If You Build It They Will Come. But Will They Stay?

An important part of a solid digital strategy is effective budget planning. Of that budget the main ongoing talking point is generally traffic generation, or in other words “how much and where should we invest in order to get people into our website”. In fact many digital strategies are completely based around budget allocation for traffic channels. These strategies resemble a process as follows:

The goal of this post is to focus on one of the most overlooked and beneficial areas to invest in: Conversion Optimisation. More specifically, the cost benefit of budgeting for and executing Conversion Optimisation projects.

You may ask what Conversion Optimisation is. The broad answer would be “anything which could increases conversion rates”. For the purpose of this post let’s just focus on site changes, where examples would include testing different landing page layouts, testing different call to action copy or even just testing the colour of a button.

Now before we continue, I would like to highlight the underlying principle for this post: Successful Optimisation projects have ongoing benefits. While increasing conversions purely through increasing traffic is an ongoing cost increase and with little effect on ROI. In other words: successful optimisation project = once off cost = extended benefit.

Let’s use a practical example to really show the principle:

- You have a website.

- It sells widgets at R100 each.

- For every 1000 visits to your site you sell 20 widgets. In other words your conversion rate is 2%.

- You get an average of 40000 visits to your site every month.

- You’re paid traffic brings in 30000 of your monthly visits and costs R60 000. That’s R2 for every visit.

So assuming you don’t invest in conversion optimisation and all other things held constant your forecast over the next four quarters will look something like this:

Now let’s say you take 10% of your traffic budget in the first 2 Quarters and invest in conversion optimisation testing. The first quarter you start with a landing page test and increase your conversion rate to 2.1% the second quarter you hit it ‘big’ and increase it again to 2.30% with more effective copy. Then in the final quarters you put all your budget back into just traffic generation. Your forecast will look like this:

Through no budget increases you have managed to increase your ROI and yearly revenue by R80 400.

This is of course a huge simplification, but the principle I am trying to drive home is not that conversion optimisation will always produce rewards (the first quarter actually had less ROI and revenue) or in what ratios you should allocate budget. Rather what I want to drive home it that optimisation efforts do cost money and require an ongoing commitment of testing and implementing to really reap the extended benefits.

So if need be, start small, but make sure to start at all. The chances are the more you practice and test the better your organization will become at running and implementing successful tests, which means even lower marginal costs for optimisation and more potential wins.

About Dane Matthews

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