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There are literally over 55,000 blog posts that talk about conversion rate optimization. This article is totally different.
I’m a marketer who has spent 12 years out in the conversion rate optimization (CRO) wilderness. I’ve tested every idea you can conceive of.
This post will reveal the key takeaway from my 12-year journey. More importantly, you will gain access to an insight none of your competitors have.
History of Conversion Rate Optimization
Conversion rate optimization, or conversion optimization, or CRO, A/B testing, or split testing isn’t super unique. The basic promise of CRO is that it will help the business drive better results. Isn’t that what all departments in the business are focused on anyway?
The modern term for Conversion Rate Optimization was coined by an agency called Conversion Rate Experts, an agency we admire a lot.
But businesses have been A/B testing to get better marketing results for decades. People like John Caples refined the concept of A/B testing different promos using coupon codes a 100 years ago.
Mr. Caples’s most famous ad is this They Laughed When I Sat Down at the Piano but When I Started to Play! promo from 1926:
The genius of Mr. Caples’s approach is that instead of just working like crazy to craft the ad and creative he inserted a tiny offer (noticed bottom right corner of the ad, highlighted by the red box) he could measure how the sales pitch corresponded to interest:
Why use an offer?
A 100 years ago marketing was extremely cumbersome. People didn’t buy that often. They weren’t used to sending their money sight unseen. So the marketer had to develop some mechanism to cause the audience’s appetite. Adding a free sample or a discount was a simple mechanism to get a micro-commitment from the prospect.
But this isn’t the source of the magic.
Notice the mail-in address in the ad. Here’s John’s stoke of genius– he would have different versions of an ad, each with a unique sales pitch (we’ll be talking a lot more about sales pitches in the following sections), presented in entirely unique publications (one publication may be an outdoor magazine, the other could be a career journal– thus allowing the marketer to talk to different audience sets). The marketer would then use the unique mail-in address (typically they would use a PO Box number) to collect responses.
These would then be manually tabulated and then the statistical significance (that’s how the marketer knows if one ad is truly better than the other) could be calculated on a long piece of paper.
What we do today with digital marketing in 2022 isn’t much different. For our agency, the only thing that’s changed is where we present our direct response sales pitch:
We have a lot more to say about the history of conversion optimization: History of Conversion Rate Optimization.
Claude C. Hopkins (1866-1932) came before John Caples and was the giant on whose shoulder John Caples sat. Hopkins was one of the earliest advocates of the Test-Measure-Refine (TMR) Loop in advertising– that’s the basic idea we covered in the They Laughed When I Sat Down at the Piano but When I Started to Play! section above.
To get a sense of the business implications of this approach, consider this– in 1907 Hopkins was hired by the advertising firm Lord & Thomas for a salary of $185,000 a year.
The average wage in 1904 was 22 cents per hour. The average worker made between $200 and $400 per year. Source.
Clearly, $185,000 a year was an obscene amount of money.
But wait, there’s more. The question is, why would the agency Lord & Thomas, which was owned by Albert Lasker pay this much to an employee? When does a business ever pay this much? There’s only one situation where it makes sense– when the business can hope to gain 10x or 100x that amount.
And that’s exactly what happened. With the birth of scientific advertising people like Albert Lasker who immediately understood the implications and went all-in ended up becoming fabulously rich. Albert Lasker ended up becoming the richest man in America.
What people like Claude C. Hopkins started as a totally new concept and people like John Caples radically improved has been in the digital era for the last 20 years.
In the eCommerce space, the best Conversion Rate Optimization example can be no one other than Amazon.com. They literally invented the practice in this medium. Amazon was running 200+ tests a month in 2004. (source: @TheGrok).
In the post-2020 period, that number has exploded. Today, the top players run thousands of tests. I got this number from a FastCompany article– Intuit: 1,300, P&G: 7,000–10,000, Google: 7,000, Amazon: 1,976, and Netflix: 1,000
The degree of sophistication when it comes to conversion rate optimization is shocking. And I believe this intimidates many marketers. One topic that get’s marketers especially nervous is the statical side of CRO.
The Statistical Side of Conversion Rate Optimization
There are lots of technical aspects to conversion rate optimization. If you are interested in the technical aspects of A/B testing and found to develop a solid statistical foundation I’d recommend Statistical Methods in Online A/B Testing by Georgi Georgiev:
Let’s address the elephant in the room. You are freaking out about the statistics surrounding conversion rate optimization castle. It feels like it’s unconquerable unless one is armed with a degree in statistics. This is not true. At all. I personally use VWO.com for all my A/B testing.
Here’s another way to think about it– when using Excel to calculate the ROI of a campaign do you double-check each calculation or do you just ensure you entered the correct formula and trust Excel or Google Sheets is doing its job? I just trust the tool to do what I’m paying it to do.
And with tools like VWO.com if I have a concern about the test setup or test numbers I jump on a call with their technical team to get to the bottom of the concern. This is one reason why I am 100% in favor of a paid tool like VWO. My time costs more than their tech support team’s. It’s a good investment. I don’t mess around with tools like Google Optimize that are free but don’t have support. As a marketer in the technical world of statistics, I have a ton of questions and can’t rely on help files.
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Now that we’ve got the statistics out of the way I hope you are feeling a little more optimistic.
Now there are a few details about statistics that still do matter, even to a marketer, and those are covered here: Marketer’s Guide to Understanding Statistics.
Fascinating CRO Statistics
There is a dizzying array of statistics and facts about online shopper behavior. Many of these stats– like optimal conversion rate for a site– don’t have any real business value because someone else’s conversion rate should have no impact on your business decision-making. For example, if your biggest competitor has a blog article that’s driving 25% of traffic to one page with a special offer that produced a conversion rate of 8% what will you do with this information? What I’m saying is it’s a total waste of time. A much better metric to pay attention to is your baseline conversion rate over time. If your baseline conversion rate (normalized for all other factors like ad spend cycles) is trending up quarter over quarter then you are on the right path.
There are a number of really important and fascinating stats that are totally worth paying attention to and we’ve been curating a list since 2007. What’s great about the list is that it only has the handful of stats that matter and we update them on a regular basis so they are relevant for 2022.
You can find our curated list in our ecommerce stats article.
We’re going to show you how we actually use these universal truths to generate incredible client results but we need to start by first looking at how conversion is done by other agencies.
How Most Agencies Think About CRO
Most agencies dream big. They don’t want to limit their scope so they look at the entire customer journey to formulate their conversion optimization plan.
Quick summary of how most conversion rate optimization agencies work:
– They start with research
– They look at the WHOLE site
We expand on these two areas in this article: How Most Agencies Think About CRO.
Our Approach to Conversion Rate Optimization
Not where this comes from but we’ve always focused on keeping things simple. If we have 12 paths to explore our mantra is “which of these paths offers the least uncertainty and the highest reward potential?” Think of our approach as the lazy man’s way to conversion rate optimization.
I should say, we didn’t just wake up to our insight on day one, we made plenty of mistakes for many years. We were lost in the wilderness.
For example, we had originally assumed that design was the problem. When studying a new client site our first thought is usually– gosh, their layout isn’t intuitive, no wonder people aren’t doing what we expect. So we spent many years developing test concepts that changed the UI (User Interface). This posed a few issues. This will be covered in our in-depth article on this topic, which is linked at the bottom of this section.
We also didn’t limit which part of the site we tested on. Client’s cared a lot about their homepages so we definitely A/B tested there, we also tested the checkout flow because Google Analytics invariably shows a lot of friction here. Another thing that Google Analytics always reveals is that people who use the site search box:
Google Analytics will also show that people who do engage with site search are 2x more likely to convert. So we did a lot of testing to make this search box more visible.
There are a lot of other things that we used to do that we don’t do anymore. That whole story is explained in this detailed article: Our Approach to Conversion Rate Optimization.