James SpillaneCRO, or conversion rate optimization, is easily confused with SEO, or search engine optimization. But while CRO experts are exclusively worried about increasing conversions on a website, SEO pros ultimately drive traffic in the hope that it will lead to more sales. But when you get those SEO reports each month, they never talk about conversions or your ROI, do they?
Therein lies the pickle: You definitely need SEO to drive traffic, build your brand, and grow your website but where does it fit into your priorities in terms of your investment capital? Even calculating the ROI is a challenge because while you can measure organic traffic and estimate a value for it, how do you measure the effectiveness of any one campaign or your expenditures for any given calendar year?
Well, it’s challenging to say the least but we can estimate ROI from SEO if the campaigns and tracking are set up properly. Conversion rate optimization is much easier to estimate ROI since we simply compare new c/r vs. baseline c/r for the site or page being optimized. So let’s look at a hypothetical online business and see what happens when we invest $6,000 in SEO vs. $6,000 in CRO.
Website ABC
Annual Online Revenue: $100,000
Average Conversion Rate: 1.4%
Marketing-to-Revenue Ratio: 5:1 for SEO Investment
Ok, so essentially, Website ABC generates $5 in revenue from every $1 invested into SEO. Or, this is a 400% return on investment (ROI) an annualized basis for SEO investment. So in theory, a $6,000 investment in SEO would boost overall revenues to $130,000 for Website ABC. Frankly, a 5:1 ratio is being extremely generous but let’s roll with these numbers.
Now what happens if the same money is invested in conversion rate optimization?
Assuming a modest and very realistic 40% increase in overall conversion rate, CRO services would theoretically boost gross revenues by $40,000. Now before you think 40% is unrealistic, here is a list of issues that most sites are facing and losing 5-10% conversions as a result (per issue):
- Site Navigation is Confusing or Too Busy
- Weak Sales Funnel (not enough people making it to main sales pages)
- Subpar Website Traffic Sources
- Slow Load Times, Glitches, and Other Web Programming Problems
- Weak Direct Response Copywriting Tools on Conversion-Oriented Content
- CMS Configuration Problems
- Pricing Mistakes or Configuration Issues with Shopping Cart
- Poor Site Design and Layout of Sales Tools
Now every issue won’t affect conversions to the same extent nor will all websites have the same problems. But, most sites have several conversion rate problems that collectively add up to an average loss of more than 40% in overall sales. Think I’m crazy? Just see how your site stacks up to the average conversion rate for other online businesses in your niche by using Adwords Performance Grader. I understand your online business will have more diverse sources of traffic which actually means you should be converting better than the PPC rates. However, this at least will help you know whether you have a good, bad, or mediocre conversion rate and is a great place to start.
But let me very clear here: The actual increase in overall conversion rate is not the only consideration when trying to calculate the ROI of CRO. Indeed, the actual overall increase in conversion rate doesn’t need to be anywhere near 40% for the ROI of CRO to far exceed that of a similar investment in SEO. Here’s why:
3 Reasons Why ROI from CRO is Much Higher than SEO
#1: Increased Sales Keep Rolling in and Driving Up ROI
Stop investing in SEO today and within 30 days, you will see traffic levels start to drop. Within 60 days or less, sales will begin tapering off and within 90 days: You’ll be ready to reinvest in SEO.
But with conversion rate optimization, your copywriting, web design, and programming problems are permanently fixed. Then, a new conversion rate is verified during testing over a large sample size to establish a new baseline rate. Unless there are major changes to the business model or a significant disruption of some kind in the niche, the increased sales from the higher conversion rate will keep growing the ROI for potentially years.
For instance, in year one the average conversion rate increase might be 35%. By year two, it may drop to 25% but the ROI from that initial investment continues to grow.
For SEO, the site may retain residual rankings but once they drop below the first 5 positions for any keyword, the traffic drops to a fraction of it’s potential and sales effectively dry up. And in some niches, a keyword can drop out of the top 5 in just a few weeks once direct investment and work has ceased. But for CRO, you can be still generating ROI for long, long after the work is done.
#2: No Marketing Costs to Eat Up Profits
With SEO, you have to keep investing just to maintain your current sales. To actually grow your revenue, you have to invest even more and thus increase your marketing budget. That means a percentage of every new sale is consumed by your SEO budget which is killing your profits and morale.
But CRO services don’t require any additional marketing investment to generate additional sales. By conducting web traffic analysis on your existing traffic sources, CRO experts learn where to squeeze more conversions out of existing visitors. So every new sale generated from CRO comes with zero increase for marketing putting that money instead straight on the bottom line. For sites where 30% or more of every purchase is consumed by online marketing costs, the additional sales generated from CRO are very profitable. And for sites using PPC, conversion rate optimization experts can actually help reduce marketing costs by finding and removing non-converting keywords from ad campaigns.
CRO Makes Future SEO Investments More Profitable
The purpose of this article isn’t to bash SEO in any way because it is absolutely vital to the success of any online business. Instead, what we’re trying to understand is how to invest a limited amount of capital into an online business and generate the maximum ROI. And the third and final reason why you should invest in CRO first is because once optimized, all your future investments in SEO, PPC, or even social media will be more profitable.
Now of course not all traffic channels will convert the same or see a proportional increase in conversions after CRO is complete. But, all things being equal on the site itself, a boost in the overall conversion rate for a site will translate into an increase in conversion rate for individual traffic sources as well.
Concluding Thoughts
Bottom line: The ROI from CRO is higher than SEO and will continue to grow long after the job is done. By not increasing or potentially even reducing marketing costs, the new sales generated from CRO are more profitable than new sales generated from SEO. And by increasing the overall conversion rate to make all future SEO investment more profitable, there is no question which service generates the higher ROI.
But again: SEO is absolutely vital to any online success so the best solution is to invest in CRO services first, and then begin a new SEO campaign.
This article was written for Business 2 Community by James Spillane.
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Aloha,
I just wanted to let you know that I think this article is such a great resource that I had to mention it in my newest website content http://nuuseo.com/business-minded-seo-and-cro/. What a great read! keep it up!
I know you are busy, so no need to reply. But if you get a spare moment, check out the page. If you like it, feel free to tweet it out.
Thanks,
Garrett