Companies love, love, to generate inbound traffic. We run ads, we deploy SEO, we send out emails, we shower social media – the more activity the better. Just bring them in! In SaaS, we spend lots of time getting users to sign up for a free trial, since we just know that once they get to the product, they’ll love it.
But what happens when people do reach your site or product? Building inbound traffic is great, but it’s only worth it if you can also turn those prospects into paying customers! Or, in SaaS, if you get people to find value in your product, and then keep using it.
This is what Conversion Rate Optimization (CRO) is all about. In this guide, you’ll learn about CRO: what it is, what it’s good for, and – most importantly – how to do it right.
What is Conversion Rate Optimization (CRO)?
What is Conversion Rate Optimization (CRO)? Conversion rate optimization is the process of increasing the number of visitors to your website, app, or digital product who perform a desired action. When visitors perform that action (making a purchase, filling out an application, signing up for a service), they are said to convert.
A higher conversion rate means that your website, app, or product is targeting the right audience, working efficiently, and creating an experience that makes the value of the conversion action clear to each user.
Why CRO matters
After getting visitors or potential customers to your website or app, how do you get them to complete the actions that are important to your business? That’s the goal of Conversion Rate Optimization.
Why is CRO important? Because you want to get the most out of every click and maximize the value of your app or site. A million visitors but zero customers makes you … not profitable. (In SaaS that would be: “a million users but zero value gained.”)
An optimized conversion process increases revenue and keeps your company using resources efficiently. In many cases, conversion optimization can turn your website into a no-touch sales funnel, generating revenue without the need for salespeople.
In SaaS, CRO can help get more people to sign up for your trial or freemium offer, or direct existing customers to use more features in your product.
How is conversion rate calculated?
Conversion rate is calculated by dividing the number of visitors who take the desired action (the number of visitors who convert) by the total number of visitors to your site. Multiply this number by 100 to get the percentage rate.
CR % = (# of visitors who convert) / (total # of visitors) * 100
The impact of CRO on revenue. If you’re growing traffic/users 10% per month, increasing your conversion rate from 2% to 3.75% will nearly double revenue by the end of the year.
When should a business start doing Conversion Rate Optimization?
The moment you get visitors on your site! No matter how big your business is, you’ll always benefit from converting eyeballs into paying customers, or converting trial users into long-term subscribers.
How do you optimize your conversion rate?
Primary conversion events usually follow a series of micro-conversions.
Conversion optimization is a little like cooking: you start with some ingredients, then taste and tweak. Maybe next time you try it with more lemon. Maybe your family hates that version, so you put the olives back in. The key is improvement over time.
Let’s see how.
Step 1: Define your conversion event
The first step is to get clear on what you want your users to do. What’s the primary action you want visitors to take?
Primary conversion events can vary across industry.
- In eCommerce the primary conversion event is usually a version of “complete purchase”
- On SaaS marketing sites it’s often something “sign up for free trial” or “contact sales”
- In Fintech it’s traditionally some form of “complete application”
These events usually mark the end of a series of micro conversions, things like “fill out line 14 on this form” or “add item to cart.” Conversion optimization often focuses on improving these micro conversions, as each can be a potential roadblock to the main conversion event.
Teams may also focus on smaller conversion goals outside of the primary conversion path. On a landing page the goal might be clicking “download whitepaper” or a different CTA. In larger products, conversion may mean that a customer has successfully changed their insurance coverage, or successfully re-allocated funds in a stock portfolio. Focusing on these can help with user experience, and is often key to making a successful product.
Step 2: Map the big funnel(s)
After getting clear on what action you hope to produce, map out the steps that lead to it. Your big funnel should have no more than 4-6 steps. In a eCommerce store, for example, the conversion funnel is often a variation of:
Land on homepage —> Browse products —> Add to cart —> Checkout —> Click “purchase” Funnel analyses help identify key dropoff points.
Step 3: Identify dropoff points
Here’s where analytics is your friend. If you’re tracking user behavior on your site or app, you can see where in the funnel users tend to leave. Dropoff points = major opportunity.
Isolating dropoff points is easier if your analytics platform automatically tracks user data. Otherwise, you’ll have to manually track every single event in the funnel, which makes the job far more tedious.
Step 4: Go granular
Now you focus your microscope. Examine each click around the dropoff point. Which ones cause most users to leave? Are there any where people get stuck?
You should also inspect paths and funnels. When users didn’t convert, what did they do instead?
Here you’re doing two things:
- Looking for small fixes that yield big dividends
- Trying to understand how the typical user navigates your site
Step 5: Segment users
There is arguably no more powerful CRO strategy than behavioral segmentation. To do it, identify behaviors that users who convert do that users who don’t convert don’t do. (Or vice versa.) Do users who convert read your blog? Leave a review? Click “like”? Save a report? Choose the purple CTA?
What you’re looking for are behaviors that predict conversion, so you can orient your product around getting more users to perform them.
Segmenting your users can help isolate behaviors that predict conversion.
Learn more about Behavioral Segmentation.
Step 6: Consider the source
Another key conversion variable is who is coming into your site. Group successful and unsuccessful users by source, search engine, social media referral, and more. If your data shows that website visitors who come from Accountants Weekly magazine convert at a 2x rate compared to those who don’t, you can adjust your outbound or online marketing to bring in more Accountants Weekly-types, and optimize messaging on your landing pages.
The equivalent for SaaS products would analyzing conversion by user type: account tier, frequency of use, job title, large vs small company, and so on. (If VPs convert at 2x the rate of ICs, you can use that information to tailor your product to VPs, or tell your sales team to sell to more VPs. Or more!)
Step 7: Hypothesize, test, repeat
The key in CRO is to be creative and iterate. The scientific method is your ally: make a hypothesis, measure and test the results, then repeat. Learn as much as you can from each test.
To learn more about hypotheses you can make in your product, we recommend the Heap Book of Questions.
What are CRO best practices?
The most important CRO best practice is to use data and not rely on guesswork or hunches. The best way to increase conversion is to be scientific and methodical.
Set baseline numbers, then identify your biggest opportunities. Focus on the micro-conversions that lead to your primary conversion event(s) and hypothesize about ways to improve them. Test, measure, and iterate.
Note that it’s almost impossible to do this right without a dedicated product analytics tool. Unless you’re capturing all user behavior and keeping that data organized, it’s extremely difficult to pinpoint opportunities for improvement or measure the effects of your tests.
Want to learn more about Product Analytics tools? Check out our complete guide!
Common goals of CRO in different verticals
Common goals of CRO in eCommerce
For eCommerce sites, the primary goals of CRO are usually to:
- make it easy for users to find the right items
- make it easy for users to purchase those items
- increase average order value, either by increasing the average number of items in a user’s cart or increasing the average price of items in a user’s cart.
eComm teams often break the customer journey into three stages, each of which can be tackled on its own.
Stage 1: Bringing the right customers to your site (customer acquisition, seo)
Stage 2: Presenting information to customers in a way that encourages them to add to cart (web page layouts, copy, messaging, reviews, website design)
Stage 3: The steps from product view to purchase (adding item to cart, reviewing cart, entering payment info)
Learn more about eCommerce Conversion Funnels.
Common Goals of CRO in SaaS
CRO goals for Software as a Service (SaaS) can vary widely, depending on product. For many SaaS companies the primary conversion event—a customer purchasing a subscription—marks the end of an extended sales process. This process often includes multiple touchpoints, including interactions with salespeople.
That said, SaaS teams often track and report on three main moments of conversion:
- Signing up for the trial or freemium version of the product
- Moving from trial/free to a paid version of the product
- Renewal of a paid subscription
For event #1, if a company’s business model involves managed sales, the goal is usually to get website visitors to contact sales or see a demo. If not, the goal is to encourage visitors to sign up for the product (or a trial) on the website itself.
For events #2 and #3, the CRO goal is often to get users to adopt key features and gain more value from the product. For this, tools like in-app guides and recommendations can be helpful.
Common Goals of CRO in Fintech
Conversions in Fintech tend to be less frequent but higher-value. The goal is often to help customers fill out an application, with the expectation that they’ll do so only once. Fintech applications often involve many pages of forms, which gives CRO teams numerous opportunities to improve micro conversions.
What are the benefits of Conversion Rate Optimization?
- Increased Revenue
This is the primary benefit. The higher the number of conversions = the greater the impact to your bottom line.
- Better User Experience
An improved conversion flow usually makes for a smoother user experience. In eCommerce, SaaS, and Fintech, less friction means a more delightful product.
- Improved Retention
Delightful user experiences tend to produce return visits. Though this certainly applies to eComm stores and Fintech applications, in SaaS it’s especially important, as SaaS CRO often focuses on getting users to adopt product features they don’t currently use.
Conversion Rate Optimization tools
What CRO methods and tools are most effective?
While CRO teams once relied on web analytics platforms like Google or Adobe Analytics, today dedicated product analytics tools have supplanted these options. This is because product analytics tools provide better, more useful information for CRO teams, and enable the following:
- Funnel analyses track the paths users take through an app or site and report the number or percentage of users that convert or drop off at each stage of the funnel. Advanced funnel analysis can break this information down by device users were on, demographic features, or user behavior. This lets CRO teams see if people who convert (or drop off at a certain point) tend to read product reviews, sign up for emails, or share other relevant features.
- Path analysis isolate the paths into and out of a conversion event – the actions people tend to take before and after converting. Path analysis is key for knowing if users are following your ideal conversion flow, and if not, for seeing what they do instead. Teams often use path analysis in two ways: to figure out where and how users leave the conversion flow, and to map the paths that correlate with successful conversions. As with funnel analysis, a good path analysis tool can segment this information along multiple dimensions – behavioral, demographic, and others.
Path analyses show you how users navigate your site.
To try out funnel and path analysis, get a free trial of Heap.
A/B testing, aka split testing, is a method for testing variations of a web page, product feature, UX flow, or a different element of your site or product. Almost anything on a site or product can be A/B tested: forms, homepage design, copy, images, alerts, messaging, notification cadence, and more.
Using an A/B testing tool, different versions of the element you’re evaluating are distributed randomly among visitors. Teams then see which variation performs better.
A/B testing tools:
- Google Optimize
- Oracle Maxymiser
- Visual Website Optimizer (VWO)
- AB Tasty
Critical to doing A/B testing effectively is to evaluate the downstream effects of your tests. While teams often focus on local improvements (whether more people click a red or a green button, say), it’s often the downstream effects that are more important: were the users who clicked the red button more likely to convert, more likely to return to the product, or more likely to be in the product 30 days later?
It takes more work to track these long-term effects, but doing so is the best way to make sure when you run a split test you’re also impacting higher-level business metrics.
Pop Ups and Push Notifications
Popup messages and push notifications are short messages designed to alert users to new information that improves conversion. Push notifications can inform users about new products, inform users that an out-of-stock item is back on your site, or offer a discount on something they’ve left in their cart. Push notifications can be valuable in eComm especially, as they often let the user bypass the steps that lead to conversion (add item to cart, etc.) and bring the user directly to the purchase page.
A time-tested CRO tool, email messages are useful in all sorts of ways, and can themselves be A/B tested to optimize results. There are many, many sources of information about email conversion (just do a quick search!), but in general the more personalized the email – the more it speaks directly to a user’s problems and needs – the better it tends to convert. As with your website or product, virtually everything about email marketing – copy, cadence, images, opening line, return address, consistency of messaging – can be tweaked and tested.
Limitations of Google Analytics and Adobe Analytics for CRO
While Google Analytics and Adobe Analytics provide useful data around traffic to your site or app, they’re less useful for CRO. This is because improving conversion rates requires teams to know what users do while on their sites, not just how they get there.
What behaviors correlate with conversion? How do different user groups navigate your funnel? What events correlate with dropoff? Getting Google and Adobe Analytics to track and return this type of information takes significant effort, and even then there’s no guarantee that either tool will capture all the data a team needs.
GA and Adobe Analytics are powerful in certain ways (primarily around measuring website traffic), but neither is really built for CRO. For this reason, more successful teams tend to employ dedicated product analytics tools.
Learn more about the differences between GA and Heap.
Interested in alternatives to Adobe Analytics? Read our complete guide.
How Product Analytics are used for CRO
If there’s one key to CRO, it’s this: the more you measure, the easier it is. The more information you can gather about how users navigate your site or app, the more straightforward it is to isolate problems and fix them, and to understand how the changes you make affect conversion.
Many product analytics solutions require you to manually tag events to ensure you collect data on them. For CRO, this is a nightmare. If you’re doing CRO right, you’ll be making lots of changes – your site or app will be evolving all the time. With manual tagging, it’s almost impossible to keep tabs on all of these changes. If you forget to tag an event, too bad – you can’t get data on it.
For CRO, the ideal product analytics solution will automatically capture data from everywhere on your site. Whatever users do, you’ll know. You can then take all this data and analyze it to understand how your users engage with your product, every step of the way.
For this reason, we highly recommend choosing a product analytics solution with Autocapture. CRO is just more difficult without it.
Conversion Rate Optimization strategies from leading brands
Some case studies of companies effectively using CRO to grow revenue and improve the customer experience:
- OppLoans: 5% Increase in Conversion Rate
OppLoans, an online lender that provides a safe and reliable alternative to payday loans, wanted to improve funnel performance and reduce friction in the customer experience.
Using their analytics tool, the team was able to find a broken step in their funnel. By “[making] meaningful improvements to our pre-pop experience,” the team saw “a seven-figure lift in new issued principal annually and a 5-percent increase in conversion rate for direct mail.”
- Casper: 20% Conversion Optimization
Sleep startup Casper was able to increase conversion by 20% by pinpointing the best time in the checkout process to offer same-day courier delivery service.
A targeted CRO strategy found that 80% of users strongly preferred courier delivery versus traditional UPS delivery.
Casper hypothesized that moving the same-day courier delivery option up in the user flow – from after checkout to before checkout – would get customers more excited about purchasing a mattress. The change produced a 100% increase in the number of people who wanted to know about shipping methods, and a 20% increase in conversion rate.
- Sur La Table: Increased Overall Conversion Rate By 6%
After looking into its behavioral data, Sur La Table noticed that users who looked at more products were more likely to make a purchase, and that they tended to spend more money on the purchases they did make.
This insight led the team to figure out how to encourage customers to view more products. Path analysis showed that cross-product merchandising increased product views, so the team expanded product pages to feature more complementary or related products. The result was a 12% increase in pageviews and 6% overall increase in conversion rate.
- ThirdLove: 50% Increase in Mobile Conversion
ThirdLove’s goal is to create a better bra for all women and to improve the bra-buying experience on all platforms. To improve conversion, the team ran path analyses and segmented the results by platform. After noticing that a large number of first-time purchases were made on ThirdLove’s mobile app, the team quickly pivoted to optimize their mobile experience.
They were happy to see a near-immediate increase in purchases and an astonishing 50% increase in mobile conversions.