Alright! You have the new eCommerce site live and people are buying things. Your revenue is starting to move – but not fast enough to hit your goals.
In this situation – most people look to increase their audience. It is a logical path to go; more people on the site means more people buying things and more revenue.
So you look to start a new PPC ad campaign with some marketing budget to get more site visitors.
Big success! It works! You get more visitors, which translates into more buyers and more revenue. You even hit your revenue goal for the year.
So far so good, right?
The problem is you spent $20K in PPC ads to get those added visits. This means that – while you hit your revenue goal – your profitability suffered.
But was there another way? Possibly.
Conversion Rate
If you aren’t familiar with conversion rate – it is a number noting the percentage of site visitors that convert.
So -> (conversions / visits) * 100
The standard conversion rate varies depending on the industry – but tends to hang out in the 2% range.
When you go back and calculate your site conversion rate – you find that it is at 0.2%. That means you get 2 conversions for every 1000 visits.
What does this mean?
Napkin Math
Say you earned $100,000 in 6 months with 50K visits and a 0.2% conversion rate, and that you are looking to get to $500,000 for the year.
You would need to increase your visits 4x over the next 6 months to hit your goal.
Let’s look at that a different way:
You got 50,000 visits, and 100 conversions over the first 6 months.
To get to $500K for the year, you would need to get 200,000 visits with 400 conversions over the next 6 months.
Where Does Conversion Rate Come In?
Instead of focusing on just increasing visits – let’s focus on increasing your conversion rate.
You install some tooling to gather data for a few weeks, then spend some development effort to refine the site.
With your changes – your conversion rate bumps up to 0.8%. This is still below the average – but is 4x what you had previously.
How much traffic do you need to get to hit your goal now?
50K visits.
A Multiplier
Because conversion rate acts as a multiplier – you don’t need to increase your traffic at all to quadruple your revenue.
What do the numbers look like?
50K visits at 0.2% means 100 conversions (X / 50,000 = 0.002 → X = 50,000 * 0.002 → X = 100)
50K visits at 0.8% means 400 conversions (X / 50,000 = 0.008 → X = 50,000 * 0.008 → X = 400)
Because you increased the conversion rate (IE – the number of people who convert) you get more conversions from the same traffic, and more revenue as a result.
Scale It Up
Now that you have increased your conversion rate – let’s add PPC and other visit increasing strategies ot the mix.
You spend $20K on a PPC campaign that doubles your visits over the next 6 months.
SO: 100K visits at 0.8% means 800 conversions (X / 100,000 = 0.008 → X = 100,000 * 0.008 → X = 800)
Notice how the number of conversions has now increased 8x.
Because you quadrupled the conversion rate – the PPC campaign was wildly successful. You came close to doubling your annual goal! (IE - $100K for first 6 months + $800K for second = $900K total)
Assisted Innovations
At Assisted Innovations we want to help you grow no matter what. Sometimes that means that we have conversations about the cost benefit of any path.
If you want to run PPC ads, but your site isn’t converting – we will talk to you about spending some time working on conversions before going down that road.
Looking to grow your revenue, and think conversion rate optimization or PPC could help? Reach out.