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Conversion rate optimization (CRO) are the strategies and tactics that create an experience that allows you to convert visitors into customers on your website. To do this effectively you need to differentiate yourself from the rest of the pack, and you can do that with things like building brand affinity and creating offers that differ from everyone else.
Making your marketing decisions based on analytics and not just what your competition is doing will also take you far in the CRO game. And most importantly, be curious and get creative. This is a good opportunity to do some A/B split testing and make sure your content and visuals are on point. If you follow these tips, you’ll turn that donkey into a unicorn in no time.
Rich: Larry Kim is the CEO of MobileMonkey, Inc. a provider of chatbots for mobile marketers. He’s also the Founder of WordStream, the World’s largest PPC management software company, managing $1 Billion in ad spend for over 10,000 customers worldwide and employing over 200 people. Larry’s blogs on marketing and entrepreneurship are read by millions of people every month. In 2015, he won Search Marketer of the Year from PPC Hero, Search Engine Land, and the US Search Awards. Larry, welcome back to the Agents of Change.
Larry: Thanks Rich, thanks for having me. How are you doing?
Rich: I’m doing excellent. So today we’re going to be talking about – I know that you can talk about a million things – but today we decided we’re going to talk about CRO, conversion rate optimization. First off, how do you define CRO?
Larry: Well I think what we’re trying to do is pull people through the funnel more effectively from awareness through completed purchase. Does that make sense?
Rich: Yeah, absolutely. Why do you tell small businesses – really all businesses – to focus on CRO? What are some of the benefits for them?
Larry: It’s just like greasing the skids here a little bit. If there’s ways that you can accelerate that then that’s actually quite a lot of leverage for your business. I guess the challenge here is that so many people define zero differently, I think a lot of people think of it as landing pages and I just found that’s kind of a very narrow definition. I look at it in the perspective of optimizing your entire business, if that makes sense.
Rich: It does, and I know that you have some unorthodox approaches to CRO so I’m looking forward to getting into that. Now is there a specific CRO percentage that we should be shooting for, some industry standard?
Larry: It’s pretty bad, yes. The typical thing on the internet – like whether you’re selling life insurance or B2B software – we looked at billions of dollars of spend, and on average stuff converts at around 2.2%, that’s kind of the 50th percentile, so anything below that you’re kind of a donkey. But then if you’re in the top 25% of advertisers, that rises to around 6.5%. And if you are in the top 10% of advertisers or marketers on the planet, you can expect to convert around 9.6%. So there’s roughly a 5 times difference between sort of the average donkey and these outlier unicorn companies – as I call them – because they’re converting their traffic at a rate of 5 times more than average.
Rich: That’s obviously a huge difference, especially when we’re talking about a lot of leads coming in. Are there specific industries that tend to be more of those unicorns, and other industries that tend to be more of those donkeys?
Larry: No. So what we find is that across industries – so e-commerce, or finance, or B2B – what we find is it’s always the same kind of stratification where you kind of have this average offer right around 2%, and then having sort of the top 10% of advertisers or marketers converting now at 5 times higher than the average person, this holds true for all industries.
Rich: Ok, so it’s not necessarily the industry we’re in. Is it because these advertisements are just so much more enticing or the offer is so much better? Have you been able to kind of find something that basically blows a horn on a donkey turning into a unicorn?
Larry: Yeah. So look, there’s a lot of little things to improve your marketing performance because this is not just true for ads, it applies through all marketing channels. But basically what we found was there’s 1,001 things you can do to make small changes to your conversion rate, like more persuasive messaging, or better imagery. But we found that those didn’t necessarily change a donkey into a unicorn, so you’re still instead of a 2% donkey you’re maybe a 2.1% donkey. So you’re still losing 98% of the people who visit your site, basically the universe is telling you, you suck.
So when we came to those outliers – the top 10% that were converting at 5 times higher than the average donkey – there was only one thing that made a difference and that was offer differentiation. So we looked at what the heck is this company offering and is it the same thing that everyone else is. And the answer for the unicorns was that it was ridiculously different.
Rich: Yeah, I definitely get it and I guess my concern is, so if I’m trying to stand out from other web design firms, do I just need to offer something that’s 20 times better than everybody else, 20 times more expensive than everybody else to get those kinds of conversion rates? Is it about always being better or can it also be about being different? Because if all of a sudden I say, “Click on this link and we’ll give you half off your website”, I’m going to go out of business in no time.
Larry: So that’s like a sale, you’re talking about a 50% off link, those will help your conversion rates a little bit, not like we’ve found if you cut your price in half it will double the conversion rate on average. But again, that’s still a donkey, right? Because the unicorns are not just 2 times better, they’re 5 times better. So I don’t think it has much to do with your price, I think it has more to do with changing your offer. So if you’re a donkey with 1-2% conversion rate, the universe is telling you what you’re offering is pretty boring, 98-99% of the people are saying no thanks.
So there’s two approaches. You can convert your donkey into an upper class donkey, better than your average donkey, but still a donkey. And that’s where you cut the price or make something seem more compelling. The other thing you could do, the only strategy that I found effective to really turning that into a unicorn, is fundamentally changing the offer.
So what was it you offer on your website, is it some kind of consultation or something like this for website building?
Rich: Sure. I mean we offer a few different things. One thing could be website design, another thing could be SEO, social media, or even digital advertising. So those are all things that we offer that a lot of our competitors might offer as well.
Larry: So don’t take this the wrong way, but a lot of companies as you said do that thing and the companies that I work with that do this see conversion rates in the 1-3% which is pretty typical. So an unusual way to change that up a bit might be to offer something else. Things that are hot right now that are converting at a higher than 2-3% rates are things like Instagram ads or Amazon ads. If you were to specialize in something a little more hot. Another thing that’s pretty hot right now is chatbots and being able to use Facebook Messenger to connect with your customers. So we’re not merely keeping the offer the same but kind of putting lipstick on it, we’re actually offering hotter things, kind of the ‘flavors of the month’ for marketing these days.
Rich: Sure, absolutely. And at that point you might bring them in and have a conversation about how this is part of a bigger whole and be able to sell the whole.
Larry: Land and expand, right? But the hook has to be a little bit more catchy. And for a lot of these web companies, if it’s just SEO, I mean c’mon, it’s supporting no doubt but it’s not new.
Rich: Right, and it’s one of those situations where you’re competing with 1,000 other companies who are offering pretty much the same thing, so it definitely becomes a challenge. Now just to take a step back, we talked about conversions and I guess my question to you is if we’re looking at these conversion rates, are we talking about sales, or are we talking about email sign ups, or is it kind of all mixed together?
Larry: So basically when I did the research it depended on the vertical. So if I was doing a legal vertical, most of these lawyers are just selling a consultation. If I was in the retail sector it was all this ecommerce and actual sales. So we were kind of comparing similar types of conversions grouped by different industries.
Rich: Ok. Now it sounds like at the end of the day we’re looking for more leads. If we’re looking for more leads, should we always be looking for a higher conversion rate? How do those two things go together?
Larry: No. I mean, leads are really tricky because more leads is often…it’s the quality not the quantity that matters for leads, because you have to follow up on these things which means you need a salesperson or somebody to actually call them. So if you get a lot of unqualified leads it’s a double negative, it takes more time to process. And number two, the one or two good leads in a pile might get missed over because there was so much other crap.
So I’ll just give you 2 quick examples. Example #1, if I’m promising in my offer free kittens or a free Xbox or whatever, that’s going to get me a crap ton of leads but 99% of them will have signed up just to get the free things, so it’s a colossal waste of time. The other thing is imagine if I had a very difficult sign up form that had enter your name, email, company, phone number, but then kept on asking all these questions like, “What are you hoping to do”, and “What’s your budget?”, and having 10 more qualifying questions. Well the one or two people that actually fill out the form and survive are going to be really, really qualified because there’s sort of a self selection happening. They were so motivated to jump over all the hurdles that you put in place and nevertheless still converted, so that’s a really good lead. So that’s an example of where you might get a low quantity with a very high quality.
I think one of the big mistakes that people make in CRO is they’re just kind of shifting and trading more quality for more quantity, or more quantity for more quality. You’re kind of just moving around the deck chairs without fundamentally changing anything.
Rich: I completely agree and I’ve run into a couple of examples like that over the years. We once put our contact form at the bottom of every single page – like a quick form – and our leads exploded, however they were almost entirely crap. And I actually had to make it more difficult to fill out the contact forms because we were spending all of our time going through all these terrible leads.
And then we worked with a small business organization in town that literally asked about 47 questions on their contact form to get a free consult, and I begged them to change that, and ultimately I found out that they’re only able to help when a business has gotten to a certain point. And what they were doing was trying to get rid of all the tire kickers and it was actually a really effective contact form for them even though it went against every sort of online best practices out there. So I hear where you’re coming from.
Larry: I can give you a quick example of that as well. I had a company that was doing software, like desktop software, where you had to register the software in order to make it go. And they were getting tons and tons of emails from the registration because it was mandatory and that was just too many to follow up on. And what they did was they changed it so that you could use it for 3 days and then after 3 days if you’re still using it – and most of the people are not using it anymore because they were just trying it out for one time, but by waiting a few days to then asking them to now register this, they cut their leads by 3 times but they 10x the quality. Do you see what I’m saying?
Rich: Absolutely. I think people have to be aware that at the end of the day we’re not just trying to get people to give us an email address, we’re trying to get the business, and that’s where that balance comes.
Larry: The problem is that these marketing teams, so many of them are just being managed to a lead number, so there’s no incentive to cut the leads. It’s all about growing the leads for next month.
Rich: Yeah, you always have to be aware of what behavior you’re rewarding people for. So we’ve talked about conversion rates, there’s also click through rates, tell me a little bit about how click through rates and conversion rates are connected.
Larry: Well basically another big correlation that we saw with high converting offers was they had a corresponding high click through rate in terms of the channel that drove the person to that offer. So think about your offer and you’re driving traffic through it, maybe email or SEO or Facebook ads, my point being if the ad or the email is driving traffic to your offer is 1-2% click through rate, well then what we found is it means that it’s kind of a boring offer and so they tended to have similarly lackluster conversion rates.
Conversely, if you had a Facebook status update talking about your thing and it had a 20% click through rate, then we found that the conversion rates were similarly very high like 10-20% because whatever the reason that people clicked through to your page, that excitement tends to carry through to a purchase or to a sign up. You’ve kind of got them all worked up about something and so they’re more likely to convert. Do you see what I’m saying?
Rich: Absolutely. It makes a lot of sense. Now in your research did you find that there was a correlation between people knowing our brand and people converting? Like, do they need to know who we are for them to convert and download something or sign up for an email newsletter, whatever the case may be?
Larry: So this is something that’s not talked about very much in marketing. There’s actually the most discriminating factor, the most telling sign whether or not the person who is on your page is going to either buy or sign up for whatever it is you’re trying to sell. Do you know what that is?
Rich: Well I’m guessing because I asked the question that it’s whether they know you?
Larry: It’s brand affinity. So it’s whether or not they’ve heard of you before. And so basically what we found is that people who were prior visitors – so they visited your site before and have a stronger affinity with you – are 200-300% more likely to convert than new visitors who have never heard of you before , as evidenced by the fact they’ve never visited your site before.
This is an enormous difference Rich, 200-300% difference is whether or not they’ve heard of you before. And so I think a lot of zeros get confused, they have crappy or great conversion rates. But my point is that the conversion rates are just a reflection of the pre-existing brand affinity for the business in the market, largely.
So if you’re the CRO guy for Nike shoes, you’re going to be converting at 10-20% no matter how badly you execute because there’s so much love and affinity for that brand. And conversely no matter how great a CRO you are, if you’re pushing some donkey shoe brand that no one’s heard of, it’s going to be very difficult to get above a 2-3% conversion rate. And there’s really nothing you can do, it’s just because no one’s heard of this dumb thing.
Rich: Absolutely. This is really important because the bottom line is we’re basically pushing this boulder uphill if we’re unknown. So it makes me wonder, we’ve been doing some advertising in the last quarter for the Agents of Change Podcast and putting it out there and that sort of stuff, and we basically set down a certain amount of money on Facebook each month and we get x number of views and x number of click throughs. And of course the more click throughs we get the less views we get, because we’re burning through our money Facebook is charging us, and I’m always kind of curious and wondering what’s actually the benefit. Maybe the benefit is actually in being seen and not necessarily getting somebody to click through, because the brand affinity of Agents of Change is growing. I don’t know if there’s been any research done on this, but do you have any thoughts about that? Like, is there ever a reason why you might want to create a Facebook ad that people wouldn’t click on just because you want to get it seen by as many people as often as possible?
Larry: That’s called “brand advertising”. When you have a campaign that doesn’t contain a very specific call to action and you’re just trying to get people to form a bias to basically remember who you are, that’s called “brand advertising”. And for the longest time – the last 10-15 years – it’s kind of gotten a bad rap in digital marketing because you’re supposed to be doing all these other things like SEO and social media, and all these direct response marketing tactics and strategies.
But the longer that I’m doing these growth marketing and direct response marketing tactics and strategies, the more I realize none of this actually works without the brand affinity. And so I would be thinking that a company like Agents of Change should be spending at least 20-40% of the efforts – somewhere in that range – on brand advertising. Just a very simple message about who you are and why you’re different, and then the rest would be on direct response stuff like “sign up for the podcast”, etc. .
Rich: That makes a lot of sense. Now you talk a little bit about Facebook lead ads, tell me a little bit about why you like them so much.
Larry: Sure. The problem with landing pages is the conversion rate for these landing pages on your site are somewhere between 1-10%, the average is 2%, but basically at best case you’re losing 90% of them and the worst case you’re losing 99% of these people. You know what I mean? That’s pretty awful if you’re spending $10 or $5 a click. So some of these newer ad formats they just kind of reduce some of the friction.
And again this isn’t going to turn a donkey into a unicorn, it’s not going to happen, a 500% increase. But they do reduce some of the friction by allowing the user to sign up for your product or service without ever having to leave Facebook or having to fill out a form because you just say, “sign me up”, and Facebook just sends over your phone number and email in the fields that are already in your profile information. And that’s just kind of easier to do on mobile.
Rich: That makes a lot of sense. So just to summarize, what I’m hearing you say is there are small incremental changes you can make in terms of A/B split tests that might affect the photo or the headline or something like that and it can get you from a donkey to a donkey wearing lipstick. But if there’s a couple of things that are going to really make the difference in terms of your conversion rate it’s going to come down to creating an offer that’s just so much different than what else is out there and what you’ve been doing in the past, and making sure people know who the heck you are and some brand affinity behind your company.
Larry: Offer differentiation and brand affinity are the two things that differentiate a donkey from a unicorn. Like a 2% converting offer versus a 10% converting offer. The other thing I’ll say is that all those little lipstick hacks like persuasive copy and compelling images and all that stuff, that’s kind of table steaks. Table steaks meaning the minimal effort you need to do. Obviously you can’t have a crappy image or have spelling errors on your landing page, that’s just table steaks, that’s the minimum you need to do, it’s not a growth strategy. Conventional landing page optimization is not a growth strategy because all you’re doing is you’re kind of doing what you need to do in the first place.
To put it another way, the biggest gains that you’ll see in conventional landing page CRO where you’re just fixing elements like making them look more pretty, the biggest gains are going to come if you had a really crappy looking landing page in the first place, which I would argue is shame on you for having had that in the first place.
The thing about this is you can’t optimize forever, you can’t take a donkey to a 99% conversion rate. Because every time you improve your landing page through design alone, it becomes harder and harder to find another design change that will actually result in a win and not a loss. And the extents to which the new contender beats the old champ will be smaller. Do you follow that?
Rich: Yeah. No, I think it makes a lot of sense. Larry, this has been great and I cannot wait to look at our own advertising and that of our clients and see what we can do to turn some donkeys into unicorns. And I’m sure a lot of my listeners are feeling the same way. If they want to learn a little bit more about what you’ve got going on, where can we send them?
Larry: Well, I’m on LinkedIn but about 6 months ago I started a new business in the exciting field of chatbots and AI and Facebook Messenger. And if you’re interested in learning how to communicate to your customers through Facebook Messenger rather than email – and one reason you might want to do that is the open rates are 10x higher in Messaging versus email – so we have a free trial for that. I’d love to give you a demo of the product and take your feedback, you can just reach out on LinkedIn and I’ll make that happen.
Rich: Awesome. Larry thank you so much for stopping by again and sharing your expertise.
Larry: Thanks Rich, have a good day.
Show Notes:
Larry Kim is the king of growth marketing and direct response marketing tactics and strategies. He’s recently delved into the world of chatbots, using Facebook Messenger to help clients engage with their customers. If you’re interested in learning more about this, check out his website, or connect with him on LinkedIn.
Rich Brooks is the President of flyte new media, a web design & digital marketing agency in Portland, Maine. He knows a thing or two about helping businesses grow by reaching their ideal customers, and to prove that, he puts on a yearly conference to inspire small businesses to achieve big success. You can also head on over to Twitter to check him out, and he just added “author” to his resume with his brand new book!
