Why Optimizing for Conversion Rate won’t necessarily increase revenue?

Conversion Optimization is a handy technique that enables site owners to enhance conversion rates cutting across their marketing investments and investments, including core business sites, email, PPC, social media and other E-Commerce platforms. It is important to align analytics to online marketing investments. This principally involves measuring your digital interactions/ conversions as well as understanding target audience behavior and competitor strategy.
Tracking your optimization investments is crucial to working out the true ROI.

Make your analytics methodology actionable

Simply possessing loads of data does not mean you will make the correct decisions. Just having a half-prepared web analytics system in place won’t mean one can sift through the data to draw insight that can benefit the business.

You should analyze the data keeping in mind a few things like:

  • Are you running the test during a period of normal sales activity sans any events or offers (weekends, Christmas, Easter, etc)
  • Are you running the test module under normal circumstances, sans any modification to your traffic flow (like sending branded traffic only through your test!)
  • Are you arriving at hasty conclusions and making a wrong decision?

So, you have undertaken a couple of basic testing modules and are happy to notice an impressive rise in your site’s conversion rate. The relationship between conversion rate optimization and business revenue is not as straightforward. Just because a test indicates higher conversion rates, it doesn’t mean your goal has been achieved.

The question to be asked is: Is the impressive increase getting reflected in additional revenue for your business? If you want to correlate the two parameters, you have to pay attention to a few important aspects at play here! Let us take a closer look at them:

Are you optimizing for micro conversion? While conducting tests on a website with a rather limited traffic flow, why not optimize for a step early in your sales funnel? Even as you optimize for a micro conversion, keep in mind the fact that micro conversions don’t necessarily mean you will get more completed sales.

The key is to optimize for more revenue/ margin. Many experts are solely focused on attaining higher conversion rate. Though it’s an important metric, conversion rate is just a part of the whole picture. A strong and sensible correlation between conversion rate and lead quality needs to be established. It should not happen that a higher conversion rate causes decrease in lead quality.

This assumption makes a lot of sense because many of your site visitors might not be motivated enough to make an actual purchase. Instead they think it easier to convert and opt for your free offer. On the one hand, this means more conversions, and on the other hand, it may well bring down your average order value.