Should you invest in acquisition or CRO? Is CRO worth the effort?

I've worked as a freelance CRO consultant for 8 years. And although it's not as widespread as it used to be back in the day, I still face today the same objection from marketers I had to deal with in the very beginning:

My business is doing okay. Investing in traffic acquisition works for us. Why rock the boat with that CRO thing?

Don't get me wrong, I do understand why you might be reluctant. Why fix it if it ain't broke, right?

But is accepting the status quo the right call? Why would you be content with "good enough" KPIs when you could get more revenue out of your marketing budget? Instead of apprehending the unknown, you should fear missing out on the extra revenue that's spilling through your fingers.

There is but one valid reason to ignore CRO

Marketers have lots of reasons why they discard CRO. Most of them are utter nonsense. Let's see:

• I don't know what it is: while ignorance is no excuse (marketers usually stay on top of major digital trends), this is easily remedied by defining CRO and how it could benefit your business (in fact I will do just that in a minute).
• I can't afford it: if you spend some of your marketing budget acquiring traffic, then chances are you can afford it; and investing part of that budget into CRO might bring in a bigger ROI (but more on that later).
• I don't have time: we're all busy. We all have to set priorities and focus on what we think will move the needle faster; but before you put CRO in the "low priority" tier (aka. the "I'll never get around to that" category) you should assess the actual ROI potential (and not just discard it based on your gut feeling).
• I don't have the required skillset: we can't be good at everything; in fact I am completely useless at a lot of things. But guess what: you can always hire people who have mastered the skills you need.
• I don't think that's worth it: you have assessed the potential ROI of CRO for your business and found it's not worth the investment. This is definitely a valid reason - THE one and only valid reason - but only if you ran the numbers and assessed the ROI potential (I will show you how in a bit).

If you have reached this point in the article, then you can't just stop and fall back on the aforementioned excuses to ignore CRO. Now you just have keep reading to know how to run the numbers and figure out whether or not CRO is a good option for your business.

Above all else you shouldn't settle for less revenue just because it's easy. Don't ignore the cost of missing out on CRO as it could be huge.

Let's get to it.

I will first explain what CRO is about, how it works and how to do it right so it may increase your bottom line. Then I will show you how to assess if your business could benefit from CRO or if you should stick to traffic acquisition.

What the heck in CRO?

CRO is short for Conversion Rate Optimization. Let’s break it down and try to make sense of the component parts:

• A conversion represents any action you want your visitors to accomplish on your site; it could be anything but the most common desired actions are user signups, quote requests and actual transactions.
• The conversion rate is the ratio between the number of conversions and the number of visitors (or sessions) for a given time period. It is a percentage that indicates how well you are converting your traffic.
• Which leaves us with conversion rate optimization, which is the process of increasing the conversion rate, meaning getting more of your traffic to sign up, to request a quote or to buy.

How does CRO work?

CRO is a process that relies heavily on 2 pillars:

• The first is A LOT of research - it is a learning process that brings you closer to your audience; obviously the more you know about your visitors, the more you understand them; and the more you understand them, the better you are able to identify what could potentially generate a conversion increase.
• The second is A/B testing - which is the process of creating another version of a page (based on the research you conducted) and splitting your traffic between both page variations. Then you compare their respective conversion rates and permanently implement the highest performer.

Successful optimizers spend most of their time doing research, not working on A/B tests. So if you end up working on CRO yourself make sure you don’t jump into A/B testing without doing prior research.

I am telling you this because A/B testing solutions tend to market their products as one-stop shops for CRO. But if you are serious about getting actual results, don’t skip on research and instead start by diving into Google Analytics, surveys, user tests and so on. That's the road to success, the path to higher conversion rates.

2 valid, complementary approaches to revenue growth

You have 2 options to choose from when it comes to increasing sales:

• Either you spend money on acquiring more traffic (and keep converting that traffic at the same level)
• Or you invest in CRO to convert more of your visitors into customers (without bringing in additional traffic)

Most businesses invest in traffic acquisition as a matter of course. The question becomes: should you use part of your acquisition budget on CRO instead?

Doubling down on acquisition vs. investing in CRO

Let’s compare both options by taking a simple example.

Let's say you currently get 5,000 visitors a month (and you acquisition cost is $0.5 per visitor); you convert 2% of this traffic on average, which represents 100 transactions a month. You sell 1 product that costs $50 (it is meant as a simple example after all!) so your monthly turnover is $5,000.

• 5,000 visitors X 2% conversion rate = 100 transactions / month
• 100 transactions X $50 = $5,000 / month

Let’s say you wish increase your sales by 50% and get from $5,000 to $7,500 monthly turnover. You have 2 options:

• You get 50% more traffic: you spend $1,250 on acquiring new traffic
• You increase your conversion rate by 50%: you convert at 3% instead of 2%

I am assuming you are a rational person so in a perfect world you would choose whichever option is the most cost-effective, which means you would invest in CRO only if it costs less than $1,250 to get a +50% conversion boost.

We are not, however, in a perfect world and it is not possible to predict by how much you'll be able to improve your conversion rate if you spend $1,250 on CRO (either in time spent or money).

Even though the investment required to achieve the same result with CRO is usually bigger than through pure acquisition over the course of a month, I would still recommend you pick CRO in most cases (unless your cost of acquisition is very low).

Why? Because any conversion increase created during that month will last for a long time whereas you would need to spend an extra $1,250 every month to keep selling 50% more products.

So even if you are not ROI-positive after one month it will definitely pay off in time. You will be able to get a higher monthly turnover without having to spend more money on acquiring traffic every month.

Time to run the numbers!

It's time for you to do the math and weigh both options so you know which would be the most cost-effective to generate sustainable growth for your business.

So please do run the numbers and make an informed decision on how to proceed next month. If it turns out CRO is not a good fit, then that's okay, now you know where you stand and you can serenely discard CRO and double down on acquisition. You know your are on the best track for growth.

Thanks for reading! Feel free to share what option seems to be most beneficial to your business in the comments (-: