Why conversion rate optimization on Magento is so powerful!
Quick Summary: Conversion rate optimization is arguably the most powerful and most underrated things most business owners or managers can do to increase sales on their e-commerce website.
If you are new to this term, “conversion rate” it simply means: out of all your website’s visitors, what percentage actually buys something on your site.
So if you have 100 visitors, and you get 1 sale.
You have a 1% conversion rate (1 out of every 100 visitors buys something).
Most of our clients have already heard about this topic, and many have even heard of specific techniques such as A/B testing, etc.
But when we ask if they have ever tried it? 9 out of 10 say no.
Almost everybody heard about it, the majority are also already convinced of its value, but have they done it? Nope.
Apparently, conversion rate optimization is one of those things at the end of the entrepreneur or manager’s to-do list and almost no one gets to it.
Yet this is one of the most powerful potential game changers for any e-commerce store.
Why?
Because you don’t need to double your sales to double your net profits.
How come?
It’s because you have a lot of fixed costs.
Therefore a slight increase in sales, without spending more on ads or SEO or other sources of traffic, can yield a significant profit increase!
I’ll show you the math in a summarized way.
Conversion rate
1.00%
Yearly sales
1 Million
Costs of products sold
40% ($400 000)
Cost of operating the business
(salaries for owner and employees, overhead, office, utilities, website costs, etc)
(salaries for owner and employees, overhead, office, utilities, website costs, etc)
$400 000
Ads and Marketing spend
$100 000
Total cost
$900 000
Profit
$100 000
If you successfully increase your conversion rate by 10% of what it already is.
So you improve 1.00% to 1.10%.
This means you go from 10 sales per 1000 visitors to 11 sales per 1000 visitors
Not a big increase right? Just 1 more sale, per 1000 visitors.
So you improve 1.00% to 1.10%.
This means you go from 10 sales per 1000 visitors to 11 sales per 1000 visitors
Not a big increase right? Just 1 more sale, per 1000 visitors.
Do you think that is possible?
Heck, ya! It is.
|
$1 000 000
in sales. |
Becomes |
$1 100 000
New sales. |
A $100 000 of additional sales!
The hard cost is 40% for the product’s purchases ($40 000).
So we have $60 000 in additional profits.
The hard cost is 40% for the product’s purchases ($40 000).
So we have $60 000 in additional profits.
You already have the staff to service this, you are already paying salaries, you can likely handle 10% more sales without much if any extra overhead cost.
Do you think that is possible?
Your yearly profit just went from
| Current
$100 000
|
 |
New
$160 000
|
That’s +60% increase to yearly profits.
With a mere improvement in the conversion rate of 10% more than what it was.
Meaning a mere increase from 1.00% to a still very low 1.10%. (We are not even near 2% yet! Which is also possible to reach in some markets.)And what if the above improvement was 1.00% to 1.20% ?
You guessed it… + 120 000$ in gross profits.
More than doubling the yearly net profits!
With a mere improvement in the conversion rate of 10% more than what it was.
Meaning a mere increase from 1.00% to a still very low 1.10%. (We are not even near 2% yet! Which is also possible to reach in some markets.)And what if the above improvement was 1.00% to 1.20% ?
You guessed it… + 120 000$ in gross profits.
More than doubling the yearly net profits!
That’s the power of conversion rate optimization.
I strongly recommend that you schedule in your strategic company plan this year, that you will commit to this strategy, that you won’t do like 9 out 10 business owners who never gets to this to-do, that this year, you will try ‘conversion rate optimization’.
It would be our pleasure to help you put a conversion
rate optimization program in place.
rate optimization program in place.