Drive and Convert (Ep. 026): Laws of Conversion (Part Two)

Today, Jon and Ryan pick up where they left out and give you Jon's final four laws of conversions.

Listen to this episode:

About This Episode:

How does one break down optimization into some key principles? In episode #24, Jon started talking through his eight laws of conversion. The first four were:

  1. It’s hard to read the label from inside the jar.
  2. People come to your website for only two reasons: to purchase, or to research.
  3. Your goals are aligned with customers, both of you want a conversion.
  4. Competitive research is not data.

Today, Jon and Ryan pick up where they left out and give you Jon’s final four laws of conversions.

Subscribe To The Show:

Episode Transcript:

Ryan:
Jon, welcome. Good to talk with you and excited to continue our conversation, this episode on what we started, gosh, probably four weeks ago now, about your laws of conversion. And this is fascinating data. I’ve heard a lot of it in pieces throughout the years, I think, in all of our conversations and being on stage and events. But hearing it come together is really cool to see, at least from my perspective. And hearing this come from our clients, and I’m sure your clients as well, these questions about pieces of conversion and seeing the flow you have assembled and the laws you’ve created, well, not created, but you’ve uncovered for people.

Jon:
Yeah. Thank you. It’s something that, it’s been a decade in the making, right? And after writing the first book that was probably seven, eight years ago now, I really look back on that book and say, “Okay, there’s a lot of great things in here.” It’s super tactical, but a lot of the strategy is what people seem to miss, right? So they go straight to the tactics. And so just trying to think about ways to communicate the overall thoughts that people should be thinking about and framing all of these tactics around instead of just going for that quick win.

Ryan:
Yeah. I can tell people what to do in paid search, but if you don’t understand the reasons that you’re doing things or what’s behind what created that strategy or tactic, it’s going to be very difficult to actually execute that and do something with that information. I’m just excited for people to be able to get this out of your head and through the airwaves and video waves, if this gets made into video ever. But to recap, last time we started this, we’ve talked through the first four and it’s hard to read the label from inside the jar, which I think you should probably trademark that. I’ve heard it from you so many times that nobody else has said that to me when it comes to online conversions. People are only coming to websites for two reasons. They either want to purchase something from you, or they want to research something to be able to come back and purchase some time or information for future purchase.
This is one that I think stumps a lot of people and they don’t think about it correctly, but your goals are actually aligned with your customers or people coming to your site. Both of you want the conversion. And I hear too many businesses are kind of that tension of like, “Oh, it’s me versus the customer,” trying to trick them or get them to buy something. What tricks can I do to psychologically convince them to give me their money? I’m like, that’s not really what happens, but I think people get stuck in that retail mindset where Target’s tracking everything and they’re doing all these crazy things to get me to spend money. It’s like they’re just greasing the wheels I think is what you do as well. Like you’re just helping people get to their goal quicker on our website.
And this is probably, I don’t know, I have a lot of favorites probably with these, but this one competitive…. the final one we talked about with competitive research is not data. And this just makes me laugh all the time when I get clients or even just talking in general business and they’re talking about, “Oh, I saw this competitor and they’re doing this. So we need to do that.” Like, do you though, are you trusting that your competitor is smarter than you or has figured something out that you haven’t. You got to test that. Don’t trust that it’s actually right.

Jon:
Always test.

Ryan:
Always test, test and measure. It’s kind of a law. I’m always going to have that answer. Two answers that I always have is, well, it depends. And we should test to measure. It’s consistently will come out of my mouth.

Jon:
I’ve brainwashed you effectively it seems like.

Ryan:
Okay. So the next four exciting things, and I think we should just jump into the next one. Okay, unless there’s something else we need to cover of the previous four.

Jon:
Not at all. That was a good recap. And definitely you can go back and listen to that episode released a few episodes ago, and covers those laws. So yeah, let’s [crosstalk 00:04:07].

Ryan:
Okay. And I don’t know, the number of times I’ve gotten a question about the next point is, it’s probably in the thousands and you’re probably in the millions at this point, considering how many people you touch online. But everybody wants to know what a good conversion rate is. And I keep trying to beat it into their heads, and I’m sure you do too. I can’t give you an answer because if I do online, and so, your next law, I love this one.

Jon:
Yeah, a good conversion rate is one that is always improving. And I think you make a good point there, right? If you’re not comparing yourself against competition, how do you know what a good conversion rate is? And it’s true. I get asked this daily, multiple times a day, right? And the answer is really pretty simple. It’s a conversion rate that is always improving. That’s should be your goal and that is what the definition of a good conversion rate is. And if you show that 1% incremental improvement day over day, week over week, month over month, you will get much, further, much faster. And there’s always going to be room for improvement anyways.
So it doesn’t matter if you’re at 1% or 5%. don’t you want your conversion rate to be better than what it is. We talked a lot about not copying your competition. And I think that’s really, really important here to be thinking about. It doesn’t matter what your competition’s conversion rate is because there’s so many things that go into that. They could have horrible margins, they could have a negative row ads, right? They could be spending tons of money in other areas that you’re better at. So don’t really compare your conversion rate to your competitors because it’s not really necessary.

Ryan:
Well, and how do you know what it is?

Jon:
Well, even then, there’s a lot of ways to mess that up. Almost every brand we come into, we look at their conversion rate and analytics and see that it’s somewhat incorrect or right off the bat. Maybe they have PayPal set up as a payment and then it comes back and triggers a second purchase because of the way that PayPal bounces and comes back. And so, even some small cleanups like that can really make a big difference in what an accurate conversion rate is. So you make a good point, your competitors aren’t going to tell you what their real conversion rate is, right? Even if they’re bragging, they’re bragging and who knows. I see a lot of brands up on Twitter talking about their conversion rates and then we end up working with them and I’m like, “I heard that was your conversion rate, but I don’t think that’s accurate.”
And so who knows where they’re getting their data. But the best way to think about this, Ryan, is, there’s a gentleman, James Clear wrote Atomic Habits and a few other great books. He’s got a rule called the 1 Percent Rule. And it’s a really great model for this. And it’s, if you get 1% better each day for one year, you’ll end up 37 times better by the time you’re done, right? So you could really see some massive improvement with that iterative gains. And that’s truly what conversion optimization is all about. And that’s how you should be thinking about your conversion rate.

Ryan:
Yeah. And I like the movie Wall Street where it’s on greed, but at the end of the day, you can put that lens on your conversion rate. Like what’s a good conversion rate, better. Like you’re never going to get there, if you’re satisfied with your conversion rate, I think you’re going to be losing in a year to your competitors who are not satisfied with their conversion rate. So you can’t get complacent and assume that, “Oh, I’ve got a 10% conversion rate. This is great.” Well, maybe you need to send more non-brand traffic to your site and drive your conversion rate down so you have to get it better again.

Jon:
Yeah. You’re always going to be chasing it because like you said, the more traffic volume you need to get, the lower that traffic is going to convert, right? There is a tipping point there. And so that’s when it really makes sense to focus on your site and say, “Okay, now I know I’m bringing perhaps less qualified traffic in because I’m at that tipping point where I need to drive so much traffic, that some of it’s going to be less qualified, at that point, really need to focus on my site, things I can control.” And that’s where conversion comes in.

Ryan:
Oh yeah. Well, and I can drive up anybody’s conversion rate that’s working with us on paid search by just cutting off all non-brand traffic. Okay. You want to take a conversion rate to the bank? Here you go, go tell them you got an 8% conversion rate on your site and see how much money they give you. Does it matter? But get it better. The next one is, I probably came up with this… I heard this a lot more in the past and I’m sure it still comes up with newer businesses. But there used to be all these rumors about how sites would increase their conversion rate by changing the color of their checkout button from blue to orange. And, oh my goodness. It was great. And that’s all they had to do. And so we don’t do commercial optimization in a logical position and we still get asked, “What’s the tricks? What do you know from being in this a decade? Can I change the button or move a picture from here to here?” I’m like, “No, that doesn’t work that way.” But, what is it?

Jon:
So, the next law is that there is no app or trick or even a hack that will double your conversion rates overnight. And almost it’s sad that I have to say this. To me anyways, but I get it. There’s really no shortcut to sustain conversion growth. Like all things in life, if it’s worth having, you have to work for it. And I think that the reality here is… there was one article I can think of in particular that spread like fire across the e-commerce community a decade ago. And it was all about how this company changed their checkout button color and gained $3 million in additional sales. And they didn’t run a proper test on it. They just changed their button color and saw their sales go up. But were they doing a bunch of other things? The article doesn’t talk about that. They just say, “Button color change, 3 million extra dollars, boom.” And you’re like, okay, a real scientist wouldn’t believe that because the data, there’s too many variables that weren’t discussed that certainly wouldn’t earn anyone a PhD on that paper, right?
But I’ll tell you what, it blew up because everybody likes the shortcuts and everybody wants a shortcut. And so I always start off by telling people that best practices are for beginners. It’s a great place to start. It’s a good basis for learning but it cannot replace the value of testing. Think about it this way, too. If it’s a trend, that’s likely not going to move the needle, right? You really need to be thinking about strategy and the overall… and this is a real reason why I wrote this book, because so many people were focused on the tactics in our last book as opposed to what are the overall strategy points they need to be thinking about? What’s the mindset? And if you forget these laws and don’t follow these laws, and there’s a reason I call them laws, because you can’t change them.
That really is just the law. And so really focus on that strategy versus the tools and individual tactics. And a strategy that’s centered around improving a website’s conversion rate rather than just providing an optimal customer experience also misses the point. So you can’t really just focus exclusively on conversion rate because you’re going to do a whole bunch of hacks on your site that are going to make the consumer experience horrible, right? Just think about pop-ups. How many companies popups build up their email lists and they justify it by saying, “Hey, the conversion rate on this pop-up is huge. I get so many sign-ups.” Since the high conversions lead to more sales, they start this whole thought process of, “Oh, anything I do to boost conversions is going to lead to more revenue.” That’s wrong, unfortunately. You can have a pop-up that achieves a really strong conversion rate, but then fails to convert visitors into paying customers.
And that’s really what matters. And that’s all just because your customer experience on your website ends up being horrible, because you’ve deployed all these hacks and tricks and the app of the day that everybody, you see all the Shopify stores installing because it’s so easy to do. And so, I think it’s really important as a sub point of this law that you can achieve a positive conversion rate, but only as a result of having a great consumer experience. And you can’t create a great consumer experience by simply having a high conversion rate. So stop focusing on all the individual tactics and instead focus on the great consumer experience overall, and you’ll be way off to the races over the next year.

Ryan:
For sure. And I think part of that sub point even too that I heard was that there are multiple conversions that happen on a site. And so there’s going to be different conversion rates. So just because you got a lot of people to sign up and you’ve got a really fancy high convert, let’s say 25%, was that actually the goal you were shooting for? Most e-commerce businesses I work with, they want revenue and profits, but that they want a P&L where it has a bigger number at the bottom of the P&L. And just because you got people to give you an email for a 20% discount coupon code doesn’t necessarily translate to the bottom of the P&L where most business owners want to be focusing their energies.
You have to understand what you’re trying to convert, which is, hey, understand the strategy or the thought behind this law before you just go do these tips and tricks and put a Relio app on your site. Listen, don’t ever do that. You don’t know if you actually think I endorsed it. So, you guys I’m sure are nice, but you won’t find it on my site.

Jon:
Yeah.

Announcer:
You’re listening to Drive and Convert, a podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers, and Ryan Garrow of Logical Position, the digital marketing agency offering pay-per-click management, search engine optimization and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple podcasts and sharing it with a friend or colleague. Thank you.

Jon:
I like this next law of yours and I think it’s probably some of what we just talked through is understanding, and then moving forward constantly and intentionality, like consciously thinking through what it looks like, and what the next step is. And so I love this next one from here.
Yeah. The next one is, must be intentional about making consistent, incremental improvements over time. So iteration is key. Okay. Let’s talk about the e-commerce elephant in the room, Amazon, right? Jeff Bezos has said that their success at Amazon is the function of how many experiments they do per year, per month, per week and per day. Trust me, they’re launching a ton of experiments at all times, and they’re using that data to optimize. It’s really all around having data, right? And that’s really where the value of this comes in. So I think that the key here is to rely on taking small bets which lead to these incremental improvements. Ultimately, you’re going to create that compounding growth. So again, iteration is key here. Amazon became successful because of that ability to make steady changes, all based around user data. And the reason that it’s so easy to buy from Amazon is because they’ve spent the better part of two decades now gradually perfecting their consumer experience through these small iterations.
Well, the best time to have started this is two decades ago. The next best time is today. And so it’s really important that you start iterating now. And if you take this approach, there’s going to be less pressure on your testing because you’re really looking to make small gains and iterate over time. Those compounding effects is really what’s going to be important here. So I think it’s important just to think about the iteration as a critical component to unlocking this long-term benefits. And really it’s going to position your website, is a ongoing process instead of something that needs to burn down the house every year and rebuild it, redesign your website. So many brands decide, “Oh, my website’s not performing. I’m going to burn it down and build it back up again, a whole new website.”
We just talked about a mutual client has spent million bucks redoing their site. And it’s like, okay, if you put that million bucks into testing, you could have got away with a third of that cost and really seen a better gain and still have $600,000 sitting around. I think it’s really interesting when brands start talking about optimization and a culture of optimization. You always see one thing and that’s always iteration is something that is key to that culture for them. So, really want to make sure you’re implementing data back to improvements, and that you’re taking a long-term approach to improving not only your site’s conversion rate, but also your site’s usability. And those two things combined in an iterative fashion are really going to move the needle.

Ryan:
And I think you touched on a really cool point that rebuilding your website doesn’t necessarily mean you’re even going to get a better conversion rate, because there’s a lot of web agencies that we partner with, I’m sure you partner with that are great at design, great at building pretty functional sites, but they are not necessarily experts in conversion rate optimization. They don’t have a decade of experience that you have. And so you can’t assume that they’re going to build a site that’s just going to convert better. So yours isn’t going to be better off, spend a million bucks to get a site. Will it pay off? I don’t know. There’s a lot of things that go into that, deciding if that pays off.
And so I think it is important to consider that it maybe isn’t just revamping the entire site, but at least talking to somebody like yourself, who’s an expert in CRO to say, “Is it a site or is it a… I just need to improve what I have,” scenario kind of weighing the costs of that. Because I’m sure you’d be comfortable telling somebody, “Yeah, you don’t have illusion. You probably need to upgrade your sites. We’re not going to conversion rate optimize that site into the next year successfully.”

Jon:
Yeah, Look, I think platform plays a smaller role than a lot of companies would think because it does have an influence on the front end of the site, but it also can just make it so any efficient on the back end that some of these platforms are just not worth being on. But unless your company has made the decision that it’s time to change platforms for other efficiencies, then that’s the only time that it’s really likely a good idea to restart your site, redesign, rebuild everything, right?
Other than that, having this massive capital expense every couple of years, it’s like… I was just talking to a friend who bought a new car and I was like, “Well, why did you get a new car, your old car was only a couple of years old.” He said, “Well, it had a couple of rattles. I couldn’t figure out what they were and it was just really annoying to me. And so I took it in and I traded in for a new car.” And I was like, “Okay, but now what happens when your new car has a new rattle that you can’t figure out?” And that’s exactly what happens is people spend all this money to take care of small problems that they think… or really it could be small problems, that if you find that source and you fix that source, then you’d be happy.
But instead, they just spent all this money to buy a new car. And then they come to find out that in three months it has the same rattles. It certainly isn’t any better when maybe all they had to do was get better tires, and then it’s acquired a car, or whatever it is, right? And so, I think that so many people focus on spending all this money when they could really be more efficient with that.

Ryan:
Very true, and it’s a challenging process for sure to be able to think through that. And it’s not generally fun conversation that thought process because it’s not easy. And just like your last law here, is probably one that makes my brain hurt the most. It frustrates me because I go against it naturally because there is such an easy button when it comes to improving conversion rates. And man, it is a difficult one. I’ve really had to retrain my brain in the last year of talking with you regularly about how I handle it with my own brands. But tell us about discounting on the final law here.

Jon:
Yeah. And you’re not alone on that. But discounting is not optimization. It is margin drain. So many brands, the first thing they do to get more conversions, run a discount. Why do I hate pop-ups? It’s not the pop-up necessarily that I hate, it’s that everybody jumps right a percentage offer dollar off discount to get that email address. And then you’re devaluing your brand. Once a brand offers a discount, that consumer will forever look at that brand as a discount brand. And no doubt that that discount will boost conversions. If you discount down enough, you can sell anything. It’s hilarious. If you get a realtor to come in and look at your house and say, “You know, I’m thinking about selling, how much do you think I can get for it?” They’ll give you a price. But then they’ll also say “Every home’s going to sell at the right price. So if you need to leave this house, just set the low price and get it out of here.”
I think it’s very similar with other brands. If you use a discount to bring in a new customer, then you were priced too high to begin with, right? So you shouldn’t have to use discounting. It’s not sustainable. It doesn’t lead to customer loyalty or even long-term growth. And I think that’s really important here. There’s so many arguments for discounting, but they’re all… so if I could sum them all up, it’s just being lazy. All of them. It’s just the easy button, always. If there’s no good reason to do discounting that is sustainable, that is protecting your margins, what are other ways that you could really offer. Running an offer instead of a discount? I think there’s a big difference between an offer and a discount.
And there’s so many options besides a dollar or percentage off discount. I have a long list I could go through, but just think about like “Buy one, get one”, right? That’s basically 50% off, but you’re not saying it’s 50% off. You’re saying, “Oh, I’m giving you a free gift.” You could do free gift with purchase, sneak something into that package that you give them a t-shirt or a product that goes with it. You could do loyalty programs. Those do really, really well. Membership programs. And you could induce scarcity. Now I’m not saying be immoral with that. But if there’s truly only five of these left, then set your site up to say, “There’s only five products left.” And people will buy. You could do things like social influence, right? So we’re saying this is where the whole market of getting people on TikTok, talking about your product is.
It really shows that other people want it. That’s social proof, exclusivity. Dyson does a great job of this. If you go to Dyson, they have special colors and special packages, you can only get on their site. This will come out after Christmas and I don’t think my wife listens to this anyways, but I bought her that new Dyson AirWave thing for her hair. And I looked at Dyson site and I looked at Nordstrom, and Nordstrom had the stock colors. If you buy it on dyson.com, same price, but it came in different colors. And my wife’s not one who likes bright pink everything but that’s the color Nordstrom had. And so I was like, “Oh, we’ll see what’s on Dyson.” They had three additional colors, and it came with a package that had a box. You could keep everything in, and a travel case and a couple extra attachments that… Dyson’s famous for all these attachments on their stuff.
And I was blown away. It was the same price but way better value, right? And they can do that because they own all the margin when they sell on their site. In addition to that, you can do things like free shipping or even a guarantee. “You don’t like it, ship it back we’ll pay for the return shipping.” That alone just reduces the barrier for people. Look, I could go on and on. There’s a great insight article up on our site with almost 100 of these offers that are on discounts, go check that out. But again, discounting is not optimization. It is margin drain.

Ryan:
And I think your long-term, and that’s what brands have to be thinking about, if you’ve already sold the business and you’re looking to get as much cash right now as possible, like maybe do a discount, give me your inventory because the business is somebody else’s later.

Jon:
That’s a short term win, right? So if you’re thinking about it correctly, you know going into that you want the short term win. And so that’s okay. But I can’t think of really, there’s a very, very limited instances where discounting really makes sense for a brand.

Ryan:
Yeah. Especially when you’re paying, like you’re playing a lifetime value game, which is what I try to do with any brand I have. I’m not willing to invest in a brand or own a brand that has one purchase and done. Like you’re playing a lifetime value where email is going to be really powerful for you. And there’s cross sells up, sells all over the place. And if your first sale is 25% off, that email list all of a sudden becomes 25, 30%. If the conversion rate goes down in your email, like, “Oh, we got to go to 40% off,” it becomes a spiral down whereas if you think about initially so many… Jon’s already done the hard work for people. Coming up with these ideas can make your brain hurt of how you’re going to do it, but then it’s also, I’ve taken the track of one of my brands to do bundling instead of discounting. Thanks to talking with you through this.
That is not an easy thing to execute on a website. Conceptually, it’s really easy. I’m going to create this bundle. It’s going to be awesome. I was talking to a client that had 20 versions of cupcakes and he wanted to do a bundle. It’s actually technically, I hate saying this, but impossible on Shopify. At this point, the platform is on to create that because it doesn’t exist yet. So we’re having to work with our developers and him to create something that allows somebody to do a mix and match 20 different flavor full pack because the amount of variants in this, there’s a lot of comments in that number. So it can be frustrating to come up with some of these solutions. So sometimes it may not be perfect to start when you’re trying to not discount, but the longterm win for your brand is so much greater knowing that I can just an email and they’re not expecting a discount, they’re expecting maybe just exclusive access to new products. They’re expecting all these things, but I don’t have to include that, “Here’s your coupon code because you’re a customer,” to get that discount.

Jon:
It just creates a lot of problems down-line because the consumer, even if you pop up and I’ve been to your site before, and you tell me there’s a discount, I know right off the bat, “Well, here’s the thing. They’re offering a discount. And even if I don’t sign up for that email, I know I can go to one of these discount sites and get that code, and I’ve got that discount without giving you any amount.”

Ryan:
Mm-hmm (affirmative). My wife has learned a lot of the tactics now that, “Hey, I don’t need this. Right this second, I’m going to leave it in the cart and then I’m probably going to get an email with a coupon code coming back later, or I’m going to move my cursor to the top of the site and get this popup with a discount code like, don’t leave. Here’s 10%.” I’ll take it if they’re going to give it to me.

Jon:
Yeah. Nothing screens, used car salesman for e-commerce, discount on your way out. But yeah, it’s interesting. Correct me if I’m wrong but I think we’ve done a whole episode on discounting, and it’s a great topic. If not, we should definitely do that.

Ryan:
It is a fun/challenging/frustrating conversation-

Jon:
And Controversial.

Ryan:
It is because it’s common and so there’s a lot of easy buttons happening out there, especially in a time where there’s pandemics and all these crazy things happening. A lot of brands try to compete on price and discounts and it becomes a future problem, for sure. Jon, we’ve gotten through the eight laws of conversion and there is a book forthcoming which will be exciting. I’ll be excited to read that and get that in the hands of a lot of my customers and my business partners. So I look forward to that. Do you have a release date anticipated yet?

Jon:
I will say first half of 2021. It’s in editing right now. And then there’s a whole timeline of stuff that happens. It just takes some time. So I’ll say right now, first half of 2021, keep an eye out. Ryan, you will be one of the first to know, and so our listeners. And we’ll make sure that we get that out there as soon as I have a date.

Ryan:
Looking forward to it. Thanks for the time, Jon, in going through this and educating me on the laws of conversion.

Jon:
Thank you, Ryan.

About the Author

Jon MacDonald

Jon MacDonald is founder and President of The Good, a conversion rate optimization firm that has achieved results for some of the largest online brands including Adobe, Nike, Xerox, Verizon, Intel and more. Jon regularly contributes content on conversion optimization to publications like Entrepreneur and Inc. He knows how to get visitors to take action.