optimization

Increase Conversion Before Increasing Traffic

By Neil Sniffen
3 minute read | Last Updated: May 29, 2016

The conundrum of increasing traffic or increasing conversion rate is one all brands face. The answer is simple.

One of my favorite The Far Side comics is the one where a fisherman finally loses his mind and repeats endlessly, “Fish or cut bait? Fish or cut bait? Fish or cut bait?”

A similar mantra can be heard from the e-commerce and lead generation folks at companies across the globe, “Increase conversion or traffic? Increase conversion or traffic? Increase conversion or traffic?”

Time to collect your wits and calm your nerves. The answer to this conundrum is increase conversion.

Now this assertion isn’t based on a whim or a hunch. No, it is based upon the analysis of several dozen brand and company websites’ analytic data. It wasn’t even close. Really.

We even created a calculator for you to see for yourself.

[caveat: for the examples presented in this article, we chose brands that earned between $1MM and $10MM in online revenue last year–curious about companies that make less than $1MM or more than $10MM, let us know, we’ve run that data as well.]

More Traffic = More People Are Aware of You
More Conversions = More People Are Buying From You

To begin, let’s first state the obvious. Any site that increases its traffic by 20% and maintains the same conversion rate will see a revenue increase of 20%. The same goes for conversion rate. If any site increases their conversion rate by 20% and maintains constant traffic, their revenue will increase by 20%. It’s a wash.

What really breaks the tie is cost to the brand.

Let’s look at what it would cost to double your online revenue in 12 months via increasing traffic or increasing conversion rate.

Cost To Increase Traffic

Increasing traffic to your site is multi-faceted. There is the marketing spend, the paid search spend, the time and effort spend. For our purposes, we’ll focus only on the paid search spend and assume that conversion rate is constant.

On average, the brands in our study spent $8,638 per month on paid search to drive 12% of their total traffic. This traffic accounts for 25% of their annual site revenue.

These brands would need to spend an additional 400% or $43,190 per month to double online revenue. A staggering amount of money. What’s worse is that in year two, they must maintain this level of spending to maintain this level of traffic. Any reduction in spending will decrease traffic resulting in a loss of revenue.

Earning (or buying) traffic is expensive and an inefficient method for doubling online revenue.

Cost To Increase Conversion Rate

Similar to increasing traffic, there are associated costs with increasing the conversion rates. But to make things equal, we are assuming that traffic remains constant while only focusing on increasing the conversion rate.

At their current monthly spending levels, the average conversion rate for the brands we’ve included in this study is 1.93% with an average annual online revenue of $3.3MM.

To double their revenue, these brands would need to spend $10,000 per month focused only on increasing their conversion rate (see our other Insights for how to do that).

Increasing conversion by 20% while maintaining current traffic ends up saving brands $33,190 per month (compared to only increasing traffic) while also increasing revenue, on average, an additional $123,800 per month.

Another benefit of focusing on increasing conversion is that in year two, with the changes and updates made to the site, the conversion increase will remain stable even with a refocus of the monthly spend (to something like driving traffic to a better performing site).

Increasing conversion rate is an efficient and cost effective method for doubling online revenue.

The short version

Driving traffic is an inefficient and costly method to doubling online revenues.

Increasing conversion is a cost effective and efficient way to double online revenues.

If you are a brand on a budget or a brand that has aggressive revenue goals, focus on converting the existing traffic on your site before working on driving traffic. The results will speak for themselves.