How To Make A Compelling Case For CRO In Your Budget

Your chances of getting an increase in your CRO budget are much higher if you can highlight the bottom-line results. Here's how to do that.

What do the following quotes have in common with Conversion Rate Optimization?

  • “Guitar groups are on their way out…” – Dick Rowe to the Beatles
  • “He lacked good ideas and imagination.” – Newspaper editor on why he fired Walt Disney
  • “I’m sorry Mr. Kipling, but you just don’t know how to use the English language.” – Newspaper editor to Rudyard Kipling

The Beatles, Walt Disney, and Rudyard Kipling were all rejected because people failed to see the great value they brought to the table. CRO is often rejected for similar reasons. It’s still in the process of proving its worth to the mainstream, which means that many top executives are a bit skeptical of its value. Unlike a more familiar marketing technique such as AdWords, which has an obvious and direct connection to the bottom line, CRO can seem a bit abstract.

The idea that improving conversion rates by just a few percentage points can dramatically improve revenue seems far fetched. And the reality is that CRO does cost time and money. Granted, it’s a small amount compared to the revenue it generates, but until you can demonstrate that revenue, executives will only be aware of the costs. Getting leadership on board requires that you demonstrate its value.

You need to help them see the specific and direct connection between increased conversion rates and an ever increasing bottom line. You need to educate them on the many ways CRO can have a positive impact at every point of the funnel. CRO tends to be neglected and not trusted. A recent survey noted:

  • 41% of respondents say there is no one directly accountable for conversion optimization at their company.
  • 26% of respondents meet with their optimization team to discuss CRO “only when necessary”. And 23% of those who have a CRO team don’t meet more than biweekly.
  • The majority of respondents run fewer than 5 tests a month. 43% only run 1-2 tests per month.

There is good news, however. CRO speaks the language of the CFO. In the end, CRO is about metrics, testing, and hard data, all leading to a boost in the bottom line and a measurable return on investment (ROI). It’s not about guesswork, “visionary” branding, or the current hottest trend in marketing. The CFO might not understand iterative testing, but they certainly understand increasing revenue with minimal costs and a high ROI. This leads to the question: how do you clearly demonstrate the value of optimization to high level executives? And, perhaps more importantly, how do you secure an increase in your CRO budget (or a CRO budget at all)?

There are a number of simple steps that can help you achieve this.

Understand Their Perspective

First and foremost, you need to understand why people are hesitant about increasing the CRO budget. Before you launch into an elaborate PowerPoint presentation or well-constructed argument, take time to listen. Ask them why they’re concerned with investing in CRO. Kevin Daum puts it this way: People who know how to persuade also know that just pushing your own argument will get you nowhere. They certainly are able to articulate their position in a convincing way, but that is only half the equation. They are actively listening when in persuasion mode.

First, they are listening to assess how receptive you are to their point of view. Second, they are listening for your specific objections, which they know they’ll have to resolve. Last, they are listening for moments of agreement so they can capitalize on consensus.

Amazingly persuasive people are constantly listening to you and not themselves. They already know what they are saying. You can’t persuade effectively if you don’t know the other side of the argument. Only after you understand their true objections can you present persuasive arguments. Frankly, most opposition isn’t due to hostility but ignorance.

Executives simply can’t see how CRO will help the company achieve its core objectives. It suffers from the same problem social media marketing did in the early days, when most businesses thought it was a flash in the pan that would soon pass. Additionally, there is often a subjective ingrained opposition to CRO. Some people may have heard stories of investing money in CRO and getting very little in return. Or they may have been burned in the past by other business trends and suspect that this falls into a similar category. Or it simply could be an ego issue. People don’t like to admit that they don’t understand something. To secure an increase in your CRO budget, you need to see things through their eyes. This will prepare you for the next step.

Bringing Clarity

Once you’ve taken to time to truly listen and understand, you can begin dispelling the wrong assumptions and confusion regarding CRO. A simple way to dispel the confusion is to demonstrate the current methods used for improving conversions, how effective they are, and explain the strategy for improvement. Because almost all these methods deal explicitly with data, they’re very difficult to argue with.

You can show how A/B testing is not about intuition or guesses, but about understanding your customer through user testing, creating hypotheses, and then doing real tests to determine their validity. You can explain that user testing allows you to clearly see how users are navigating your site and then eliminate the problems that prevent them from purchasing. If you have implemented previous tests (and you should have), show the results of those tests and how scaling the tests could dramatically improve the bottom line. The first step in demonstrating the value of CRO is to establish what it is and exactly how it works.

Show Them The Competition

There’s a really good chance that your competition is implementing CRO, and if you don’t keep pace, you’ll fall behind. This is one of the deepest fears of C-level executives, and by tapping into this fear you can demonstrate the value of CRO. If, by some chance, your competition is not using CRO, you can present it as a massive opportunity to overtake the competition and cut into their market share. Three simple ways to demonstrate what the competition is doing:

  • Do a competitive analysis of your competitors. Evaluate their growth and, if possible, tie that into specific optimizations they’ve made.
  • Analyze companies that your leadership monitors, admires, and respects. If they see a highly respectable company using CRO, it can demonstrate the legitimacy of the practice.
  • Use a tool like Datanyze to see if the competition has a CRO tool installed on their site

Showing case studies from successful companies can also be a hugely effective tool. It allows executives to have a clear before and after picture when it comes to CRO investment. For example:

  • L’Axelle made a few small tweaks to the copy on their add to cart buttons and saw a 93% increase in conversions.
  • 37signals made some small design changes to their homepage and saw a 102.5% increase in signups.
  • Nature Air changed the position of CTA content and saw a 591% increase in conversions.

Case studies like these show that CRO isn’t a marketing technique used by a few outlier businesses. Rather, it’s being successfully implemented in many companies across numerous industries. If all of these fail, play the Amazon trump card. Amazon, along with many other massively successful companies (Facebook, Google, Apple, etc.) use CRO to constantly improve and optimize.

As Lela Draganic notes: It’s not a secret that some of the biggest and most famous companies base their growth on CRO. They invest heavily in it and depend on it when making decisions about future innovations and strategies. Booking.com, Facebook, Amazon, Google – all the heavy hitters do it and it’s an accepted part of their everyday business. You can also find examples of much smaller companies that embraced CRO and swear by it. It has worked wonders for them too, even if they’re just a fraction of the size of those giant companies. The results of these companies speak for themselves.

Explain The Value of Improving User Experience

It’s important for the leadership to understand that CRO is not exclusively about revenue, although that’s certainly at the heart of it. It’s also about dramatically improving the user experience. We’ve all experienced the frustration of trying to navigate a clunky site that makes it almost impossible to purchase. That experience almost always leads to us never visiting again. CRO eliminates that experience. How?

  • Improving customer retention. When customers have an easy, user friendly shopping experience, they come back again and again.
  • Reduced customer service workload. A smoother customer experience always leads to fewer frustrated customers and customer support calls. This, in turn, reduces customer service costs.
  • Business-wide improvements. Unlike many improvements, which only affect a particular department, CRO results in business-wide improvements. For example, a new shipping system improves the order fulfillment side of the business but doesn’t do a whole lot for sales. CRO, on the other hand, improves customer service, sales, marketing, and a host of other areas.
  • Increased exposure. Better customer experiences inevitably lead to more word of mouth marketing, exposure, and brand visibility. Zappos is a prime example of this. Their epic tales of customer service have made the company a legend and attracted many customers burned out on traditional shopping.
  • Improve acquisition. More word of mouth marketing means more customers, more revenue, and a lower customer acquisition cost. And CRO will help ensure you get more ROI from your traffic generation spend.
  • Reduced customer churn. Churn is the bane of ecommerce companies. Acquiring customers costs enough as it is, and when you add retention costs on top of this, it takes a big bite out of the bottom line. CRO directly minimizes churn by improving user experience.

Reveal The Fresh Opportunities In The Existing Strategies

The beauty of CRO is that you don’t need to totally revamp your business strategy in order to implement it effectively. It doesn’t require a rebrand, a strategic shift, or a dramatic pivot. It can slot in nicely with your company’s existing strategies. The leadership will probably have reservations if you suggest sweeping changes. CRO allows you to suggest small, incremental ways that things can be improved. Some straight forward ways to do this:

  • Contrast areas where success has been seen against areas that still need to be optimized. Assuming you’ve optimized some areas already, you can show them how this has led to success and how the same strategies can be implemented in other areas of the business.
  • Once you’ve demonstrated past success, present a complete list of all the potential CRO opportunities available in your business.
  • Finally, present a plan that prioritizes improvements, forecasts outcomes, and projects returns based on success (revenue gain, not just better conversions).

Your overarching goal is to show them what has already been achieved and how much more could be accomplished simply by expanding CRO into other areas. Remember, this is about results. If you can demonstrate past results and then realistically project them into the future, you have a good chance of getting executives on board with CRO increases.

Present Them With Revenue Gains

Unlike paid media, in which you are spending money to get more traffic to your site, CRO works with owned media, your website. The benefit of CRO is that you’re simply improving the effectiveness of the traffic already coming to your site. In contrast to buying traffic, CRO costs won’t rise in parallel with your sales. This, in and of itself, is an advantage over the widely accepted practice of buying traffic.

In fact, many of the changes that CRO can bring can actually reduce costs elsewhere. If you can demonstrate that even a small change in conversion rates can have a substantial impact on revenue gain, you’re much more likely to convince leadership of the value of CRO. For example, if you have 100,000 visitors coming to your site each month and 1.5% are purchasing a $150 item, that’s about $225,000 in monthly revenue. If you can increase your conversion rate 33% up to 2%, that’s an additional $75,000 each month.

Your CEO may scoff at a 33% increase, but he’ll change his tune when he sees the bottom line results. And, when you tell him that the costs of that increase are sustained and you don’t need to buy more traffic, it makes an even stronger case. This is where sample A/B tests can be so powerful. You can clearly show the undeniable effects of CRO. You start with your existing data, then propose a hypothetical scenario.

For example: “Let’s say we change the layout of the product page in this way, and that leads to a 2% increase in conversions. That will double our revenue! Now imagine if we saw those kinds of results on a regular basis.” Numbers speak much louder than jargon and buzzwords. Leadership ultimately thinks in terms of ROI, profit/loss, and market share.

CRO is a powerful way to increase revenue without a significant increase in costs. Always bring your pitch back to these core concepts. Overcoming Budget Objections Inevitably, you’ll face the question, “Where is the budget going to come from?” Fortunately, there are ways to “borrow” from existing budgets temporarily to cover the minimal CRO costs. Most likely, your IT department already houses website analytics as well as back end data. In many cases, this data is sufficient for implementing some CRO testing, meaning you don’t have to invest in expensive analytics software.

Additionally, you can probably pull from budgets that should already be driven by testing. Web development is a prime example. Rather than spending tens of thousands on a huge site redesign, spend a portion of that on optimizing your existing website based on the clicks and movements of your visitors. You can also temporarily borrow from your paid traffic budget and optimize the traffic already coming to your site. This is a short-term solution that can create long term results. Once you’ve optimized, you can begin sending paid traffic back to your site, except you’ll be seeing much higher conversion rates from that traffic. Finally, you can pull from existing profits.

The math for CRO is difficult to refute. It’s a straightforward more profits/less costs equation. If CRO will multiply profits, why hesitate to use them as an investment?

Bring an Implementation Plan

Ultimately, it will be difficult to convince the leadership if you don’t bring a clear implementation plan (including budget) to the table. This plan should contain a clear picture of your average order as well as the average customer lifetime value. Once you have these numbers, you can identify good and bad ROI investments, as well as determine if a CRO investment can move the needle on these metrics. A clear implementation plans helps leadership understand:

  • The opportunities available
  • The specific steps you’ll take to exploit those opportunities
  • How long it will take
  • The cost of the investment
  • The expected ROI of the investment

These types of clearheaded statements make it obvious that you’re not operating on a hope and a prayer. This isn’t a marketing gamble. Rather, it’s a strategic, data-driven plan that has a high chance of success. It’s all about the ROI.

In the end, CRO is about ROI.

That’s what many C-level executives fail to understand. Your job is to help them see that CRO is not a marketing trend based on anecdotal evidence, like the recent Pokemon Go trend in which businesses were claiming it drove more foot traffic to their locations. Optimization is about data, hypotheses, testing, and conclusions. It’s probably the closest thing to the scientific method in the business world. Your chances of getting an increase in your CRO budget are much higher if you can highlight the bottom-line results. If you want to estimate the ROI you would get based on your CRO budget, use our free ROI calculator.

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