Imagine you are the manager of a retail store in the middle of a lively city. Imagine being able to only see who’s coming in, who’s going out, and which customers are making purchases. You are able to see what they are buying and general stats like total daily sales, total store visits and total items that they added to their shopping cart. But you have no idea why they selected certain products, what exactly they did in your store, and why the vast majority of them didn’t end up buying anything. Maybe the prices were too high for specific products. Maybe the way you sorted your inventory didn’t produce the best results, or perhaps it was just the presentation of your products that didn’t make sense. You just don’t know.
It’s nearly impossible to improve your business when you have no idea why your customers are doing what they’re doing. And the truth is, the majority of online businesses don’t have a clue what people are doing on their website. Yes, nowadays every platform has a dashboard that shows you the most important metrics like purchases, visitors, conversion rate and total sales, but these are just the end results of what happened with your users. Some of these are just side effects. You uploaded this product, with this price, image, and description and you got that conversion rate. Or you uploaded this ad to Facebook and you get this cost per purchase. The most interesting part about this is that people expect that the results they get on their website, (like conversion rate, add to cart rate, etc.) are static results that are pretty much predetermined. They put very little effort into making changes to improve them. The reasoning makes sense to some degree. They think that they spend thousands of dollars per month driving traffic, that’s where their focus should be. If only they can make little improvements to their creatives and targeting, they can bring a lower cost per action and better ROI, right? YES and NO.
YES, because if they do work on their targeting and creatives they can get a better click-through rate or better cost per click. Better cost per click and click-through rate can mean more visitors for a lower cost, thus more conversions for the same amount of ad spend.
NO, because better creatives and better targeting won’t give you more conversions if your conversion rate sucks to begin with. You see, you can easily manipulate your click-through rate by showing your ads to more ad clickers (audiences who tend to engage and click with ads but not purchase). You can also get better performance on your creatives by showing your ads to those who are more likely to engage, but that won’t always get you a better return on investment. What will get you a better return on investment is better page performance! This is the part that many advertisers forget, and they end up losing thousands of conversions in the process!
Think about it for a second. If you have a product that is getting a 1% conversion rate and your average cost per visitor is 50 cents, that means that in order to get a sale, you would need 100 visitors, and that will cost you $50. That means that your cost to get a conversion in paid traffic will be $50. What happens if you can make changes to your website that will increase your conversion rate by 20%? Your cost per purchase will be $40! Your new conversion rate will be 1.2% and you will only need 40 visitors to make a sale.
These changes can be minor – your product image, price change, description, product name, related products, or special offer. Anything can have an impact on your cost per purchase. Your visitors are humans, not machines. They have desires, needs and wants that can impact their behavior. Every little thing matters!
Now, if you’re wondering, “Well, we can manipulate click-through rate. So can’t we just manipulate our conversion rate by showing our ads to a highly-targeted but more expensive audience with the same results? It would be a lower cost per purchase, but a higher cost for each visitor, right?” Wrong! The one metric that you cannot magically decrease is your cost per purchase. Because getting a purchase is a holy grail and it requires someone to have money to make that purchase. Those users are scarce and they are on everyone’s target list. On the other hand, clicking and engaging is FREE! You don’t have to put a credit card down to engage with an ad and that makes all the difference. The idea here is not to abandon a certain part of your funnel, it’s to understand that all steps in the funnel will contribute to your final goal, which is making money!
See illustration below –
If the illustration above looks confusing, don’t be alarmed. It’s just trying to show you that your entire funnel consists of more than two steps. It’s not just about showing an ad to a user and counting your total purchases and cost per purchase. It illustrates that every step along the user journey will have an impact on the performance of the previous step, and on your entire cost per action.
Break It Down And Optimize Major User Events.
If you understand the illustration above, you understand the importance of segmenting your funnel and optimizing each step independently. Yes, theoretically speaking, a single step of the funnel, like user targeting, can have a positive or negative on your entire funnel, but that shouldn’t stand in the way against improving your entire funnel. Then when you fine-tune your targeted audience, this can cause an uplift in performance by improving your key metrics.
First touch – Creatives and targeting.
When it comes to improving our creatives, the job never ends. I examine thousands of creatives per week and I am still learning about new types of creatives that convert. There is no manual on how to create great creatives because the definition of “great” creatives are creatives that sell, and those change based on a million different factors. Humans get bored when they start seeing too much of the same thing. Once a creative is seen in many different places, it loses its impact. Your creatives might be performing ok now, but they won’t perform well forever. The pursuit for high-converting creatives should be ongoing for as long as your business lives and can dramatically impact your entire cost per action and ROI. Targeting also shouldn’t be overlooked, but understand that targeting is becoming more and more automatic. Your targeting should be set to make sense, but creatives will always be the greatest factor in your ads.
Second touch – product page/offer page.
If we use the analogy of a restaurant, then your creatives would be your menu with pictures just outside the restaurant and an inviting host, and your product page would be your waiter. Your waiter would know exactly what to recommend for you based on his experience and will do everything he can to maximize your order value. Most online businesses create their entire website based on generic templates and their general instincts. They don’t use a/b tools to test different images, names, descriptions, and layouts. They completely underestimate the value of testing to improve which image converts better, which products should be recommended, or where you should send the user first. In addition, details like sign up rate, add to cart rate, buy to detail rate and Google Analytics, are not used to better understand how different products/offers are performing compared to each other. Once your website is up, any major change should always be a/b tested using a legit app or website that allows for a scientific a/b test. This will allow you to improve and test every change before you publish it. Analytics should be examined actively in conjunction with any other advertising platform to properly evaluate the performance of your ads and platform.
Last touch – Checkout, converting visitors to buyers.
If the first two steps were critical to your performance, remember not to neglect the checkout. The biggest reason users drop in checkout and don’t complete the purchase is because the price they see in checkout is different than the product page. Every change here should be carefully examined. Changes to shipping rate and price changes can have a dramatic impact on your checkout rate. A/b tests should be conducted and improvements should be made towards increasing your conversion rate. Whether it’s a discount code at checkout, a return policy on your checkout page or anything else that can have an impact on your potential buyers, optimizing your checkout is vital for your funnel’s success.
Most website owners don’t know what users are really doing on their website. They have access to the most important metrics, but the majority of their focus is usually geared towards optimizing their advertising campaigns, and not towards optimizing their websites. It’s important to analyze and segment each step of your funnel and actively improve the steps to reach a better cost per acquisition. Every step that’s optimized and improved across your funnel will contribute directly towards a decrease in cost per acquisition and will improve your ROI.
There are tools online that can help you manage and test every aspect of your website to improve your business’ performance. From heat maps that measure activity, to a/b testing tools that allow you to test variations in real time, to recommendation apps that use AI to maximize performance, the opportunities for improvement always exist and will help you take your business to the next level.