How To Split-Test Your Way To Higher Profits

Your website conversion rate is one of the most important metrics for your online marketing. Your conversion rate becomes even more important if you are running a Pay-Per-Click (PPC) campaign. This article starts by highlighting the relationship between conversion rates and profits and will go on to show you 5 different ways to improve your conversion rate.

First let’s look at an example that shows how small improvements in the conversion rate can result in greater increases in profits.

How Your Conversion Rate Affects Profits

Example: Assume you are an online retailer buying traffic on Google AdWords. Your average profit on one sale is $100 excluding advertising cost.

Scenario 1: Your monthly advertising budget is $5,000 and your metrics are:

  • Cost per click: $0.50
  • Clicks: 10,000
  • Conversion rate: 1%
  • Sales: 100 (= 10,000 clicks x 1%)
  • Cost per sale: $50 (= $5000 budget / 100 sales)
  • Profit per sale: $50 (= $100 sale amount – $50 cost per sale)
  • Overall profit: $5,000 (= $50 x 100 sales)

Scenario 2: Now let’s assume your website conversion rate is 1.25%, – a conversion rate increase of 25%. Your advertising budget remains the same at $5,000, but the metrics become:

  • Cost per click: $0.50
  • Clicks: 10,000
  • Conversion rate: 1.25%
  • Sales: 125 (= 10,000 clicks x 1.25%)
  • Cost per sale: $40 (= $5000 budget / 125 sales)
  • Profit per sale: $60 (= $100 sale amount – $40 cost per sale)
  • Overall profit: $7,500 (= $60 x 125 sales)

Conclusion: What’s the impact of the conversion rate increase on profits? In this scenario a 25% improvement in the conversion rate leads to 50% more profit! If you are currently running a Pay Per Click campaign, any improvement in the website conversion rate will lead to a proportionally higher increase in profit.

5 Ways To Improve Your Conversion Rate

So here are five fast ways to improve your website conversion rate. In order to evaluate whether your changes actually produce better (and statistically significant) results, we recommend using the free Google Website Optimizer, a Google tool that allows you to split test changes on your website.

1. Improve The Headline On Your Landing Page – The headline is one of the most important elements on your page. It needs to grab people’s attention and convince them that they have landed on the right website.

2. Split Test The Copy On Your Page – If your visitor has read the headline on your page and hasn’t left yet, the text on the page has to convince the prospect to take the desired action (signup, enquire, buy). Make sure that it is easy to read, well structured and always include a call to action at the end of the page.

3. Test Different Images – Images support the message on your pages. Just because you like an image doesn’t mean that your target audience will also like it. Test different images in order to find out what your customer demographic responds to best.

4. Establish Credibility – Why should someone trust your business or buy from you? Especially online, it is important to establish credibility. Are you a member of an association in your industry? Have you won an award in the past? Do you have raving customer testimonials (video testimonials are best!)? Wherever you can include evidence that proves your credibility.

5. Test Different Offers – Testing different offers is a great way to improve conversion rates. You may want to test adding a special guarantee (365 days versus 30 days), increasing or decreasing prices or offering free shipping. There are many ways to re-package your offer to make it more attractive to your visitors.

So, isn’t it time you start working on your conversion rate?

Stefan Maescher

Stefan Maescher

CRO Producer at Web Profits

Stefan Maescher is an online advertising and CRO expert. He helps clients achieve maximum ROI by optimising advertising campaigns, improving web design performance and running data-driven experiments on every part of the online marketing funnel.