Welcome to the eCommerce Growth Tips series – bite-sized videos for accelerated eCommerce Growth!
We are going to present over the course of 8 short episodes deep insights on how to grow your eCommerce store using smart tactics and tools.
For our first topic, we are tackling one of the most discussed subjects in eCommerce and user experience: conversion rate optimization and the fact that it’s no longer enough to generate growth. In other words, getting traffic and conversion optimization is not enough to make your business thrive.
Crazy, right? Not so crazy after you see this.
In this episode, you’ll learn why CRO is not enough and what to do to really boost your eCommerce business.
- (00:00) – Intro
- (00:29) – What the data tells us about CRO
- (00:51) – Why most companies stop the CRO process after 9 months
- (01:24) – What you actually need to do
- (01:58) – Enter CVO – Customer Value Optimization
- (02:24) – The problems of big stores
- (03:11) – CRO agencies, evolved
Let’s get started.
Below is the transcript, for all you avid eCommerce readers.
Generating a ton of traffic or improving the conversion rate is not enough for e-commerce growth. In some cases actually, it’s counterproductive to improve those. Today I’m going to talk to you about why conversion rate optimization is not enough to grow an eCommerce.
Since we started Omniconvert seven years ago, we had the privilege to access data from more than 19000 websites that made A/B testing, surveys and web personalization with our software. It was surprising for us to see that after around nine months, most of the e-commerce companies stopped their CRO process and we wondered why. Working closely with a few of our best e-commerce customers allowed us to understand why.
After a certain moment, the cost of testing was not justifying the investment, becoming unbearable to continue. So if those companies don’t have outstanding talented people to work for them, they don’t make the cut anymore. And the reason behind it is that after a certain moment, tweaking the website itself is not moving the needle anymore. What those companies need is actually improving the whole customer journey and improving customer lifetime value, not the conversion rate.
Let’s do the math. If you keep on acquiring customers, but you are losing money for every customer that you are acquiring, this is counterproductive, right? So what you need to do before acquiring more customers, before improving the conversion rate is to check if the customer lifetime value is positive and is justifying the customer acquisition cost.
So, the discipline that we all must nail right now is the customer value optimization, not conversion rate optimization. Name it however you want: CRO, CVO, CJO, it doesn’t matter. What matters is that eCommerce must break even. And in order to break even, you need to check the balance between the customer lifetime value and the customer acquisition cost.
If you are a 6-7 figure e-commerce store, you have these problems:
- access to capital
- high competition
- not having built-in sticky products
- traffic acquisition
- the conversion rate
The fact is that most of the stores like you have are lacking a customer-centric mentality. So improving only the conversion rate on the website is not making the cut anymore. Of course, there are CRO agencies and T-shaped marketers that understand these aspects and they are transforming their process from optimizing the conversion rate on the website to optimizing the whole customer journey and understanding their customers.
But it’s time to nail down this new discipline. Customer Value optimization is here to stay. There will be CRO agencies that will become stuck in the website tweaking and there will be CRO agencies that will transform their services towards a more strategic approach to their customers.
If you are an e-commerce leader, this is the time to start monitoring and optimizing the customer lifetime value instead of being hypnotized about tweaking the UX of the website.
Stay tuned for our next eCommerce Growth Tips video next week where we learn more about what Customer Value Optimization is and how it revolutionizes eCommerce!