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Why is optimizing so important? Why not just push for more traffic?

Optimizing your business (revenue, conversion etc.) is effective because even a small change can have a big bang of an impact. For instance, if you double your rate of conversions from free trials to paid customers, you will double turnover. Of course, you can’t just magically double conversion rates overnight – it takes time. But there is a reason to focus on raising conversion rate before trying to increase traffic to your company’s site. It’s usually much less expensive to improve conversion than it is to increase traffic.

Let’s say you have 10,000 visitors a month, and a conversion rate of 0.5%. Which would be more beneficial: Gaining another 10,000 visits, or raising conversion rate another 0.5%? Either choice has the same effect on revenue. But have a look at this:

Simple example:

You get 1,000 visitors per day. 5% convert to free trials. That’s 50 people on free trials. 10% convert from free trial to paid customer – that’s 5 paying customers. To raise that up to 10 paying customers, you can do one of the following:

1. Double your traffic from 1,000 to 2,000

2. Double your conversion rate to free trials – from 5% to

3. Double your conversion rate from free trials to paying customers from 10% to 20%

No matter which route you choose, the result is still 10 paying customers. Surprised? Read the next example.

Simple example, extended:

The more hoops your potential customers have to jump through before they become loyal, paying customers, the higher risk you have of losing them. If you can remove or lessen the number of hoops, conversion rates generally improve.

You start out with 1,000 visitors

10% of those visitors start your free trial

10% of the free trials become paying customers

10% of those paying customers become regular subscribers, paying every month.

If you add up all the conversions, you ultimately have a 0.1% conversion rate from visitors to loyal customers.

If you start out with 1,000 visitors, you get 100 free trials, which convert to 10 one-time paying customers and finally 1 loyal customer. That means that increasing traffic from 1,000 to 2,000 visitors winds you up with 2 loyal customers.

If you concentrate on the other conversion rates instead, and succeed in raising one or more of them from 10% to 20%, you could end up with as many as 8 new loyal customers.

If you were to raise one of the conversion rates from 10% to 50%, and the others from 10% to 20%, you would have 20 new loyal customers! To achieve that same increase by increasing traffic volume alone, you would have to go from 1,000 visitors to 20,000. Boom!

No one is saying it’s easy to optimize conversion rates, but it’s well worth giving it a serious try. And if you understand and incorporate an increase-conversions mind-set into your business, it will definitely strengthen your business model. Even if you cannot double your conversion rates, you can surely improve them. The graph illustrates this.

Review and summary – why optimization is good

As covered above, there are many reasons for focusing on optimization of your business.

1. Easier and cheaper

Often it’s easier and cheaper to optimize your conversion rates than to increase the number of visitors to your site. Especially if you have not worked on optimization previously – in that case there is almost certainly room for effective improvements.

2. More effective

Small optimization steps can have big effects on revenue.

3. It’s easier to adjust what’s already there

You can usually adjust existing frameworks and functions more easily than you can come up with and test new marketing channels. It’s normally less expensive, too.

There are many ways of optimizing. Here are some great places to get ideas:

ToTango at www.totango.com
Google Website Optimizer (A/B-test) Click Tale at www.clicktale.com
Visual website optimizer at www.visualwebsiteoptimizer.com

Use Google Analytics to follow your changes online.

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