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If you are entering the online world for the first time as a business it doesn’t matter whether you are a startup or an established bricks-and-mortar company, you need to choose what to spend your resources on.
So far so obvious; that’s all part of your marketing strategy. But when you’re thinking about that strategy there’s one big, tough question that will almost inevitably come up:
“Should we spend more of our resources trying increase brand awareness or increasing conversion rates?”
The answer to that question is much less obvious than the question itself.
The reason it’s less obvious is that as soon as you ask yourself that question a chain of logic starts in your head which runs something like this:
- The purpose of our website is to get more customers, so we should focus on getting the best possible conversion rates.
- But no one’s going to come to the site if we don’t get some brand awareness, so we should focus on exposure.
- But if we don’t make any sales we’ll go out of business, so we should focus on conversion rates.
- Maybe we should balance our resources between improving the website and increasing traffic.
- But if we don’t get enough people coming to the website we will never experience word of mouth growth and start scaling, so we should focus on exposure.
- But if we don’t focus on improving our website then people won’t want to talk about it so we’ll never get word of mouth growth, so we should focus on conversion rates.
And so on until you need a gin and tonic and a lie down.
So what’s the true answer?
Now, this is the kind of question that can cause a fair amount of debate, as indeed it did in the office when we raised it.
It’s also a question that depends a lot on context, industry, and your team. So rather than just putting my opinion down I thought I would open up the debate to Twitter and find out what fellow marketers from around the world think.
Choice one: focus on conversions
(SEO & Inbound Strategy Consultant in Spain and Italy, Moz Global Associate & State of Digital blogger)
@BenjaminMorel Cro first then chasing new traffic.— Gianluca Fiorelli (@gfiorelli1) March 12, 2014
Gianluca was quite definite on this one. While he agrees that a focus on one shouldn’t exclude the other and that chasing more and better traffic is needed for conquering new market’s areas and for being the leader in your main one, you should start by putting more resource into increasing brand loyalty.
As Gianluca says:
CRO [Conversion Rate Optimisation] is essential for giving effectiveness to the traffic acquisition effort.
This school of thought says that putting your early focus into converting a few visitors into paying customers and increasing the value of each one of those customers is going to be the path that pays off in the long term.
It might take longer to get your first ten sales or 100 signups, but those people will be worth more. And because you’ve spent time on your platform those people are more likely to turn into evangelists for your brand than if you had focused on improving traffic to your site.
Choice two: focus on traffic
The main idea behind the traffic-first approach is that making your product ubiquitous is the key to early success, especially if you have invented your own niche.
The growth driver behind companies like Facebook, Amazon and Google is that because a group of people use them, so others connected to that group start to use them, then others outside that larger group, then others outside that now even larger group, and so on until their brand is everywhere. So much so that two of those companies’ names are now verbs.
This approach relies heavily on achieving that ubiquity. And because businesses, especially those with a tech focus, recognise that reliance they are hiring people in a role known as the Growth Hacker to build the reach they need.
A job description coined in 2010 by Sean Ellis then of Dropbox, a Growth Hacker is “a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth”.
AirBNB is a good example of a company who used growth hacking to accelerate adoption: it worked out how to automatically cross-post all listings onto Craigslist despite it not having an API, resulting in a huge amount of exposure.
The big problem with manufacturing huge early growth is that unless you get very creative, like AirBNB did, getting a big dollop of exposure is quite likely to cost a big dollop of cash, whether that’s paid to a PR company or to the Growth Hacker you employ.
So unless you are confident in your platform’s abilities to perform well today and in your ability to attract major investors soon this approach is probably not going to be a successful one.
It is very telling that none of the marketers I spoke to when putting this post together recommended going down the traffic-first road.
There may not be wisdom in all crowds, but when a crowd of experts all avoid a certain approach it’s probably a good idea to pay attention.
Choice three: balance your approach
Everyone that has contributed to this post has noted that balancing traffic and conversion rates to some extent helps to keep your growth stable: if you want to be successful you can’t go all-out on either only platform enhancements or only traffic improvements and expect to see great results.
But balance can be a problem, since it means a lack of focus. This lack of focus makes setting specific goals more difficult, since you will try to hit a wide range of KPIs rather than focusing on just a few.
A completely balanced approach will also make getting results from experiments difficult: if you see improvements in sign-up rates for your SaaS platform were they due to the new pricing table design or to the Twitter promotion you ran?
Unless you’re doing some pretty sophisticated testing it will be hard to tell.
Further, if you only have a small marketing team then trying to balance things 50/50 could actually mean they don’t have enough time to make a definite impact on either traffic or conversion rate; this makes the completely balanced approach potentially harmful to early growth.
A fourth choice? Conversions might be important, but it’s all about the overall experience
(Director of Search Marketing at Go Fish Digital, blogger at SEO by the Sea)
@bill_slawski I guess then it depends on your definition of "success". For Facebook success = lots of users. For Amazon success = books sold— Ben Morel (@BenjaminMorel) March 12, 2014
@BenjaminMorel Both though focus very much on building a strong platform and reach they can succeed upon.— Bill Slawski (@bill_slawski) March 12, 2014
The original question was about CRO, but Bill gave a slightly different view: that although companies like Amazon spend plenty of time and effort on CRO their focus is not increasing profits.
Instead, it’s on improving their platform so a visitor’s whole experience is better. A great example is their famous delay experiment, in which they proved that even a delay of 0.1 of a second in a page loading can knock your conversion rate down.
It’s not the process of going through your sales funnel that stops people here, it’s their overall experience.
The idea behind this is that by working on improving users’ overall experience on your platform you can build a platform that will have higher conversion rates tomorrow, rather than just converting lots of visitors today.
I think the most interesting thing about this approach is that it forces you to focus on improving the user’s experience through the whole story, from visiting your site for the first time to becoming a repeat customer.
Of course this does not mean that you abandon a conversion-focused approach. On the contrary, one potential practical approach to platform improvement is always to be focusing on optimising conversion rates. But make sure that you target micro conversions as well as macro conversions.
Macro conversions are the end goals of your website, thing like a visitor purchasing on an ecommerce website or becoming an active subscriber to a SaaS platform. They represent the bottom of your sales funnel.
But how do you measure success for the rest of the funnel? This is where micro conversions come in. These are actions that don’t put money directly in your pocket, but they do help you to understand how successful you are at engaging people who might buy from you tomorrow if not today. Things like:
- Subscribing to your email newsletter.
- Registering for a free account.
- Signing up for a demo.
- Downloading an information sheet.
- Adding a product to a cart.
If you can increase the number of people who complete these micro conversions then your macro conversion will see a corresponding boost both today and tomorrow.
Measuring micro conversion rates might sound difficult, but it’s actually relatively easy. If you’re a fan of Avinsh Kaushik’s then you might have read one of his many posts about them.
Alternatively, if you use Metrics for Pirates to measure performance then you could target improvements in the Activation, Referral, and Retention metrics you have chosen, rather than just the Revenue metric.
Or, if you are a fan of cohort analysis you can look at your chosen per-customer or per-visitor metrics and work out how to boost them.
Whatever system you use, the idea is that every part of the user’s experience affects their value to you, not just the action of converting.
Which path to choose?
Many more businesses focus their resources on getting traffic to their website rather than focus on improving their conversion rates.
But unless you have a product that people want to talk about and a platform that makes it easy for them to talk about it, you will never experience scalable growth – and it’s scalable growth that you need if you are going to be profitable.
A good example is AirBNB. We talked about the 'growth hacking' tactic of using Craigslist, but here’s the catch.
If it hadn’t spent the previous two years perfecting its pitch, hiring photographers for their first clients, and improving the platform, then all the lovely targeted traffic that Craigslist drove would have got it nowhere because people wouldn’t have wanted to use the service.
Even Dropbox when Sean Ellis was there coining the phrase “growth hacker” recognised this, which is why the company spent a lot of time and money making the product as easy as possible to use.
So rather than finding new ways to bring in visitors to your site, spend time instead reducing friction all the way through your sales funnel.
When your sales funnel is working well, make the sharing funnel as slippery as possible: the easier it is for someone to tell other people about your product, the more likely they will be to do it.
Dropbox is great at incentivising people to invite others, and it is this word of mouth growth that lets its scale marketing. All the while spend time making your digital platform the best in its class, so that people want to talk about it and share it.
Ultimately as a business your aim is almost certainly sustainable, scalable growth. And as Andy Johns, a founding member of Facebook’s growth team, said in a recent TechCrunch article:
You can’t sustainably grow something that sucks.