“The CRO power law “what is it? Why it’s so important for your business?

Conversation rate optimization (CRO) has real potential unknown by companies. We will see how a company can grow and be in a “virtuous circle “with the tree benefits that CRO provide to your company.

Advantage 1: CRO provide you free more customers

The main reason for your company to improve the conversion rate is to bring more customers without spending more money on advertising. Your revenue corresponds to:

visitors x conversion rate x Lifetime Customer Spend = Revenue

So if you multiply your conversion rate by 150% your revenue will increase x150% but even if your CRO increase a little you can have a huge increase of your revenue that why it’s so important to improve CRO. But CRO has better benefits!

Advantage 2: Your revenue is less sensitive than your conversion rate about your profit

How to calculate your profit?

Revenue – Costs = profit but if you increase your conversion rate by 150% (previous example) all of your costs don’t get multiply by 150% too. Because you have 3 types of cost :

-Fixe cost: meaning that they stay the same every time it’s the cost of the office per month for example

-Advertising: Stay the same because improving your conversion rate don’t impact your marketing or your products

-Variable cost: This is the only one that will multiply by 150% too because for example if you increase your profit you will have more sells so more packaging used which leads to more resources used. At least, your

profit can increase in an impressive way! You can see it below:

These smalls improvement of conversion rate can be very efficient for some companies as you can see on the graphic.

Advantage 3: CRO create awesome traffic

Once your conversion rate was improving you will have more profits, then you can spend a part of it in the advertising campaign to earn more clients. That allows your company to spend more money than your competitors and to be stronger than them on your market which is a big advantage. Indeed, many companies before improving their conversion rate can’t afford some advertising who are too expensive for them but once you increase your profit with your conversion rate you can invest a part of it to increase your advertising budget and unlock marketing opportunities that you can’t afford before.

The CRO is not a minor point for small and medium Startup because it allows them to do profitable advertising in different fields (TV, radio…). Customers additionally turned out to be ready to pay associates more. The standard even applies to SEO: if an organization will produce twice as much income from the main spot, it can bear to spend twice as a lot to catch it. This guideline is extreme to the point that many promoting offices pay us to deal with their customers’ sites since they comprehend that CRO enables their customers to beneficially build their advertisement spends. With the correct blend of the CRO and traffic getting, you can dislodge contenders for good.

Advantage 1 x Advantage 2 x Advantage 3 = The power law of CRO

Here’s the best piece: Benefits one, two and three are multiplicative. Which implies your benefit has a power-law relationship to your CR.

Obviously, the multipliers rely upon the financials of the business. You can perceive how your very own benefits would be influenced by an expansion in transformation rate by demonstrating various situations in a spreadsheet. Moreover, more you have requests more you have clients and more you have economies of scale which allow you to increase your amount to get more customers! All the big web companies are focus on network effects, customers experience, conversion flows because without CRO you won’t be able to be one of the best or the best web company without these.