Episode 12: CRO's Role in Ecommerce Growth

In every business there are tools specific to that industry or type of business that will help them grow. Ecommerce is no different. CRO is one of the most important tools to grow an Ecommerce business. Today, Jon dives into the role CRO plays in Ecommerce businesses.

For help with your CRO:
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TRANSCRIPT:

Ryan:
Oh Jon, most people start businesses because they've got skills, knowledge, and the desire to control their work and what they're actually doing on a day to day basis. I would also guess most business owners want to grow and in every business there are tools specific to that industry or type of business that help them grow. E-commerce, as we know, is no different. You and I both know CRO is one of the most important tools to grow an e-commerce business and it's never a bad time to grow.

Ryan:
Today I'm really excited to dive into the role CRO plays in e-commerce businesses. You, Jon McDonald, knowing more about CRO than anyone I know, can you start us off today by giving us your thoughts on CRO and the growth process of an e-comm business, at a high 30,000 foot level?

Jon:
Yeah, sure. Well I think the best way to think about this Ryan is that there's only a small number of ways to grow your company just at a high level before even thinking about conversion rate optimization. You can get more new customers, you can get your current customers, or even those new ones, to spend more with you, and you can get your average customer lifetime value up by getting those customers that have purchased to come back and purchase again. Those are really the only three mechanisms you have for earning more revenue out of your business.

Jon:
So, of course, traffic generation can hit that first one really well. We might argue, and maybe you could fill in on this a little bit Ryan, but traffic generation, when done well in digital marketing, can help you also increase average order value. Then remarketing, you can resell to the people who have already purchased perhaps and you can run campaigns around that.

Jon:
But I think if you're really looking to impact the first two of those in a major way, conversion rate optimization is really going to be how you're going to get a higher return on that ad spend and how you're generally just going to convert more of your visitors into buyers. So if you're thinking about growth the biggest lever with the highest return on investment, and of course, I'm biased, but I think that the highest return on investment is going to be conversion optimization because with a small investment in making it easier for people to purchase on your site you're going to get a high value back that's going to be sustainable over time.

Ryan:
Well yeah and I think even on a previous podcast we talked about CRO after the sale even and increasing some of that lifetime value in areas I hadn't even considered actually being CRO. Like even some of the things in the shopping cart post purchase which would increase lifetime value had never even occurred to me.

Ryan:
I think it does play in all three, but I think for most people as they're thinking through their entire e-comm business they're going to probably see CRO in those first two buckets of growth. As you're looking at e-comm businesses and you analyze tons of businesses, is there a place in the growth curve of an e-comm business where you really see CRO as being the most impactful? I'm thinking in my head of a bell curve and growth or maybe you're growing up to a plateau like where would you in a perfect world insert CRO?

Jon:
Well I think that you need to have enough traffic to effectively do certain types of CRO. Let's break this down a little bit. Let's look at this bell curve in three chunks. The first chunk would be the folks who are just getting started, maybe we'll just say less than a million dollars in revenue, which is a pretty big gap there. But that first million what you really need to be focused on is making sure people know that you exist.

Jon:
They need to have an easy to use website but normally you're going after those early adopters who are willing to put up with a little more complications on your site than the average customer. So it's really important for that first third of that curve that you are mainly focusing on driving traffic that is going to hit a very specific segmented marketplace that is going to be your key customers that are going to stick with you no matter.

Jon:
You probably aren't going to be converting much on branded terms because people don't know who you are, so when people do find your site, at that point, you want to make it as easy for them to purchase but you're not going to be able to do things like AB or multivariate testing because AB testing and multivariate testing, et cetera, require enough traffic for you to get results in a meaningful timeframe.

Jon:
So in that first third what I usually would want people to do is when I'm looking at these companies I want to see them collecting data. What do I mean by that? Well are they actually looking at great analytics data? Have they actually ever dived in there and customized it a little bit or is it just they just put the snippet from GA on their site and that's all they have.

Jon:
Couple other things to be thinking about there, like you could easily pretty cheaply get things like heat maps and movement maps. You can do that type of stuff to start understanding how people engage with your website and just make changes based on data. You don't have to test it, right?

Ryan:
Mm-hmm (affirmative).

Jon:
Just make the changes. The best way to test there is just to do week over week or month over month. Now if you're making changes every day that's going to be hard to really know what worked well, but I don't want that to stop brands. They should still be tweaking their site as much as possible and then sticking to perhaps even larger changes in that first third.

Ryan:
In that space, in that first third, a lot of times the business owners generally don't know best practices on website. They know their industry, they know their products well. But how much would you as that business owner trust your gut looking at small pieces of data like that on a daily, weekly basis where you can't actually get an AB test and have full confidence that this is what is better. You just say hey, go with your gut on that because it's probably better than not going with your gut?

Jon:
Well I think that it goes back to the phrase I say quite often which is it's really hard to read the label from inside the jar. I think that with that in mind that it's still as an owner of a site and a daily operator you're still too close to it and you really still need that consumer feedback. Collecting that data and paying attention to it, even if it's only 100 visitors a day or a week, that's still data that you should be looking at. Where are people leaving, what pages are they getting stuck on perhaps, where are they dropping off in the funnel, that's all good information to know where are the holes in your bucket because they're flowing right through that bucket instead of collecting them as revenue. You really need to know where those holes are and that's really what I'm getting at here.

Jon:
The other thing you can be in this first third of that curve, go talk to consumers. You should email every single person who buys personally. There's not a volume at that stage under a million where you can't email every single person individually and just ask them, "Hey, this is me, this is actually me," just start the email that way. "I'm sending you a personal email. I want to know why you purchased and what your experience was." That's it.

Jon: