Don’t Focus on Conversion Rate During Your Next A/B Test
To get more leads and registrations, marketers implement conversion rate optimization processes in order to A/B test every single element of their landing pages and get substantial results. Many even achieve some serious successes with double-digit lifts. But is every conversion rate uplift (even one as significant as 80%) something that generates a bigger bang for your buck? I doubt it.
I have seen many tests that delivered outstanding conversion rate lifts but failed to deliver a real impact on business. Even more surprising, many marketers do not calculate the true business impact of the A/B tests that they conduct. How is this possible?
How to generate more leads or registrations and… fall into trouble
Let’s assume that the main purpose of your landing page is to generate leads, which are then processed by your sales team. Is your ultimate goal to generate more leads? Not really. Your ultimate goal is to get more sales. Getting more leads is just a means to an end and focusing solely on the conversion rate may get you nowhere.
Many Conversion Rate Optimization Experts forget about this. In their struggle to create higher conversion rates, they forget to focus on the most important thing that matters to every business — making money.
We all know that getting shorter forms on landing pages can substantially increase conversion rates (in fact some research suggest that conversion rate improves by almost half when the number of form fields is reduced from four to three). Unfortunately, fewer fields also mean less information that your sales team can act on. When you strip additional fields from your forms, you may increase the conversion rate on the landing page, but your sales team may have much more work to do in order to close each deal.
In the best scenario, despite having less information, your sales team will still be able to close more deals. In the worst, your sales team will onboard fewer new customers than before (or a similar number). This is why, during an A/B test, you should not only pay close attention to the conversion rate that measures the effectiveness of your landing page, but also to the conversion rate that measures how many leads are then turned into customers.
Furthermore, something that you can be nearly 100% sure of in the situation described above, is that the cost of your customer acquisition will go up. If you do not pay close attention to this additional metric, your A/B test efforts might even become a serious threat to your organization. You could generate more leads, or even close more deals, but the cost of a single customer will eat into your profits far too much.
In fact, it may turn out that even though you have delivered a conversion rate uplift on your landing page, you have not delivered a real impact on your business (or worse — the impact is negative!).
Click to Tweet: Did you know that you can have a conversion rate uplift but end up with a negative business impact?
A similar situation could happen to any SaaS businesses which aim to leverage conversion rate optimization for faster growth. In such companies, the primary focus while A/B testing, is to get as many new registrations as possible. But again — is this the one and only metric you should be focusing on? Not really.
Measuring the percentage of users who register is not enough because there is so much more to be done with the user after registration than just achieving a good conversion rate on the landing page. Typically, after the user has registered, he or she has to activate the account by clicking on a link sent to his or her email address. Then, the user has a 30-day free trial before he or she even starts delivering any cash to the company and it can take months before reaching the break even point. Again – focusing only on the conversion rate during an A/B test may get you nowhere (or may even damage your business).
Click to Tweet: Stop focusing on conversion rate when conducting your next A/B test
So what should you do to avoid getting trapped into this deadly pitfall of imaginative growth?
First of all, focus on the right metrics.
One of the lessons I have learned throughout more than 5 years of testing is to always focus on the money. Conversion rate optimization is not about generating more leads or registrations. The goal must be to generate a massive impact on business and this is always calculated in money-related metrics. If you want to be successful in your conversion rate optimization efforts, start by looking beyond the conversion rate and start applying the right metrics that can tell you about the real business impact that you want to deliver.
If the main goal of your landing page is to generate leads, you need to focus not only on the conversion rate from users to leads. You need to also monitor the conversion rate which shows the percentage of leads that are being turned into customers, as well as the customer acquisition cost.
Equipped with these two additional metrics, you will be able to calculate the true business impact of your A/B testing efforts.
If your company is an SaaS business, then you should not only focus on the conversion rates during the testing, but also monitor other key metrics with a longer perspective: for example the cost of customer acquisition, LTV, churn rate and so on. And when A/B testing your landing page, you should create cohorts of users who converted with different challengers in order to calculate the true impact on your business.
Secondly, design tests with the right metrics in mind.
When you realize that the conversion rate is not the ultimate metric that you should be focusing on during your A/B testing efforts, an additional switch should also happen in the way you approach designing new challengers. With additional metrics, you will start noticing new strategies that can work with your audience and become more alert in spotting the risks that may have been previously overlooked.
Previously, when you were focused on delivering conversion rate lifts, dropping a few fields from your form sounded like a no-brainer. Now, when you consider the possible implications for other metrics, the idea may not sound so great and you may have to work out other ways to achieve your goal (check out how we have managed to lift the conversion rate on a landing page by 36%, by redesigning a form into a 2-step process rather than dropping an e-mail field).
Business is not about conversion rates. Business is about money.
Determine how your business makes money. Derive the right metrics from it that you should be monitoring during your A/B testing. Then focus on these metrics and design your tests with them in mind. This approach will guarantee that you are on track to ensure that your efforts are generating true business value.
Click to Tweet: Business is not about conversion rates. Business is about money. Remember this when you conduct your next A/B test
If you want to gain a competitive advantage by increasing your conversion rate and grow your revenue and profits without spending an additional dime on advertising, contact Mavenec today to learn more about our approach to conversion rate optimization. You can also learn more about conversion rate optimization by downloading our Ultimate Conversion Rate Optimization Toolkit.
Author: Paweł Ogonowski
have been transforming our clients companies into data-driven organizations for over 5 years. I strongly believe that the key to success is a structured process to analytics and conversion rate optimization. I am a frequent speaker at industry conferences and an author of 80+ articles on CRO and DA.
Follow me on Twitter @Pajex