Conversion optimization is a growth strategy, but it’s been handicapped. We all know what a sales conversion rate is, it’s the ratio of sales opportunities to closed sales. So if you close 3 of 100 opportunities your conversion rate is 3%. Sadly, this too simple understanding is holding businesses back, and not just online.
To increase sales conversion rates you can do one of two things:
- Decrease Friction – remove the obstacles that slow, block or confuse buyers while they are engaged in the buying process
- Increase Motivation – help the buyers gain confidence that this is the right purchase, at the right time in the right place and from the right people
Decreasing friction is much easier and more immediate than increasing motivation. I’m certain that’s why in 2017 the average US eCommerce conversion rate is approximately 3%. The top performers convert closer to 15% and Amazon Prime Members convert at 74%. Funny, in 2003 it was controversial when we asked people to consider why their online conversion rates were below 10%. We still ask.
Decreasing friction can be accomplished short-term, with a cross-functional team and a modicum of intra-company cooperation. That’s hard to accomplish. It’s worthwhile. Please don’t stop there!
Increasing motivation requires empathy for the customer across the organization and a cross-functional team. It also needs a leader who advocates for the customer, irrespective of silo or department. That leader needs enough authority to influence buy-in so it’s probably not the head of a department like marketing or sales. This so much harder to accomplish. It requires a leader who cares more about the customers than the particular internal structure of their organization. It’s the juiciest part of optimization and it’s a long-term growth strategy.
Caring about customers is what stimulates agile innovation and optimization. Optimization creates a virtuous cycle of high growth. It primarily requires caring about the quality of the experience of customers and potential customers. We wrote about Amazon’s Four Pillars of Success and how customer-centricity is the first push on the flywheel in Be Like Amazon: Even A Lemonade Stand Can Do It.
What stops businesses from extracting the juiciest parts of optimization?
- Internal teams focused inwardly instead of on the customer. They need a leader to help them see the bigger picture.
- Internal teams don’t think they have to change. Nobody likes change. They need a leader who knows when it’s necessary.
- Internal teams see themselves relative to competitors but not relative to the gap in customer expectations. They need a leader with a different reference point.
- Internal teams perform against a benchmark. However, often that data doesn’t reflect the customer’s reality. They need a leader who is focused on optimizable qualitative inputs instead of quantitative outputs.
Not caring enough about customers is what stands in the way of dramatic growth. It takes courage and vision to do what it takes to help customers buy from you. If you’re not the CEO or an owner you probably can’t pull it off without their full support. If you are the CEO or owner we’d love to hear from you. Do you have the courage and vision to sustain a long term high growth strategy?