Why Ecom Store Conversion Rate Doesn’t Matter

Joseph Liu | Nov 19, 2021

Reading Time: 4 minutes

Hey everyone! Joe here, from Build Grow Scale. I’m a Revenue Optimization™ expert, and I help ecom store owners build, grow, and scale their business.

Today I want to share with you a quick story that happened to me today. So, I have access to our BGS Instagram account, and one of the comments I saw on a post that we posted was, “Hey, are you guys just rebranding CRO …” (which stands for conversion rate optimization) “… into revenue optimization and selling it as a new product?” I replied to him, “Not exactly. CRO is a small part of what revenue optimization does, and CRO is a small part of the front end of a store that we help stores optimize. But, in terms of revenue optimization, there are a whole lot of things happening in the background in order to help a store optimize for more revenue.”

A quick example would be this: I remember a few months back, one of the Ecom Insider members asked me, “Hey, man … My ecom store’s conversion rate is not as high as I want it to be. It’s like 3.8% and we want to get it higher.” And I was like, “I need to look at more data in order to answer your question because at the end of the day, conversion rate is not everything.” Everyone wants a higher conversation, wants to convert at 8%, 10%, 12% … but you need to look at what’s happening in your store. What are the costs for your products? What’s your AOV? What’s your profit margin?

So, I answered him (the guy sells t-shirts) … I told him, “If you normally sell your t-shirts for $29.99 and decide to sell them for 50% off at $15.00, your conversion rate is going to double and go to 12% … but does that mean you’ll make more money? Probably not.” And he’s like, “Whoa, I never thought about it that way!” So, there are a lot of things you can look at in terms of conversion rate optimization. When you have a free product that you’re promoting on your store, you’re going to have a higher conversion rate. Does it mean you’ll make more money? Not really.

At the end of the day, conversion rate optimization is a small part of what revenue optimization covers. And in terms of revenue optimization, there are only three things you need to focus on:

1. Get more sales.
2. Increase AOV.
3. Increase retention rate (frequency of purchase).

And for ConversionRateOptimization (CRO), likely, you’re only focusing on getting more sales, which is the front end of your business, and some part of AOV as well. But the backend of your business, which is what revenue optimization covers in addition to the front end, is having a great funnel, having a great retention system, having a great way to bring customers back to your store and purchase more, more, and more often from you. And that’s what revenue optimization is all about. It covers a lot of ground.

I’ll give you one example, a quick tip for you today as well, of how Daniel, one of our ROs on the BGS team, did an amazing thing. This is a great example of what RO does that CRO doesn’t cover. So, he downloaded his store sales report from the previous couple of months, and he took a look at individual items they were selling. In this case, the store was selling bulletproof vests. So, he took a look at the data and noticed there was a specific item people were buying more than one of at a time—they were buying two, three, four at a time. And they looked at it and thought, “Huh. You know what? There’s a reason why people are buying more than one at a time of something sold as a single item.” And what they did was … By the way, these products are rifle plates. So, essentially, these rifle plates are the plates that you put into a normal bulletproof vest that could stop normal pistol gun type bullets. These rifle plates are basically inserted into normal bulletproof vests to turn them into bulletproof vests that protect you from rifle rounds. And essentially, they looked at these items and said, “Huh. We can create one product that contains two plates.” So, a package basically—a bundle. Then they made sure to explain the benefit of buying two at a time (you can protect the front of the vest and the back of the vest) … you know, why they were packaging two items instead of one, and then gave a slight discount. 

So, they did that as a test on their product page—same product page by the way—and the revenue coming from that product doubled in the span of seven days. Which is insane! And this is a great example of how deep revenue optimization is. It looks into your sales data. It looks into your backend. It looks into ways to increase customer satisfaction, increase customers’ buying decisions, and increase AOV. We also look at how often we can bring your customers back to the store so they purchase from you over and over again. And that’s increasing the retention rate. Right? 

So remember, takeaways for today … The ways to increase your overall profit are:

1. Get more sales.
2. Increase AOV.
3. Increase retention rate (frequency of purchase).

So that’s the difference between CRO and revenue optimization. CRO is getting higher conversion rates, which you can do by selling free products or lowering your prices. But at the end of the day, we at BGS strive for profit. We’re not in the business of making higher conversion rates for the sites that we help. We’re in the business of helping sites make more profit.

Alright? So, that’s the video that I wanted to share with you today. If you liked the content, click the “Like” button, subscribe to the channel, and share this post if you want to see more of this type of content.

And if you want to work with BGS, you can also book a free strategy session call. You can go to workwithbgs.com and book a call with us. We’ll see where you are in your business, where you want to be, and how we can help you get there.

Alright, that will be all. Thank you for today, I’ll talk to you soon.

Bye.