Conversion Rate CVR Let’s also say that our clients stay

FristDatabase

CRO and revenue If you look at our business at Flagship Marketing, we provide a range of growth services to clients on a retainer basis. Hypothetically, using some easy to parse numbers, let’s say our current marketing spend generates good leads a month from our website and of these leads one of them becomes a customer. We can calculate our conversion rate with the following formula: new client per month leads per month or   with us on average months and that an average retainer is £, per month. My current revenue is: new client , per month x months , Now, if I double my conversion rate to  and do nothing else to increase traffic to my site,


I will still get good leads a month to our site. But because the conversion rate has changed, it now looks like this: leads per month x  conversion rate new clients every month Using the same parameters of client retention average of months Frist Database and an average retainer of , per month my total revenue is now: new clients , per month x months , If you double your conversion rate, all things being equal, you will double your revenue. CRO and profit “But”, I hear you say, “Revenue is not profit and we need to consider costs as well, to come to a useful assessment of the importance of CRO.” That’s a very fair point, so let’s look at that. If you consider the types of costs our business has, there are elements that we would consider:





Fixed costs which don’t change in relation to our marketing activity. These are not impacted by CRO. Activity-related costs that do change. It costs us more to service two clients a month than it does to service one client a month. However, there is nearly always excess capacity in any business to accommodate more demand without having to invest in additional resources, so the increase in variable costs is invariably less than the increase in new revenue. So, for example, the demand for raw materials, transportation, storage and plant may increase in response to winning new business, but personnel costs, including client service costs, may well not.