What is Conversion Rate Optimisation (CRO)?

CRO & UX Article

TL;DR:

Conversion Rate Optimisation (CRO) is about maximising the desired actions of users on your website. It combines psychology and data to improve the user experience (UX) and increase conversion rates. By understanding user behaviour and emotions, and analysing data, you can identify and address obstacles in the conversion path. CRO involves making UX improvements based on psychological insights and A/B testing different approaches using data analysis and experimentation. The goal is to make the conversion process easy and enjoyable for users, leading to higher conversion rates and business growth.

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What is CRO? a digital fusion of psychology and data

Conversion Rate Optimisation (CRO) is the practice of discovering the full potential of your online business. Anything can be a ‘conversion’ and it depends on what you want your website’s users to do. Typically, this will be making some kind of transaction, or perhaps signing up for an email newsletter. The key thing is that anything that you want to measure can be defined as a conversion.

You can choose what you want to focus on and to maximise understanding, you have the freedom to be as granular as you want. For example, as well as the transaction itself, you could measure how often people ‘Add to Basket’, or click ‘Checkout’. These steps are all important in the conversion path and an understanding of each step will help identify bottlenecks.

In simple terms, CRO is the process of maximising the proportion of users taking these desired actions.

Mathematically, for a specific type of conversion, the corresponding conversion rate is defined as:

Conversion Rate = Conversions / Sessions.

Note that we use sessions in the denominator, rather than users. This is because the same user may visit a website multiple times and sessions therefore represents the full potential of website visits.

One of the crucial nuances of conversion rate is that it depends on many different variables. These include time (of day, week, year…), current events, source and nature of website traffic, brand awareness, and website usability and accessibility, to name a few. CRO takes the aspects that can be directly controlled by focusing on something called the user experience (UX).

Evaluating the UX has a very wide scope, which can involve analysis on a micro-scale, e.g. trying to understand why users click on certain things over others, and on a macro-scale, e.g. how many people visited a certain webpage. While there is often overlap, these can both be better understood through psychological and data insights. This blog will briefly cover both of these main aspects and explain how they influence conversion rates.

Psychology of taking action

Whether a website user’s actions result in a conversion partly depends on cognitive-based emotion. When we are browsing a website, our emotions are shaped by our experiences. Intuitive functionality and a slick design will make us feel more relaxed, certain and positive. These emotions are involuntary, as Nico Frijda points out that emotion is an essentially unconscious process (Frijda, N. H. (2007). The laws of emotion. Lawrence Erlbaum Associates Publishers.) and that this spontaneous human response is what prepares us for action. Hence, in the context of a website’s UX, by minimising any undesirable feelings such as uncertainty or frustration, a higher proportion of users will then convert.

Improving UX can involve a wide range of methods, from simple changes such as altering shapes and colours for clarity or to better match the design and brand, to more complicated ones such as overhauling a product’s whole configuration process and transaction functionality.

Fundamentally, through a psychological lens, the aim is to make the conversion path as easy and enjoyable as possible to reduce cognitive load. This will evoke a positive emotion that is more likely to result in a corresponding action towards the desired outcome. Think of it as, rather than experiencing unexpected blockages or diversions, the user cruises down the smooth, unhindered conversion path to a destination that feels right for them.

Psychological considerations in CRO typically fall within ‘heuristic’ insights that can be determined by simple observation; ask yourself questions like, “What is making it difficult to convert?” and “Is this content really necessary?”. Such insights can also be gained through user testing and session recordings. They can also provide some of the justification for testing hypotheses and comprise an important part of the CRO process. The other side to this is a more quantitative approach, using real data to back up and understand users’ engagement with a website.

Interpreting the data

Without actively changing anything on a website, conversion rate can change simply by how it is interpreted. For example, an average conversion rate over a week may be different from over a month. If there are fluctuations between weekdays and weekends, the average conversion rate should be considered over an integer number of weeks. However, it is also important to keep in mind any wider context. Is this the peak time of the year? Furthermore, do trends we see in user behaviour also correspond to what we observe in conversion data? Data such as pageviews, devices, engagement levels, sources etc. can all reveal potential UX problems, as well as provide quantitative justification for the test. For example, perhaps a certain page has a higher bounce rate or is not being clicked on, or is converting at a much lower level than others - how can its UX be improved to keep people engaged?

Numbers and data find themselves in all aspects of CRO. They can give evidence of where a potential problem is, and its overall impact, and also inform performance metrics. Testing must be carried out to determine whether different UX choices actually improve conversion rates.

Running tests for CRO requires the appropriate experimentation method. The most common way to test whether a change will improve conversion rates is to run an A/B test, where two versions of the same webpage are given to users. The original acts as the control, while the variant reveals the extent of difference that the change makes. However, the first step in testing is to come up with a hypothesis, i.e. a statement whose truthfulness is determined through the test.

A strong test hypothesis answers four main questions:

What is the problem?
What change will we make?
What will be the result of this change?
What is our justification?

Using data to support a hypothesis will only make it stronger.

After conducting a UX review it is likely that you will have multiple hypotheses and there will be many things you want to test. Prioritise individual experiments by ranking them according to ICE: Impact, Confidence, Ease (sometimes Risk is included, making the acronym RICE, but is usually considered a part of Confidence).

Testing and its Implications

The modelled conversion rates produced in the testing report for the original and variant will converge over time towards their true values within a certain confidence range (see a previous blog post on understanding test reports for a more in-depth discussion). Ideally, a test will result in a statistically significant result of a variant with a higher conversion rate. If the data tells us that the variant improves the conversion rate with a high probability then we can be confident that the change is beneficial to the site’s UX. If the winner is not clear, which can happen, then it’s fine to re-evaluate the method, try to understand why it went wrong and improve on it the next time around.

The implications of results may not always appear to be meaningful. For example, say a test won and the conversion rate increased at a statistically significant level from 1% to 1.1%. At face value, it does not sound very impressive. However, if this was for an ecommerce website, this 10% increase in overall revenue (assuming value per transaction was unchanged) over a year would represent a profound effect on profits. Furthermore, say this test was on a single product page; rolling out this winning variation across all similar product pages will only amplify the result. Communicating the value of CRO and how its impact can be scaled can convincingly demonstrate its importance, especially given how even small changes can produce big numbers.

Summary

To summarise, CRO is an experimental implementation of psychological considerations in the context of UX while using data to support these ideas. To effectively conduct CRO, identify areas that may be hindering the conversion journey and act on them by the following steps: