# Understand the relationship between the CRO and the ROI of your e-commerce!

Conversion Rate Optimization (CRO) does not always mean that an online store will get more qualified traffic. With the help of strategies and implementation techniques, it is even possible to increase the return on investment, or ROI.

In practice, CRO works like this: If in one month the number of people who bought from e-commerce increased by 15% without any marketing campaign for e-commerce sales, it could mean that the company saved on paid traffic.

Read on to better understand how CRO affects ROI, as well as the variables in the conversion formula and other relevant information on this topic!

What are the variables that make up the conversion formula?

Before we talk about the formula, we need to clarify that conversion goes far beyond online store purchases. Filling out landing pages to get unique content and “getting in touch” are just two examples that can be explored. An American institute specializing in CRO – MECLABS – has developed the following formula:

C (conversion) = 4m + 3v + 2(i-f) – 2a

The “m” in the formula stands for motivation. This variable expresses how much the consumer cares about a product or service, which justifies it having the greatest weight in the equation (4 in this case).

“v” is the value that the consumer sees in the company. This means that motivation is not enough. One must demonstrate professionalism, authority, and the potential to solve problems and meet the needs of the public, among other things.

The “i” stands for the added incentive. In some ways, it is very different from the “value” variable, as in many situations it represents the discount or special condition that facilitates the purchase decision. Some other ways to encourage the consumer are:

• social evidence;
• last units in stock;
• delivery on time.

“f” is the friction or obstacles that can prevent transformation. An example of this is the usability of the corporate website: If it is not good – especially on mobile devices – the chances of conversion tend to decrease.

As with friction, the variable “a” is subtracted from the equation because it equates to fear. Imagine a consumer who has never shopped online: Most likely, he is wary of entering his personal and credit card information on the site, so he holds back despite the motivation and high incentives.

## What are the essential concepts of CRO?

Now that we understand the variables of the conversion formula, let us look at some of the concepts of CRO. So take a look at the following subsections!

### Roberval Balance

If you are dealing with a lot of pages, keep the following in mind: changes and optimizations can affect the balance of the site’s integrity. In other words, very abrupt configuration changes can cause the online store to lose loading speed, for example.

### The paradox of choice

What is the focus of e-commerce? If retailers are clear about this answer, consumers are less likely to experience the paradox of choice. In practice, focus on a reduced number of options for the user, as this prevents them from getting confused and lost amidst all the information on the site.

### Loss aversion

It is common for people to buy products and services not because of benefits, but because of aversion to losses. This means that e-commerce must make this perception clear to the public by highlighting in the offer the things that the customer will not gain if they do not complete the transaction.

## How can e-commerce ROI be impacted by CRO?

A virtual business requires investments, e.g., for website hosting, information security, and the payment system. All of this must work in a coordinated way for the business to gain visibility and profit. That is, CRO is a means to achieve a high return on these investments, not only by applying the conversion formula and the concepts presented, but also through the practices we will mention here.

### Metrics

After you have tested and validated a CRO strategy, it is time to measure its effectiveness. Let us say that e-commerce wants to provide a landing page to get the user to take a certain action.

For example, if an A/B test is conducted, it is important to know which of the two landing pages has the highest conversion considering a pre-determined set of metrics. Google Analytics is one of the most important tools that can be used in this context, including for A/B testing.

### Tests

As we have already discussed, test is one of the words that best summarizes the CRO. However, this must be done through planning that is based on solid information and requires attention to simultaneous experiments. In other words, it is essential to ensure that the result of a test in one part of the interface does not interfere in another, which requires the precise application of Roberval Balance.

It is also important to avoid reproducing verbatim the tests performed by the competition. Conducting research and analysis along these lines is perfectly acceptable, as long as only the essentials are captured. Companies in the same niche have peculiarities that reduce the effectiveness of the test if it is reproduced in the same way as the competitor.

### Researches

When the company conducts a survey from the CRO perspective, it wants to know the consumer requirements in detail. One of the best-known examples of this is the NPS (Net Promoter Score), which is used to determine the number of promoters and detractors in a company. Based on the responses, the team has the opportunity to continuously make adjustments and improvements and improve the customer experience.

As we have seen, CRO, when applied correctly, directly impacts the ROI of the business. If your e-commerce needs to optimize conversion rate, you can choose Corebiz as your partner. We focus on the customer experience and guide the customer throughout the buying process. We work with the latest technology, including testing, which is so important to the effectiveness of the CRO strategy.