The easiest way to convince a stakeholder that optimization is a good idea is to talk to them in their language. And speak to their motivations. Revenue.
Your boss and your clients likely care most about increasing sales. What we’ll learn today is a way to convince your stakeholders that landing pages and optimization is the smartest investment to achieve these goals.
As a marketer, a powerful way to convey the value of optimization is to demonstrate the effect it can have on the cost of acquiring a new customer. We’ll do this by comparing two different approaches to increasing sales: buying more traffic vs. optimizing your existing traffic.
We’ll also look at how you can borrow from an existing budget to prove the effectiveness of landing page optimization and testing.
So our options are as follows:
- Paying for more traffic vs. optimizing your existing traffic
- Borrow from an existing budget to prove results
1. Paying for more traffic vs. optimizing your existing traffic
Often, the quickest way to obtain more traffic is simply to buy more of it, in the form of Pay-Per-Click (PPC) ads from networks like Google AdWords. For this reason, we’ll use a PPC campaign as an example to illustrate how to lower the cost of acquiring a customer through optimization.
Option 1 – Paying for more traffic (increasing your PPC budget)
Throwing more money at your campaign gives a predictable outcome. It grows in a linear fashion. Double your spend and you’ll double the number of customers you acquire while maintaining the same cost of acquiring each customer.
Note: these numbers are based on some average Google Adwords PPC stats.
Month 1 – Traffic Budget. No optimization investment.
| Campaign budget | $5,000 |
| Traffic budget | $5,000 |
| Conversion investment | $0 |
| Cost-per-click | $1 |
| # of visitors to your page | 5,000 |
| Conversion rate | 2% |
| # of new customers | 100 |
| Cost per acquisition | $50 |
Month 2 – Increased budget, no investment in optimization
| Campaign budget | $10,000 |
| Traffic budget | $10,000 |
| Conversion investment | $0 |
| Cost-per-click | $1 |
| # of visitors to your page | 10,000 |
| Conversion rate | 2% |
| # of new customers | 200 |
| Cost per acquisition | $50 |
You’ve doubled the budget, received twice as many customers and the cost of acquiring a customer remains the same.
More cash = more customers. It’s predictable, but it’s not efficient and not improving your marketing ROI.
Option 2. Optimizing your existing PPC traffic
It’s cheaper to keep an existing customer than to find a new one. Similarly, it makes sense to get the most from your existing flow of inbound traffic by improving the conversion rate.
Here you can see that by using a portion of the budget on optimization results in less traffic, but the improved conversion rate of 2.5% makes up for this, resulting in the same cost of acquiring a customer.
| Campaign budget | $5,000 |
| Traffic budget | $4,000 |
| Conversion investment | $1,000 |
| Cost-per-click | $1 |
| # of visitors to your page | 4,000 |
| Conversion rate | 2.5% |
| # of new customers | 100 |
| Cost per acquisition | $50 |
In month 2, the continued investment in optimization has resulted in a further increase in the conversion rate to 2.75%.
Now you can see that the cost of acquiring a customer has dropped to $45.50.
| Campaign budget | $5,000 |
| Traffic budget | $4,000 |
| Conversion investment | $1,000 |
| Cost-per-click | $1 |
| # of visitors to your page | 4,000 |
| Conversion rate | 2.75% |
| # of new customers | 110 |
| Cost per acquisition | $45.50 |
As you can see, continuing to invest in landing page optimization further reduces your cost of acquiring a customer, without having to increase your campaign budgets. It’s hard for a stakeholder (be it a client or your boss) to argue with that.
| Campaign budget | $5,000 |
| Traffic budget | $4,000 |
| Conversion investment | $1,000 |
| Cost-per-click | $1 |
| # of visitors to your page | 4,000 |
| Conversion rate | 3.00% |
| # of new customers | 120 |
| Cost per acquisition | $41.67 |
In summary
What this shows us is that as we increase our investment in conversion optimization, our traffic spend decreases which results in fewer visitors, however, the improved conversion rate more than makes up for this by bringing in more customers and ultimately reducing the cost per acquisition (CPA).
Why? Because an optimized page will continue to produce the new conversion results obtained in month 2, into months 3, 4 and 5 etc..
By investing in conversion rate optimization, the cost of acquiring a new customer drops. A lower acquisition cost means your marketing campaigns are more efficient, ensuring that more sales are made from the same marketing spend.By proving you can increase sales, you will be able to convince stakeholders that optimization is a worthwhile investment.
2. Borrow from an existing budget to prove results
Rich Page recommends another excellent approach to obtaining buy-in from your boss or client: borrowing from an existing budget.
If the company you work for has an existing budget for PPC, a great way to demonstrate the value of a testing budget is to ask to “borrow” 10% of that budget for a period of time. Obtaining this for 6 months gives you enough time to get a few big testing wins under your belt and report back with clear metrics on the gains and ROI realized from the investment.
This type of evidence is hard to argue with, and will most likely result in your boss or client developing a very favorable view of the testing and optimization process.
If you can use this information to convince your stakeholders to give you a portion of the marketing budget to prove the value of optimization, you have the opportunity to prove that you can make a difference. This will have the effect of placing landing page optimization at the forefront of your marketing initiatives.
How to Explain the Value of Landing Page Optimization
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