Impact of Increasing Your Conversion Rate on Your Bottom Line

There are only two ways to get more conversions; more visitors or a higher percentage of conversions.  In this post I will cover the impact that getting more visitors to convert has to your bottom line.  We first need to know where we stand with visitors, our conversion rate, and the average value of a conversion.Let's use the following baseline numbers:

  • Average Visitors Per Month: 5000
  • Average Monthly Conversions:  50
  • Average Value of Conversion: $200.00

This gives us a current conversion rate of 1.00% (the average monthly conversions (50) divided by the average number of visitors per month (5000), or 50/5000= .01 or 1.00%). Another way to look at this is that with our current numbers the website is earning $10,000 a month or $120,000 annually.  Not too bad, but we can do better.

1.0% to a 1.1% Conversion Rate

What happens if we are able to increase the average conversion rate for our website from 1.0% to a mere 1.1%.  Let's plug those numbers into our current visitor traffic. 1.1% Conversion Rate

  • Average Visitors Per Month: 5000 (same)
  • Average Monthly Conversions:  55 (new)
  • Average Value of Conversion: $200.00 (same)

With this new conversion rate the website is now earning $11,000 monthly or $132,000 annually.  Not a bad increase for only moving the conversion rate a tenth of a percent.

It Takes Money to Earn Money

This sounds good on the surface, but I need to pay someone either internally or externally to do the work to our website.  Okay, true enough, so let's see if the ROI is worth it.  After adding it up (internally), or signing off on the contract (externally), we incur a total cost of $10,000. Monthly ROI is calculated by taking the monthly incremental value minus 1/12 the total cost and then dividing that by the total cost. The easiest way to get Annual ROI is to multiply the monthly ROI by 12. If we do the math we get the following:

  • Monthly ROI:  2%
  • Annual ROI: 20%

This means that if we will get a 20% return on our investment after the course of a year.  I believe that this would be an excellent use of available monetary funds available.  Just imagine if the conversion rate grew to 1.5% or 2% instead of just 1.1%. I hope this post helps to illuminate the impact that even little changes can have on the overall performance and ROI of your website.  Keep that in mind next time you are looking at your website analytics.

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