A Little Goes a Long Way – How Small Increases in Conversion Rate Add Up

One Percent Improvement Per Month Over Five Years

Sometimes a small month-on-month change in the conversion rate will seem disappointing given the gains that are often spoken about in conversion rate optimisation of 50 or more percent.

Not every site can be increased by large amounts straight away, but even a one or two percent change every month can add up to a significant difference to your company.

Consider a site getting 30,000 visits a month and 500 sales with an average order value of £16.00. We therefore know it’s converting at 1.67% and makes £8,000 a month.

With our conversion clients we recommend a minimum reinvestment of 20% of the improved gross profit into paid search to increase traffic to the site. Doing so will usually allow us to get results on the tests quicker and increase profits faster.

In the example I’m going to show what just one percent increase on the conversion rate each month can achieve. In the “real world” the increases often are far more dramatic. We’ll use an 25 pence price per click on the adverts.

Month Visits Sales Conversion Rate Earnings Extra Sales Extra Earnings 20% for PPC Extra Visitors @ 0.25
Control 30,000 500 1.67 8,000.00 N/A N/A N/A N/A
1 30,000 505 1.68 8,080.00 5 80.00 16.00 64
2 30,064 511 1.7 8,176.00 11 176.00 35.20 141
3 30,141 518 1.72 8,288.00 18 288.00 57.60 230
4 30,230 524 1.73 8,384.00 24 384.00 76.80 307
5 30,307 531 1.75 8,496.00 31 496.00 99.20 397
6 30,397 538 1.77 8,608.00 38 608.00 121.60 486
7 30,486 545 1.79 8,720.00 45 720.00 144.00 576
8 30,576 552 1.8 8,832.00 52 832.00 166.40 666
9 30,666 559 1.82 8,944.00 59 944.00 188.80 755
10 30,755 566 1.84 9,056.00 66 1,056.00 211.20 845
11 30,845 574 1.86 9,184.00 74 1,184.00 236.80 947
12 30,947 581 1.88 9,296.00 81 1,296.00 259.20 1,037

Looking at the table above, we see how increasing the conversion rate by just one percent a month over a year, and investing 20% of the increased revenue into paid search we go from earning £8,000 a month to £9,296.

Over the course of a year the website would have earned more than an extra month, £8,064 after the cost of PPC that still is an extra £6,451.20 by just increasing the conversion rate by one percent a month, from 1.67% to 1.88%.

If you took this data further increasing by a single percentage each month, then you’d see the following earnings over the next few years.

Year Visits Sales End of Year Conversion Rate Year Earnings Extra Sales Per Year
Control 360,000 6,000 1.67 96,000.00 N/A
1 365,414 6,504 1.88 104,064.00 504
2 379,328 7,611 2.12 121,776.00 1,611
3 396,263 8,956 2.38 143,296.00 2,956
4 417,255 10,627 2.69 170,032.00 4,627
5 443,699 12,735 3.03 203,760.00 6,735

You can see that from just 6,000 a month by increasing the conversion rate by one percent each month for five years we’ve more than doubled monthly sales.

The methodology of constant testing as integral part of the way an online business is run needs only minor improvements to increase sales and profits dramatically.

An Extra 262,928 From a 1% Improvement Per Month

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Author: Online Sales

Owner of Mega Products Ltd. Everyday superhero web-bloke.

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