A Beginners Guide to Conversion Rate Optimization

Online marketing is about generating traffic. But how can you make the most out of that traffic?

This is where conversion rate optimization comes in. Today we are going to discuss how you can use it to convert:

• More visitors into leads
• More leads into customers
• More customers into repeat customers

Here’s our complete conversion rate optimization guide for beginners….

What is a Conversion Rate?

Conversion rate is a metric that shows what percentage of people who were exposed to a call to action ended up taking that action (“converting”).

You can calculate conversion rates using this formula:

(Total Number of Conversions / Total Visitors) x 100 = Conversion Rate

For example, if 100 people visited your sales page and 10 of them bought your product, the conversion rate of that sales page is 10%:

(10 / 100) x 100 = 10%

Sales Funnel Conversion Rates

A sales funnel is a system for converting visitors into leads, leads into customers, and customers into repeat customers.

It’s important to track the conversion rates of each stage of your sales funnel as well as its overall conversion rate.

Impression-to-Click Conversion Rate

Ad impressions is a paid advertising metric that shows the number of times people have seen your ad.

Typically, at least 30% of the ad needs to be visible on the user’s feed for at least 1 second for it to be counted as an impression, though this varies from platform to platform.

The impression-to-click conversion rate shows what percentage of ad impressions converted into ad clicks.

Visitor-to-Lead Conversion Rate

A lead is a potential customer who has given you their contact details.

The visitor-to-lead conversion rate shows what percentage of people who visited your website or landing page converted into leads by giving you their email addresses.

Lead-to-Customer Conversion Rate

The lead-to-customer conversion rate shows what percentage of leads converted into paying customers by purchasing something.

Customer-to-Repeat-Customer Conversion Rate

The customer-to-repeat-customer conversion rate shows what percentage of first-time customers converted into repeat customers by making a second purchase.

Downsell Conversion Rate

A downsell is an offer that you present to the potential customer after they have declined your core offer. It’s supposed to be a downgrade from it.

The downsell conversion rate shows what percentage of people who were presented with a downsell purchased it.

Upsell Conversion Rate

An upsell is an offer that you present to the potential customer after they have accepted your core offer. It’s supposed to be an upgrade on it.

The upsell conversion rate shows what percentage of people who were presented with an upsell purchased it.

Cross Sell Conversion Rate

A cross sell is also an offer that you present to the potential customer after they have accepted your core offer, but instead of being an upgrade on it, it’s supposed to be complementary to it.

The cross sell conversion rate shows what percentage of people who were presented with a cross sell purchased it.

Overall Sales Funnel Conversion Rate

The overall sales funnel conversion rate shows what percentage of people who visited your website or landing page ended up converting into paying customers.

In other words: your visitor-to-customer conversion rate is your overall sales funnel conversion rate!

What is Conversion Rate Optimization?

Conversion rate optimization is the process of systematically making adjustments to web pages with the goal of increasing their conversion rates.

The primary conversion rate optimization method that marketers use is A/B testing, which we are going to discuss later in this article.

Why is Conversion Rate Optimization Important?

Conversion rate optimization enables you to make the most out of the traffic that you are getting, maximize your revenue, and improve your profit margins.

And the more your business grows, the more important conversion rate optimization becomes!

Example: Increasing the Visitor-to-Customer Conversion Rate by 1%

Let’s say that you get 1,000 visitors per month and your sales funnel conversion rate is 10%, which means that you make 100 sales per month.

If you increase your sales funnel conversion rate by 1% so that it would be 11%, you’ll make 110 sales per month with the same amount of traffic. Sure, it’s an improvement, but it may not feel particularly meaningful.

Let’s imagine that as your business grows, it eventually reaches the point where you are getting 100,000 visitors per month.

In that case:

•  A 10% sales funnel conversion rate would result in 10,000 sales per month
• An 11% sales funnel conversion rate would result in 11,000 sales per month

Now that 1% increase in conversion rate means 1,000 extra sales every month and has a significant impact on your bottom line!

Don’t Wait Until You Are Getting a Ton of Traffic to Optimize Your Sales Funnel for Conversions!

If you aren’t getting much traffic at the moment, you may feel tempted to procrastinate on conversion rate optimization.

However, we would advise doing the opposite: start optimizing your sales funnel for conversions as early as possible because that will enable you to reap the most benefits.

This is especially true if you already have product-market fit and intend to continue selling more or less the same offer indefinitely. 

If that’s the case, even a 1% increase in your sales funnel conversion rate early on is going to translate to a ton of extra sales, revenue, and profit over time as your business grows.

Sure, that 1% increase may not seem like a big deal now, but think about how much money it can add up to over 3, 5, or 10 years!

And just to be clear: we are using 1% as an example to make a point. You can probably increase your sales funnel conversion rate by at least 10% if you haven’t done any conversion rate optimization before!

The #1 Principle of Conversion Rate Optimization

Here’s the most important conversion rate optimization principle that you need to understand:

Every page should be designed with a single conversion goal in mind.

Anything that can distract the visitor from that conversion goal is going to lower the conversion rate.

Note that you can have several calls to action but they should all serve the same conversion goal!

Example: ClickFunnels Website

The conversion goal of our website is to convert visitors into leads by persuading them to sign up for our free trial.

On our homepage, you can see two call-to-action buttons above the fold: “Try For Free” and “Start Your Free Trial Today”. 

As you scroll down, you’ll see more “Start Your Free Trial Today” buttons. So we have a whole bunch of calls to action on our homepage but they are all serving the same conversion goal.

In fact, if you use the navigation bar to explore our website, you’ll find that every page features “Start Your Free Trial Today” buttons.

You know that saying “All roads lead to Rome”? Well, in the case of our website, all roads lead to the conversion goal: getting people to sign up for our free trial. 

The only exceptions to this are some of the pages in the footer that have different conversion goals. Say, on our affiliate program page, the goal is to persuade people to become our affiliates.

We recommend using the same approach in your business: decide on the conversion goal and then build your entire website around it.

Generally speaking, the best conversion goal for most websites is lead generation, so consider optimizing yours for converting visitors into leads!

Why You Need to Build a Value Ladder Sales Funnel for Your Business if You Want to Maximize Conversions

What is the Value Ladder Sales Funnel?

We believe that building a Value Ladder sales funnel for your business is the single best thing that you can do to increase conversions.

This sales funnel was created by our co-founder Russell Brunson who then used it to take ClickFunnels from zero to $100M+ in annual revenue.

Its structure looks like this:

The Bait Stage

You start by offering the potential customer something for free in exchange for their email address.

It can be a free guide, a free service, a free trial, etc. What matters is that it provides a solution to a problem that they are struggling with.

This freebie is known as a lead magnet and it serves three purposes.

It helps you to:

1. Get the potential customer’s attention
2. Persuade them to give you their email address
3. Build trust by providing value

Once the potential customer gives you their email address, they become a lead and enter your sales funnel.

The Frontend Stage

Now you can start selling them your products and services via email marketing.

However, instead of throwing random sales pitches at them and hoping that they’ll buy something, you want to present them with your least valuable and least expensive offer. Why?

Because that’s the best way to capitalize on the trust that you built with your lead magnet.

Ideally, you want to charge $7 for your Frontend Offer, as that will put it within the impulse buy range. Once a lead purchases it, they become a customer!

The Middle Stage

Next, you want to pitch them your Middle Offer, which should be more expensive and more valuable.

Ideally, you want to pick a price point that ends with the number 7 and keep it under $100.

If they buy your Middle Offer, they become a repeat customer!

The Backend Stage

Finally, you want to pitch them your most expensive offer.

While the jumps in price were relatively small from the Bait to the Frontend Offer to the Middle Offer, the jump from the Middle Offer to the Backend Offer can be much larger.

Say, if your Middle Offer costs $97, it’s okay to price your Backend Offer at $997. Of course, if you want to charge a high price, you need to make sure that you provide commensurate value.

Very few people who enter your sales funnel are going to buy your Backend Offer but those who do are probably going to generate the majority of your revenue.

Think about it: if your Frontend Offer is priced at $7 and your Backend Offer is priced at $997, you would need to make 143 sales of the former to exceed the revenue that you would generate with just one sale of the latter.

This is what online marketers mean when they say that the money is in the backend!

There Needs to be a Logical Progression From One Offer to the Next!

The Value Ladder sales funnel isn’t just about the progression from your least expensive offer to your most expensive offer.

There also needs to be a logical progression: at each stage of your sales funnel, the subsequent offer should seem like the obvious next step!

Example: Weight Loss Value Ladder

Let’s say that you are in the health and fitness industry and specialize in helping people lose weight and build muscle.

You can create a lead magnet that provides the most important information that someone who wants to lose weight needs to know. That’s your Bait.

Then, you can pitch the potential customer a one-on-one consultation and a personalized weight loss plan for three months. That’s your Frontend Offer.

Then, you can pitch them a coaching package that includes one consultation per week for three months where you will keep them accountable and help them follow through with their personalized weight loss plan. That’s your Middle Offer.

Then, you can pitch them a coaching package that includes a personalized weight loss plan for an entire year and one consultation per week for the same duration of time. That’s your Backend Offer.

Alternatively, if the customer didn’t have much weight to lose and they got down to their ideal weight within three months, you can direct them to your muscle-building Value Ladder, which should have a similar structure as your weight-loss Value Ladder.

Keep in mind that the more seamless the progression from one offer to the next, the higher your conversion rates are going to be!

Why Does the Value Ladder Sales Funnel Work So Well?

Closing a sale requires trust.

And the more expensive the offer, the more trust you will need to sell it.

The Value Ladder sales funnel enables you to gradually build that trust until you get to the point where you have enough of it to sell your most expensive offer.

For example, here’s one of our sales funnels:

At the bottom of this Value Ladder, we have a free quiz that provides a little bit of value in exchange for an email address.

At the top of it, we have our co-founder Russell Brunson’s Inner Circle mastermind that provides a TON of value and costs between $50,000/year and $250,000/year.

Russell is a great salesman but if he started pitching his mastermind to random people who have never heard of him, they would probably think that he’s some kind of lunatic.

However, the Value Ladder sales funnel enables him to gradually build trust with our existing customers that he can then capitalize on to sell Inner Circle memberships.

In fact, this mastermind gets so much interest that it’s now application-only because the spots are limited!

Again, we believe that building a Value Ladder sales funnel for your business is the single best thing you can do to increase your conversions.

So make sure to put one in place before you worry about anything else!

The Top 5 Factors That Affect Conversion Rates

Okay, now let’s get into the nitty-gritty of conversion rate optimization.

There are five key factors that affect web page conversion rates:

Factor #1: Offer

It’s not enough to have products and services to sell.

If you want to maximize your conversions, you need to package those products and services into offers that appeal to your dream customers.

Here’s our formula for creating an irresistible offer:

High Value + Low Price – Financial Risk = Irresistible Offer

If you get this right, the potential customer will feel that you are offering them an amazing deal and will be inclined to take the leap because they don’t have anything to lose by doing so.

Let’s take a closer look at each of these three variables:

High Value

“High value” isn’t about the objective value, it’s about the perceived value of your offer.

One of the best ways to increase it is to throw in a few info products as bonuses.

Templates, cheat sheets, guides, video master classes, and online courses can all work well here because they have high-profit margins.

For example, if you have an e-commerce business that sells sandwich makers, you can bundle them with an eBook that includes recipes for all kinds of sandwiches and a video course that shows how to make those sandwiches.

Another way to increase the perceived value of your offer is to bundle together everything that the customer needs to solve a specific problem.

For example, if you have an e-commerce business that sells women’s work clothing, you can create an offer that includes a classic shirt, a pencil skirt, and a pair of ballerina flats.

That way, your customers will be able to purchase an entire office outfit with one click instead of having to buy everything separately. Remember, everyone is feeling overwhelmed these days, so people are willing to pay more for convenience!

Finally, if you are selling information products such as books or video courses, you can increase the perceived value of your offer by including a one-on-one consultation with you.

For example, if you are selling an online course about search engine optimization for businesses, you can include an SEO consultation in your offer.

Low Price

“Low price” is not about the absolute price, it’s about the price relative to the value.

This means that the more you increase the perceived value of your offer, the more you can increase its price.

However, the price should still seem low compared to the value. You want the customer to feel that they are getting an amazing deal!

Financial Risk

You want to remove all financial risk from the buying decision.

One way to do that is to offer an unconditional, no-questions-asked money-back guarantee that is valid for a clearly defined period of time after the purchase.

30-day, 60-day and 90-day money-back guarantees can all work well. Generally speaking, the longer the guarantee period, the higher the conversion rate.

Another way to remove financial risk is to use results-based pricing. You can either charge per deliverable or set a specific target where if you fail to achieve it, the customer doesn’t have to pay anything.

Factor #2: Design

When it comes to page design, the first thing you need to consider is Jakob’s Law, a UX design principle which states that:

“Users spend most of their time on other sites. This means that users prefer your site to work the same way as all the other sites they already know.”

In other words:

• If you run a SaaS company, you want your website to look similar to the websites of other SaaS companies.
• If you have an e-commerce store, you want it to look similar to other e-commerce stores.
• If you have a blog, you want it to look similar to other blogs.

…etc.

That way, when visitors arrive at your website, they will immediately know how to get around it.

As for the landing pages and sales pages, we recommend using proven templates – such as the ones in our template library – instead of designing them from scratch.

Finally, you should direct people’s attention to the calls to action. Select a color that stands out in your overall color scheme and then use it exclusively for the call-to-action buttons. That way, people’s eyes will be immediately drawn to them!

Factor #3: Copy

“Copy” is the text on the page.

The most important copy element of them all is the headline. Its purpose is to grab the visitor’s attention.

Then there’s the subheadline. Its purpose is to provide a summary of what is included in your offer.

If you get both the headline and the subheadline right, you will be able to convey the most important information about your offer in just a few seconds.

If the visitor belongs to your target audience, that should be enough to get them to stay on the page and continue reading.

The rest of the copy should emphasize the benefits of your offer, explain its features and pre-emptively address potential objections.

If you want to learn how to write copy that converts, we highly recommend reading our friend Jim Edward’s book “Copywriting Secrets”.

It’s available on Amazon where it has more than 1,900 global ratings and an overall rating of 4.7 stars.

However, you can also get it directly from Jim for free. All he asks is that you cover the shipping!

Factor #4: Social Proof

Social proof is the evidence that other people trust you:

• Credentials
• Accomplishments
• Media Mentions
• Influencer endorsements
• Customer testimonials

…etc.

Generally speaking, adding social proof to a page is one of the best ways to increase its conversion rate. Typically, the more impressive the social proof, the larger the boost!

Factor #5: Traffic

Sometimes, when a page doesn’t convert, the problem is not the page itself but the traffic that you are driving to it.

For example, if you sell a muscle-building program for young men, but the traffic you drive to its sales page primarily consists of elderly women, you can have the best sales page in the world and it still won’t convert.

While this is a ludicrous example that we are using just to make a point, you’d be surprised by how often traffic is the main issue behind low conversion rates.

Ask yourself this: are the people that you are targeting with your marketing campaigns your dream customers?

How to Use A/B Testing to Optimize Your Sales Funnel for Conversions

A/B testing, also known as split testing, is the most popular conversion rate optimization method.

Here’s how it works:

Step #1: Pick Something to Experiment With

First, you want to choose an offer, design, or copy element that you are going to experiment with.

It’s best to start with the element that is the most likely to have a noticeable impact on your conversion rate.

For example, when it comes to landing page design, assuming that you are using a proven template, that element is probably the call-to-action buttons.

Experimenting with their size, color, and number can help you increase your conversion rate!

Step #2: Come Up With a Hypothesis

You can just start testing random changes to see what happens.

However, there’s an infinite number of element variations that you could test, so this approach of throwing spaghetti at a wall to see if something sticks is not the best way to go about conversion rate optimization.

Instead, once you decide on the element that you are going to experiment with, you want to create a hypothesis.

For example, maybe you believe that a red call-to-action button will convert better than a green call-to-action button because it stands out more in the color scheme of your page.

Formulating hypotheses before running experiments will help you better allocate your resources, increase your conversion rates faster, and develop an intuition for conversion rate optimization.

Step #3: Create the Version A and the Version B

You will need two versions of the same page to test your hypothesis.

They should be identical except for the element that you are experimenting with. 

For example, if you want to see whether the red or the green call-to-action button converts better, you should create two versions of the page that you are testing:

1. Version A with a green call-to-action button
2. Version B with a red call-to-action button

We want to emphasize that it’s extremely important to make sure that there’s only one difference between the two versions. Why?

Because if there are more differences and one version converts better than the other, you won’t know what caused that.

A/B testing only works if you isolate the variable that you are experimenting with!

Step #4: Test Your Hypothesis

Once you have your version A and version B, it’s time to test your hypothesis. You can do that by driving the same amount of traffic to both versions.

Something to keep in mind here is the concept of statistical significance. 

In the context of A/B testing, it shows the likelihood that the difference in the conversion rates between the two versions is caused by the variable being tested as opposed to just being random.

It’s advisable to run the experiment until you reach 95% statistical significance, meaning until there’s a 95% chance that the difference in the conversion rates between version A and version B is caused by whatever it is that you are testing. 

You don’t need to worry about the math here because any decent A/B testing app is going to calculate statistical significance for you and tell you when you can stop your experiment.

Step #5: Keep the Winning Version

Once your experiment reaches 95% statistical significance, it’s time to stop it and evaluate the results. Which version converted better? That’s the one that you want to keep!

Always be Testing!

Realistically, the vast majority of your A/B tests won’t produce impressive results, especially once you are done with the low-hanging fruit.

However, even tiny conversion rate increases can add up over time and have a significant impact on your bottom line.

Also, the more experiments you run, the more likely you will be to stumble upon some big wins that lead to drastic conversion rate increases.

That’s why we recommend adopting the “Always Be Testing” mindset: you want to always have at least one A/B test running!

Want to Learn How to Build Sales Funnels That CONVERT?

Our co-founder Russell Brunson used sales funnels to take ClickFunnels from zero to $100M+ in annual revenue in less than a decade.

He is now widely considered to be one of the top sales funnel experts in the world. Want to learn from him?

His best-selling book “DotCom Secrets” is the best place to start because it covers everything you need to know in order to build sales funnels that convert.

This book is available on Amazon where it has over 2,500 global ratings and a 4.7-star overall rating.

But you can also get it directly from us for free…

All we ask is that you pay for shipping!

So what are you waiting for? 🧐

Get “DotCom Secrets” for FREE!