November 24th 2016
How to safeguard your company against Brexit and Trump
After the UK's recent vote to leave the European Union and the election of Donald Trump as US President, the only thing we can be certain of is uncertainty with regards to the economic future. Some economists are predicting a prolonged period of volatility in the markets. We have already seen a negative impact on exchange rates and property prices in the UK.
While it's hard to predict anything with any degree of confidence, there is the very definite spectre of a negative outlook looming on the horizon, and companies will be bracing themselves to deal with the challenges that lie ahead. As we saw during the global financial crisis in 2008, a shrinking economy would mean austerity in the corporate world, with potential hiring freezes, redundancies, and diminished or even frozen advertising budgets.
So what does this mean for organisations who still need to compete, often on the international stage? They need to be able to maintain growth and profitability. But the investment they need to make a return on to satisfy their shareholders will likely be a fraction of what it was before.
This is where conversion rate optimisation, or CRO, can help. While channels such as display and paid search advertising are part of the digital marketer's customer acquisition strategy, conversion rate optimisation can play a large part in retention. And while an organisation's acquisition strategy tends to demand regular advertising budget to feed it, the retention strategy is less reliant on it. Of course, companies need to invest in a split testing tool like Optimizely or Adobe Target to be able to execute a full CRO strategy, but they can generally incorporate the actual testing activity into business as usual operations.
Historically companies have been much more willing to focus on the acquisition side of digital marketing, and haven't given retention activities the attention they deserve. Similarly on-site measurement used to be an afterthought, with many being guilty of bolting on an analytics programme but never spending the time to look at the results. This resulted in a huge amount of wasted advertising budget, limited data insights, and no clear idea of how successful the acquisition activity actually was.
With conversion rate optimisation, a company can focus on maximising the effectiveness of a website to make it as profitable as it can be. With a successful optimisation programme you get more paying customers without having to spend any more money on advertising. In other words, you get more customers for free, and you can then plough that additional profit back into your advertising budget.
In fact, some argue that a relatively modest conversion rate increase of 50% can result in an increase in profitability of around ten times that amount. This sounds staggering, but it's really just elementary economics: as cost of sale isn't affected, it's an increase in pure profit rather than just an increase in revenue, resulting in disproportionate incremental growth.
Surprisingly, though, relatively few companies are actually doing this with any degree of sophistication. Which means that those that are can quickly steal a march over their competitors and reap the benefits.
The challenge for organisations that haven't yet embarked on an optimisation journey is that they may need to change their company's culture to allow it to flourish.
You don't just become an optimisation organisation overnight. It takes a great deal of time and effort, not to mention sell-in to stakeholders and senior management.
The most successful companies today are the ones that have adopted a culture of continuous improvement through a 'test and learn' approach. And it's starting to become clear that organizations that haven't risk being left behind, especially if we are going to be faced with yet more years of economic doom and gloom.
Unfortunately for some it may already be too late.