1% = 100% : the Power of Conversion

João Gonçalves

When it comes to Sales and Marketing, the details are everything. Small, almost imperceptible changes to the message can mean the world to anyone whose aim is to show potential customers that they're in the right place, and that they'll leave with one less problem.

Marketing is complex. People are complex. But the truth is that this mysterious science can be boiled down to two variables: exposure and conversion.

Reaching lots of people matters to a good many businesses. Converting potential customers — people who know the brand exists — efficiently is vital to every business. No exceptions. Selling means getting the prospective customer to understand the problem, and convincing them that you hold the solution.

If there's a secret at all, it lies in precision, in conversion. It's the difference between firing into the air over and over, and firing with intent and to some effect.

Advertising on social media, for example, and on the internet in general, frequently amounts to nothing more than expenditure. It doesn't even make it into the investment drawer. The old line “There's no such thing as bad publicity” holds true where exposure is concerned. If the goal is simply for the public to know the brand exists, then there's a chance that, however poorly executed, the exposure serves its purpose. The thing is, if you genuinely want to build something of real value, certain principles apply. Keeping some focus on the long term, and having customer satisfaction as the ultimate aim — customers who will recognise the value of the product or service for what it really is — are non-negotiable principles. In that case, the earlier strategy is probably not a good idea. That way of operating sacrifices the future for “attention” in the present.

If there's a secret at all, it lies in precision, in conversion. It's the difference between firing into the air over and over, and firing with intent and to some effect. Cheap attention doesn't sell. Or maybe it does. It sells the way you gather oranges into a basket while sitting under the tree, waiting for them to drop. Given enough time, one is bound to land in the basket. Take the example of a services company. We have two scenarios: 10,000 people see our ad, post or video, and 50 buy the service; or 2,000 are exposed to it and 200 convert.

Let's do the analysis:

In the first option, 5 times more people now know about the service compared with the second. Exposure is 5 times greater. If the only goal is for people to come into contact with the company, the strategy passes.

In the second option, something jumps out at you. For every 10 people exposed, 1 bought the service. 10% conversion! Conversion in the first case was 0.05%. 20 times lower!

Why do cases like this happen? Think about the impact these different approaches have on revenue and on how a business develops. The same service, sometimes the same people → polarised results.

The good news is that this kind of decision is actually simpler than it looks. People can't care about the solution if they don't first care about the problem. And the problem isn't always something directly negative. It might simply be not selling more, or not knowing something valuable, or having some tool that's of lower quality than it should be. It might be an inefficient allocation of time.

The Power of Conversion is incalculable in the long run. But in the short run, it can be estimated.

The vast majority of service businesses solve precisely that problem: they let companies do what they're specialists in, by delegating the tasks where they hold no knowledge advantage over the competition. Hiring a competent professional or agency in a given area is exactly that: closing the gap in information and skill.

The focus of any sale is therefore, above all, making sure the person knows which problem is being solved, and how. One of the main signs that the process failed at that very stage is very low conversion rates, as in the first case we looked at. Either the exposure was poorly targeted, and those exposed were nowhere near qualifying as potential customers, or the content has no direction at all, because it fails to show what it solves and how it solves it. Without that, the truth is nobody cares WHO solves it.

With these principles in place, the business will be set up to operate and compete at any level. The Power of Conversion is incalculable in the long run. But in the short run, it can be estimated.

Take the classic example of email lists. A list of customers and potential customers gives us the chance to know, with great precision, what state our conversion capability is in. An email sequence or a newsletter is a direct invitation to buy. How effective that invitation is can and should allow us to draw various conclusions about the state of the company.

• Is the message unclear?
• Do people perceive no value at all? → Do they not understand the problem?
• Do they perceive more value in the competition? → Do they not understand the solution?

The conversion rate is a symptom. Diagnose it, treat it, and you get results like this:

• 20,000 views → 200 conversions (1%)
• 20,000 views → 400 conversions (2%)
• A 1% increase in conversion = a 100% increase in revenue (x2)

Lifting conversion by 1% is far simpler, faster and cheaper than doubling your advertising. Or doubling your headcount. Or raising twice the funding.

And, happily, there's no ceiling on improving marketing effectiveness. There are email offers converting at 40%!

Improving conversion doesn't stop you improving exposure too. In fact, it can pay for it. It isn't enough for value to exist. It needs to be perceived as such. Sometimes all it takes for a business to pull away from the competition is having people who know how to make that value clear and widely perceived.

That's what we do at Jelly.