There are two sides to conversion optimization.
The first one is the one that’s in the open. You perform tests, measure activity, and choose the winner that will yield a better conversion rate for your business.
The conversion rate might be for opting in to an email list, buying products, or signing up for a demo.
But behind that conversion rate number, there’s a more complex factor lurking…
Marketers love conversion rates because they give us something to measure and base our decisions on. But they can be taken too far.
If the rate at which your visitors convert to purchasers increased from 2% to 4%, did you just double your sales for good?
That’s because numbers reflect quantity without taking quality into account.
Simply put: If you double your current conversion rate but do so in a way that lowers your conversion rate in the future (i.e., rate of getting return customers), that initial optimization could actually decrease the profit you make.
If this isn’t obvious to you right now, don’t worry.
I’m about to show you four specific conversion rate optimization tactics that can appear to give you positive results in the short term but can do serious damage to your business in the long term.
On top of that, I’ll show you what to do instead.
Need a spike in sales?
Easy…just send out coupons or put your products on sale.
In almost all situations, you will see a spike. And the bigger the discount, the bigger the spike.
Also, if you do some testing, you can price the discount so that you maximize your overall profit.
So, what’s not to love?
At first glance, discounting looks like a great way to boost sales, which seemingly might lead to more return customers down the line too.
Most short term case studies support this. They show, for example, conversion rates improving by 13% with a simple 10% coupon.
But the complete picture is much bleaker.
There’s a company you’ve probably heard of called Groupon.
It’s a pretty simple company/app. Groupon contacts businesses offering to send them a ton of new customers if they provide them with a big discount, often at 40-50% off.
Many companies thought Groupon was an amazing opportunity to grow their businesses for the reasons I mentioned above.
However, they quickly discovered that the big discounts not only didn’t grow their business but indeed hurt it. If you Google “Groupon caused business failure,” you’ll get a slew of results that explain how running a Groupon deal actually killed someone’s business.
And these results are not rare; there are many of such sad cases.
The proof is in Groupon’s share price. After its IPO (in 2011), it was valued at about $13 billion (or $20 per share).
Currently, Groupon’s share price is under $3, which is less than a sixth of its original valuation.
It has steadily declined over the past few years as businesses have learned that massive discounting isn’t effective in the long term.
There are multiple ways that discounting can hurt you.
Problem #1 – You attract the wrong customers: There are many sites, like Slickdeals, that exist solely to promote sales to their user bases.
If your products have a fairly wide appeal, any discounts will end up on these kinds of sites.
The people who use these sites are looking for great deals (called discount hunters) and nothing more.
They don’t become long term customers.
In addition, if you promote your sale (and why wouldn’t you?), it could actually cause you to lose potential long term customers.
That’s because you’ve shifted the focus to your product’s or service’s price.
So, when a potential customer (who cares about quality over price) is comparing their options, they’ll go with the company that’s emphasizing the quality of their product rather than the price.
Problem #2 – You set a bad precedent: This adds on to the problem of having discount-seeking customers.
Once you discount a product for a customer, that becomes their new perceived value of your product.
They are not likely to buy from you again unless they get a similar deal in the future.
This is okay for some businesses that rely on selling huge volumes, but most businesses can’t permanently slash their profit margins.
Additionally, if someone pays a full price for your product and then sees that it goes on sale, they’ll usually feel shafted. There’s a good chance that they won’t want to buy from you again because of that.
Problem #3 – You erode your brand’s and product’s value: Finally, since a discount can lower the perceived value of your product, it can make potential customers question its quality.
Why is this so cheap? Is there something wrong with it?
In some cases, discounts actually lower short term conversion rates since customers care about quality over cost.
How do you get the potential benefits of discounting without giving a discount? Discounts are not evil despite all these common problems.
They can be used effectively in some specific situations.
More importantly, you can learn a few general elements of effective discounting and use this knowledge to increase your conversion rate without hurting your business in the long run.
One of the main reasons why people buy discounted products and services is because they feel they are getting good value for their money.
Think of it like this:
Likelihood of buying = Value of product (or offer) / Cost
When the cost goes down, your conversion rate goes up.
However, you could also just increase the perceived value of your product.
Bryan Harris uses this tactic well. He sells courses related to building an email list.
When he goes through a sales campaign, he doesn’t discount his courses often. Instead, he adds bonuses.
If someone buys the course, they get a free valuable add-on related to the course:
This way, you still increase your conversion rate, but you don’t damage your product or brand in any way, and you still attract the right customers (who care about value more than a discount).
Businesses that sell physical goods use this tactic as well by sending free samples of products with orders. For example, Bodybuilding.com sends free samples of supplements:
The second useful aspect of discounts is that they make your product feel less risky.
No one wants to buy something only to find out that it doesn’t do what they thought it would.
The solution is to make buying your product feel less risky by addressing potential concerns. This will be different based on the type of your product.
One option is to create detailed case studies that show how your product works and what results it produces:
If you sell physical products, create a high quality video that shows your product in action. Remove all doubt.
If you sell software, offer a demo, or create clear video walkthroughs.
We all look to friends and experts to guide our purchases.
This is known as “social proof.”
If other people recommend something or simply already use it, it’s a sign that the product is good.
Case studies, testimonials, number of members, etc. can be considered as social proof.
And social proof can have a big impact on conversion rates. One study found that testimonials increased sales page conversions by up to 34%.
While social proof is most studied in the context of sales, it plays a role in all types of decisions (conversions).
Should you join that email list? Well, do any of your friends or mentors recommend it? If so, you’re much more likely to.
Additionally, social proof matters on social media, just not in all the ways that many marketers think it does.
The logic is that if you have a ton of followers on a social media account, other users will think you’re popular and be more likely to follow you as well.
It’s hard to build up a social media account from scratch, so marketers look for a shortcut: buying followers.
It’s easy to go to Fiverr and get a few thousand subscribers on any main social network for $5.
These followers or likes all come from bot accounts that won’t do anything afterwards.
Having more isn’t always better: There are a few major downsides to faking social proof on social media.
One that most marketers never even consider is that having more social proof doesn’t always improve conversion rates.
Derek Halpern conducted a test and found that social proof in the following form actually decreased his email opt-in rate:
Join 15,000 people already subscribed.
The reason why this “social proof” might backfire is because some people don’t want to be part of a huge crowd.
They want to feel like they could potentially make a personal connection.
It, of course, depends on the demographics of your audience, but you can’t automatically assume that having thousands of followers will improve your follow rate.
Fake followers can kill your reach: The more important issue is that many social networks are determining the organic reach of users based on their engagement rates.
Take Facebook for example.
If a page has 10,000 likes but gets only one or two likes or comments on each individual post, Facebook assumes the posts aren’t very good.
Then, Facebook will start showing that page’s future posts to fewer people unless the business pays for advertising. If you want to improve your Facebook page’s organic reach, read this guide.
When you have fake followers, you have low engagement rates because bots don’t engage with anything. Your profile will look something like this:
This means that fewer of your real followers will see your content, or you’ll have to spend a lot more than the initial social proof boost gave you.
Clicks equal views, and views equal revenue.
At least that’s a reasonable formula to use when your revenue comes from advertising.
These headlines pique curiosity of readers and make them more likely to click through to the content.
In the past years, marketers have used clickbait headlines for content headlines, email subject lines, and social media posts.
I’m not a fan of using them anywhere—but particularly in email subject lines.
When someone is on your email list, they’re giving you access to a valued personal channel of communication. Trust is key.
When you use clickbait headlines, it’s almost impossible to offer your readers content that will match their expectations and make them feel satisfied.
For example, imagine I sent you an email with the subject line:
10 Mind-blowing SEO tactics that will change your life
I don’t think I could come up with a single “mind-blowing” SEO tactic, let alone 10.
Even if the 10 tactics were valuable, you’d still feel unsatisfied after reading that subject line.
If you use these types of email subject lines, please stop.
It might help at first, but your readers will quickly catch on.
A study of 9 million subject lines identified clickbait phrases and looked at their effect on the open rates.
It turns out that clickbait phrases have either minimal positive or significant negative effect on open rates.
The reason is simple. Why would anyone continue to open your emails once you showed them they will be disappointed?
The solution – Deliver on your promises: You should always make your subject lines as enticing as possible, but you need to ensure that they match the content closely.
If you say you have five tactics that will double your subscriber’s revenue, those five tactics had better do just that.
Your subject line is a promise that you need to keep if you want to earn long term trust.
One way to improve conversion rates in almost every situation is to make use of scarcity.
It’s one of Cialdini’s 6 principles of influence.
When there’s a limited amount of a product we might want or a limited time to buy it, we are much more likely to make the purchase.
Landing pages that have countdowns, indicating when an offer will expire, are a great example of this. These pages can improve conversion rates by up to 147%.
Another example of scarcity is a simple email saying that there’s a limited amount of a product left:
Both are incredibly effective.
Scarcity works, but keep it real: As always, some marketers get too greedy.
Using scarcity in the form of a timer, for example, is a one-time thing. You can use it once per sales period.
What some marketers do is set up a timer that runs out and then starts again.
If you’re continually sending new traffic to the page, the idea is that you can use scarcity all the time.
But people aren’t stupid. If they come back to the page after the timer should have ran out, they will know that you were trying to trick them.
Of course, once someone feels tricked like that, they’ll never trust you or buy from you again.
So, while you might improve your conversion rate in the short term, you’re also going to scare away some good customers for life.
By all means, use scarcity, but don’t fake it.
If you say you have only five spots left in a course, then sell only five more. If you say you’re selling something for only 10 more hours, stop taking orders in 10 hours.
All marketers and business owners need to use conversion rate optimization to improve their revenue.
However, you need to consider the long term effect of any changes you make based on short term optimization.
I’ve shown you four common tactics that can work in the short term but could hurt your business significantly in the long term.
If you’re making one of these mistakes, fix it. If not, be aware of them and avoid them in the future.
To close off, I’d like to ask you to leave me a comment below telling me one way that you’ve prioritized long term success over quick wins as well as any questions you have.
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