Why increasing conversions is more profitable than attracting visitors

By the nature of my activities, for several years now I have had to deal with a variety of stores - from a grocery store with delivery in the district to large chain stores with its own warehouses and points of issue. Among them are super-successful projects whose owners have already earned money for a jeep at the institute, there are frankly bad ones where there is neither money nor orders, and investors are all waiting for manna from heaven.

During my work in my company, I have accumulated quite a few observations about some specific features of online stores, distinguishing them from content projects, online representations, business card sites, portals and other invented types of online projects. In order not to be bored on a difficult weekday, I would like to share one of such observations with highly respected habrazhiteli.

Further on many things I will speak in a simplified form. I want to warn in advance about this, because Advanced marketers have probably already managed to come up with fashionable foreign words and abbreviations for everything that might come to our mind. That is, to answer the question in the title, I will try to use the most ordinary Russian language. So, let's begin.
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Initial data

First, let's define three groups of Internet users with whom we will have to deal:

• Audience - all Internet users who could make a purchase in the Store.
• Visitors - all Internet users who visited the site during the reporting month.
• Buyers are visitors who placed an order at the Store (by any means, including a call). At the same time, we will take into account the buyers who refused the order, since the processing of orders is another story altogether.

For ease of calculation, we establish the following values ​​of the indicators:

• Audience - 3 000 000 people / month.
• Visitors - 30,000 people / month.
• Buyers - 300 people / month.

At the same time, all conversion indicators (audience / visitors and visitors / buyers), as it is easy to calculate, will be equal to 1% (which, by the way, is quite true).

Money

Now about the most important thing: where does the money go? We distinguish 2 categories of expenses. The first term is conditionally called “Advertising” - this is money that is spent on the fact that out of 3,000,000 people, the audience will attract 30,000 visitors to the site. For example, to attract 30,000 visitors, you will need expenses from the category of "Advertising" for 100,000 rubles . per month.

The second category of expenses is the site. Everything related to the development, support, organization of work, testing, administration and other costs that are directly or indirectly related in order to receive 300 orders from 30,000 visitors. We also conditionally call this category of expenses - “Site”. If you hire a half-time programmer for this story, ask a designer’s friend to “draw” at half price and add the site administrator’s salary to this, then the expenses from the “Site” category will be at least 50,000 rubles. per month.

“Advertising” turns the Audience into visitors (for example, contextual advertising is% CTR), and “Website” turns visitors into buyers (% conversion of an online store). That is, the costs from the category “Advertising” are proportional to the number of visitors, and the costs from the category “Website” are proportional to the conversion.

Now let's estimate how much it costs us to attract a visitor to the site: 100,000 rubles / 30,000 = 3 rubles. (by the way, you will have to try to make advertising costs so effective, and this, again, labor costs or outsourcing at irresponsible agency prices). And what is the cost of "turning" a site visitor into a real buyer? 50,000 rubles / 300 = 167 rubles. , that is, 55 (!) times more expensive.

Summary

For me personally, this was a revelation. Of course, one cannot say that investing money and time in working on the site to increase conversion is 55 times more profitable than in advertising. If you spend on the site is not 50 000 rubles. and 100 000 rubles. , the conversion will not increase from 1% immediately to 2%. Nevertheless, I personally made two simple but remarkable conclusions for myself:

1. Work on the store site is much more important than the counter indicators
2. Conversion must be calculated to hundredths of a percent.
3. Increasing conversion is more profitable than attracting new visitors.

And finally, another important point: if you spend 100,000 rubles this month . Yandex.Direct and get 300 orders per month, next - you have to pay the same amount. If you spend competent work with the site, aimed at increasing conversion (and spend money on it only once), then the result of these actions will work for you for a very long time, until a new fashion appears on the triangular buttons, or HTML6 will be released.

Now a little about what prompted me to write this post. The fact is that when it comes to sales growth, increase in turnover, business scaling and so on, every single investor begins to think about advertising, marketing, promotions and other ways of attracting visitors to the site. And when the next bag of money dissolves in Google Analytics, and the number of orders grows disproportionately to attendance, or does not grow at all, everyone starts to bite their elbows and arrange brain storms one by one on how to increase the conversion (if they have time to “enlighten”, while investors do not pressed to the wall).