The Ultimate Guide to Conversion Rate Optimization: Chapter 5: The Ratio of Conversion

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Is it worth it?

That question is so powerful. It’s one of the most frequently-asked questions we have to answer all day, every day, for our entire lives. Sure, we ask and answer it subconsciously, but it’s fundamental to the entire concept of free will.

• Is it worth it to get out of bed this morning and go to work?
• Is it worth it to risk embarrassment and ask that girl on a date?
• Is it worth it to go out for dinner with friends, or can I just stay on the couch watching Netflix?
• Is it worth my time, energy and resources to engage with this business? What do I stand to gain, and what am I giving up?

7. Cost-Benefit Principle

The cost-benefit principle states that all human “behavior is regulated by the perceived difficulty of a task in relation to the perceived reward.”

In short, just as your business doesn’t invest in a marketing strategy unless you’re confident it will yield a positive return, so it is with people: each action we undertake is done in direct relation on our expected reward.

This relates most often in the marketing world when we’re talking about optimizing for lead generation: the amount of form fields you require leads to fill out needs to be in direct relation to what you’re giving them in return.

An analysis of the cost-benefit principle in regards to lead gen:

1. At the top we have registration for a conference or event
   Events, where people are actually signing up (or even applying to attend) are the top of the lead gen food chain. Your average influencer speaking at an event will allow you to ask for the entire life story of possible leads if you’d like it.
2. Next is ”sign me up for a call” and “free demo”
   This lead gen strategy offer a lot of value (one on one conversation). This means you can ask for a lot in return. I’m talking job title and size of business.
3. Then we have case studies and industry reports
   Worth more than ebooks only because they offer exclusive information that leads can’t get anywhere else, these are worth at least a post code.
4. Last but not least is ebooks, whitepapers, webinars and podcasts
   While this content can be incredibly valuable, by in large (and because value is assumed until they actually get to read the book or hear the webinar) these are the bottom of the lead gen barrel. I’d recommend asking for name and email address. That is, unless there’s an influencer involved (in which case this strategy jumps a couple spots in the lead gen hierarchy).

Psychological Case Study:

In 2013, one of Neil Patel’s many lead-gen forms contained four fields: Name, Email Address, Website URL and Yearly Revenue.

He tested removing the “Revenue” field and replacing it with “What can we help you with?” but the test was inconclusive.

He tested removing the “Revenue” field altogether (so the form only had three required fields), and conversion rates increased by 26%.

Recommended for You Webcast, September 7th: 3 Ways to Speed Up Your Marketing Review and Approval Process

How you can use this psychological factor for conversion rate optimization:

• As a rule, avoid asking leads for more information than you need to nurture them towards a sale (remembering that you can always ask for more lead information down the lead-nurturing funnel)
• Balance your lead generation “Ask” with your offer. If you’re offering an ebook but asking for an essay, don’t be surprised when your for conversion rates are rock-bottom low.

8. Risk-Benefit Principle

Similar to the Cost-Benefit principle, the Risk-Benefit principle is a psychological factor which determines initial action. However, whereas the Cost-Benefit principle relates most closely to the question “is this worth my time/energy/resources?” the Risk-Benefit principle relates to the question “is this worth the risk?”

Analyzing the risk of a situation (we’re predominantly talking lead-generation here, by the way) is very much dependent on the individual doing the analysis. For instance, if someone has had a bad experience with a brand, in which they gave their personal information and were then overwhelmed with spam until they had to change email addresses, they’re far more likely to feel that doing so again isn’t worth the risk.

The most interesting part of the Risk-Benefit principle is this:

”When individuals are exposed to a risk over which they have no control, they make risk aversion their primary goal. Under these circumstances individuals require the probability of risk to be as much as one thousand times smaller than for the same situation under their perceived control.”

• Chauncey Starr

How you can use this psychological factor for conversion rate optimization:

• Include a “We promise we won’t sell your information to any 3rd party” message within your landing or product pages.
• Include a “We’ll only email you once a week with relevant, educational content, and you can always unsubscribe with the click of a button” message.
• Don’t use the word “spam” (even in the phrase “we will never spam you”) as it just puts the idea in the mind of your prospective lead.

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The Ultimate Guide to Conversion Rate Optimization: Chapter 5: The Ratio of Conversion