CRO or CVO: Which One Has Better ROI?

Simbar Dube

Simbar Dube

Simba Dube is the Growth Marketing Manager at Invesp. He is passionate about marketing strategy, digital marketing, content marketing, and customer experience optimization.
Reading Time: 7 minutes

CRO or CVO, which is better for your eCommerce business?

Well, it depends.

There’s no doubt that both CRO and CVO vehicles generate results that have an impact on your bottom line and can drive your business growth.

But, not all eCommerce companies have a customer lifetime value or conversion problem.

Knowing when to use each can be the difference between an eCommerce brand that soars or sinks.

Sometimes, you can use both CRO and CVO for maximum benefit and growth – these two processes can complement each other extremely well.

But, let’s say you’re given the option to only pick one? Which one will you go with?

That’s a tricky question, right? I understand!

Let’s dive in…

Defining Customer Value Optimization (CVO)

When customer satisfaction becomes the number one priority for a business, customer value optimization is required.

According to Omniconvert:

Customer value optimization is a process to create a great customer journey and maximize the ROI for all marketing activities.”

The CVO system analyzes customer needs and desires in order to reduce customer complaints and increase customer satisfaction by modifying or adding products or services that will fulfill those needs.

Customer value optimization can be done at all levels of a company from customer service input into product design.

When doing CVO, there are three things that you don’t have to ignore:

  1. Customer research – you need it to determine specific information about customers.
  2. Customer segmentation analysis – you need it to define groups of customers to target specific products towards.
  3. Analyze customer feedback (after product development) – you need it to ensure the happiness of customers with the final result.

Ryan Deiss from Digital Marketer, created the chart below to articulate how the CVO process works:

Using the above chart, you can break down CVO into 7 steps:

  1. Determine product/market fit
  2. Choose traffic source
  3. Offer a lead magnet
  4. Offer a tripwire
  5. Offer a core product
  6. Offer a profit maximizer
  7. Create the return path

Here is a simple discussion around each step:

A product/marketing fit: This is the first building block you need to build a successful business. Product/market fit is the degree to which a product satisfies the demands of the market.

Choose a traffic source: What’s the best way to reach out to your targeted market? Master one traffic source before you add a second or third one.

Offer a lead magnet: This is a valuable piece of content or information that you offer in exchange for a potential customer’s email.

A  tripwire offer: This is usually a low-dollar offer that is intended to convert more leads into customers.

Core offer: This is the flagship product that most businesses already have – this is usually a bit pricey than other offers.

Profit maximizer: This is a way of maximizing the transaction value of each customer through cross-sells, bundles, and upsells.

The return path: These are tactics and strategies you use to increase customer retention.

Looking at the above steps, it’s clear that CVO should always be an ongoing process since customer behavior is constantly changing. So, when you think about it, customer value optimization is customer satisfaction done on a large scale.

Customer value optimization takes more resources than an individual customer service representative could give, but creates better customer relationships in the long run by building customer trust.

This system is successful because it reduces customer churn while increasing customer acquisition rates and customer lifetime value.

The more satisfied customers are with their products or services, the less likely they are to stop buying them. This means that customer value optimization will require less marketing dollars spent per customer since they provide repeat business allowing for greater profits over time.

Defining Conversion Rate Optimization

CRO is the process of increasing the percentage of visitors to your site that complete the desired action. That could be purchasing something, filling out a form, subscribing to an email list, or any number of other things you’d like users to do while visiting your website.

Conversion optimization can apply to anything that involves user interaction with your website, landing pages, or even ads. CRO can help you improve not only your bottom line but also increase the effectiveness and efficiency of the marketing tools at your disposal.

ALSO READ: The definitive guide to conversion rate optimization

According to Invesp’s CEO, Khalid Saleh:

When performed correctly, CRO becomes a way of discovering more about your visitors and customers as well as your website and your company. A good program can give you precious insights to apply to other areas of your organization.”

In other words, CRO goes beyond what’s on your website – and the insights you gather from a CRO program can be used to improve different departments in your organization.

The CRO methodology involves the following:

  1. Conducting a heuristic evaluation for the site
  2. Conducting qualitative research and user behavior analysis
  3. Conducting quantitative research
  4. Conducting competitive analysis
  5. Prioritizing problem areas on the site and creating a conversion roadmap for your website (what pages need to be fixed)
  6. Creating a testing hypothesis
  7. Creating new designs based on the testing hypothesis
  8. Conducting AB testing (or multivariate testing)
  9. Analyzing the testing results

One mistake you should avoid at all costs is launching a conversion rate program with no methodology. You can copy the SHIP methodology that we used on all our clients:

According to Invesp’s Co-founder, Ayat Shukairy:

“Each stage holds importance and must be done thoroughly. However, the greatest emphasis in terms of time should be focused on two stages: the scrutinize and propagate stages.”

ALSO READ: Starting your conversion optimization project the correct way

Even when you have a CRO process in place – increasing conversions is not a guarantee. Conversion optimization is a long-term commitment that requires you to understand and anticipate the visitors’ cognitive progression (what info your visitors are expecting to see) and you have to provide them that info.

How CRO relates to CVO

Some marketers consider CRO and CVO as one and the same thing. Others believe that these two acronyms mean two different things.

Even to this day, no general consensus about this issue has been made.

In this context, we are going to look at CRO and CVO as two separate mindsets or processes.

Oftentimes, CRO is stigmatized as only:

  • Related to the process of optimizing for conversion rates.
  • Focused on what’s on the website.
  • Focused on converting visitors into buyers and not customers into repetitive customers.

But, those wrong assumptions about CRO are usually brought to life because of the name – conversion rate optimization – which kinda limits the space and impact of the whole process.

Because of that, some marketers prefer calling the process “customer experience optimization”, “experimentation”, or just “optimization.”

No matter how you decide to name it, there’s no doubt that the process – helps improve revenue – works for small, medium, and enterprise-level businesses. It works for eCommerce businesses, SaaS companies, and even lead generation brands.

This is something we can attest to having used the CRO process to help dozens of companies across different industries.

Having said that, so how do CRO and CVO relate?

CRO vs. CVO: What are the similarities?

Well, CRO and CVO might be regarded as separate initiatives, but they are two sides of the same coin. The goal of both channels is to improve customer experience and drive more revenue.

Here are some of the similarities between CRO and CVO:

Help you understand your customers better

You really can’t do any optimization work – whether it’s CRO, CVO, or SEO – if you do not understand your customers.

It’s vitally important to know who they are and what they want in order to fulfill their needs and enhance revenue.

This is where CRO and CVO can improve your eCommerce business.

Much of the research that goes into CRO or CVO has to do with who your customer is, what they need and how they need it.

Turn more visitors into high-value customers

Every business needs to have valuable customers in order to be sustainable.

Fortunately, part of the CRO and CVO research tactics involve reviewing your customer intake channels so as to find out where more of your best customers come from.

On the flip side, this also helps you see which channels and landing pages are underperforming.

For instance, let’s say you find that you get most of your great customers through social channels and your Google Ads campaigns are not converting well.

The most logical thing to do is to switch your marketing budget to channels with a better ROI.

Increase ROI on your existing traffic

One thing about CRO and CVO is that you don’t have to increase your traffic in order to get more conversions.

CRO and CVO allow you to increase customer lifetime value from the traffic you already have.

This can be achieved by observing your customers’ purchasing behavior, launching a survey, or conducting #JTBD customer interviews, and then tailoring a strategy around the information you have gathered.

By observing customer behavior, you can identify conversion bottlenecks and hurdles on your website that are causing customers to leave your website without taking the desired goal.

Once you have identified conversion roadblocks, you can then optimize your website and improve customer experience.

Help you get more repeat customers

Contrary to popular beliefs, conversion optimization efforts do not end when a visitor completes a desired action. You can rely on it to build long-term customer loyalty.

According to the founder of The Good, Jon MacDonald:

“Maximize your existing retention efforts CRO is like steroids for your existing customers retention efforts, creating a virtuous cycle. Customers come to your site and, due to your CRO efforts, convert at a relatively high rate. When they come back to your site, due to email marketing or retargeting, the repeat conversion rate is also relatively high because of the CRO techniques you’ve employed.” 

CRO and CVO tactics can help boost customer retention because they all can help you design a consistent shopping experience across your brand.

Spend less on ads

The more conversions you get from your existing customers, the less you need to devote to ads. In other words, the more value you get from your existing traffic flow, the less you have to spend on ads. The math is simply here, CRO and CVO can help reduce customer acquisition thus saving you a lot of money that can be used on improving some sectors of your business.

Conclusion: Which one should you focus on right now?

This can be a hard question to answer because both CRO and CVO strategies have a direct impact on your bottom line and can help drive your business growth.

But, in order to know which strategy to go with, you first have to know what problem does your eCommerce company has.

If you have enough traffic but fewer conversions, that means you have a conversion problem  – and that can be solved through conversion optimization.

On the other hand, if you have a customer lifetime value problem and you need to increase the average transaction value, then you need to have a customer value optimization system in place.

The thing is, you need customers to be converting first on your website before you even think about increasing the value they bring to you.

This means that a CRO program should precede a customer value optimization process.

Fortunately, you don’t have to outsource two different companies to handle your CRO and CVO programs. There are CRO agencies that can help you do both – it’s even better and cheaper that way.

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Simbar Dube

Simbar Dube

Simba Dube is the Growth Marketing Manager at Invesp. He is passionate about marketing strategy, digital marketing, content marketing, and customer experience optimization.

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