# Is optimization even worth it?

June 2020

*This post was originally sent out as an email to my now-defunct mailing list. You can read all such posts here, if you like.*

Before you let a slick CRO ninja sell you on optimization, or before you sink another precious hour of your own time into it, what’s the potential upside? Let’s take a few minutes to figure it out.

**1. What’s a conversion?**

You’re probably measuring free trial signups, or leads passed to the sales team. Whatever it is, be clear about how you define it (and make sure you’re tracking it accurately).

**2. What’s your website conversion rate?**

You can measure this by visitor (“3.7% of visitors sign up for a trial”) or by time period (“We get ~250 signups per month”). Make a note of each.

**3. What’s a conversion worth?**

To get here, you have to work backwards. What’s a *customer* worth?

If you know your average Customer Lifetime Value (CLV), start with that. If not, estimate it like so:

*CLV = (Average monthly revenue per customer) x (Average # of months a customer sticks around)*

Now that you know what a customer’s worth, you can calculate the value of a signup, or lead, or whatever you’re measuring on the website. Let’s say it’s leads:

*Conversion value = CLV x (Average % of leads who become customers)*

**4. How much would a 5% increase in conversions per month bring?**

Suppose your spend 6 months on optimization, and see a 5% increase in your conversion rate. What does that mean for the business?

*Number of additional conversions = (Conversions per month) x 5%*

*Value of additional conversions = (Number of additional conversions) x (Conversion value)*

If you followed along, you’ve got a dollar amount in front of you. How does looking at that amount make you feel?

*Excited! Wow, this would be huge!* Time to call up that slick CRO ninja and take out your checkbook.

*Underwhelmed*. Try assuming a bigger increase. 10% instead of 5%. Or 50%, or 100%. How much of an increase does it take to make things exciting?

Depending on where you’re starting, how well you execute, and your luck, seeing 50% improvement might be completely realistic. But targeting a 50% increase is way different from trying for 5%. Just make sure that CRO ninja has a plan to get you there.

Which brings us to the missing piece of this puzzle - what’s an “average” conversion rate? How do you know if expecting a 50% lift is reasonable, or crazy town? I’ll have some help for that on Friday.

In the meantime, if you’re interested in going a little deeper on these calculations, check out this post.