Scenario 2: Improving the Conversion Rate
Instead of spending more on ads, the business decides to use its marketing budget to improve their conversion rate by investing 70,000 AED in website optimization and design.
Let’s assume that this optimization leads to a 1% increase in the conversion rate, bringing it to 3%.
Revenue = Average Order Value x Conversions
Revenue = 500 AED x (10,000 visitors x 0.03) = 150,000 AED
Profit = Revenue – Website Build Cost
Profit = 150,000 AED – 70,000 AED = 80,000 AED
In this scenario, despite the same amount of website traffic, the higher conversion rate leads to increased revenue and a far healthier profit margin.
The key takeaway?
Improving website performance (to increase conversion rate) can have a greater impact on revenue and profit than simply spending more on ads to drive additional traffic.
Remember, the website rebuild is also an initial one-off payment, whereas you will have to continually invest more in ads to sustain any sort of success. Equally, this is only from a 1% increase in conversion rate, which is a relatively conservative prediction.