by Mats
Increase your site speed before you invest in marketing
A while back we talked about building a performance culture and how analysts at Portent found that conversion rates could more than double when improving Page Load Speed.
Portent recently did an updated analysis on the subject by creating a 30-day snapshot of 20 e-commerce sites (14 B2B and 6 B2C) and they got to the same conclusion - a maximum loading time of two seconds has a great impact on an e-commerce company’s revenue. And a blazing fast site that loads in just one second actually has a conversion rate 2.5x higher than a site that loads in five seconds. The updated analysis also showed that site speed in general slightly improved from the previous test back in 2019, 86 % of the tested sites had a page load speed of 5 second or less compared with 81% in 2019.
When taking a closer look at the Transaction Conversion rate for users completing a checkout, we find some interesting numbers. High performing sites (loading speed of one second or less) have a conversion rate of 3.05% while poor performing sites (four seconds or more) have a conversion rate of only 0.67%. That means that those sites must increase the number of customers starting a checkout process with 4.5x to get the same revenue on the bottom line! Wow!
So, let’s stay with that thought and do a very simple calculation on how much you would actually need to invest in marketing to get that 4.5x increase of customers. Please note that this is just a play around with numbers and not a real analysis, but we still think there are interesting insights worth noting.
Suppose you have 1000 visitors before you start the campaign. Also say you know that your customers mainly use Facebook, and you are planning for a Facebook campaign to gain more customers. We don’t want to make the calculation too complicated so assume that every new potential customer is derived from this campaign. You would have to pay, in average (January 2022), $ 0,94 per click (CPC) on Facebook so to get additional 3500 potential new customers you would need to pay Facebook $ 3 290. You need a good margin or very high prices on your products to motivate this marketing cost for only 23 new customers (0,67% x 3500).
And to have the same volume over time you need to run this campaign 24/7 in order to have the same amount of paying customers as a lightning-fast site.
But what if you actually had that lightning fast site and decided to run the same marketing campaign? That would result in a lot of increased revenue for your money. If you pay $ 3 290 and get 3500 new potential customers, you would add 107 (3,05% x 3500) new paying customers instead of those 23 if your site having a page loading speed of 4 seconds. And if your average checkout is $200 you will increase your revenue with $ 21 400 if your page load speed is 1 second, and only $ 4 600 if your site page load is 4 seconds.
As mentioned, this was just a theoretical and a simplified calculation, but I think you see the huge advantage you get with a lightning fast site.