Inflation is one of the best ways to reduce the purchasing power of your money. Over the last 7 years, the value of money has dropped drastically. If you were holding $1000 in your pocket in 2010, but the time that you reached 2017, that same $1000 would now be worth only $868.37. This is a reduction of $131.63. That’s a pretty serious decrease!
According to Inflation.eu since 2010 the value of money has been reduced by approximately 13.16%. You can study the following chart for more details:
| Year | US Inflation Rate (%) | Monitory Value | Real Value After Inflation |
|---|---|---|---|
| 2020 | 2.62 | $891.74 | $868.37 |
| 2019 | 1.26 | $903.11 | $891.74 |
| 2018 | 0.12 | $904.20 | $903.11 |
| 2017 | 1.62 | $919.09 | $904.20 |
| 2016 | 1.47 | $932.80 | $919.20 |
| 2015 | 2.07 | $952.52 | $932.80 |
| 2014 | 3.16 | $983.60 | $952.52 |
| 2013 | 1.64 | $1,000 | $983.60 |
Now, if you check the data of the average cost per click for the last 5 years, according to Hochman Consultants, and using the trend for 2017’s average cost per click, you can see a tremendous reduction in sales while still spending the same amount of money on Google advertising.
According to Hochman Consultants “To provide useful guidance, our benchmark shows average results for a group of approximately fifty advertisers on the Google AdWords ad network. AdWords text and image ads are displayed alongside and above the main Google search results, and also on Google’s content network sites. Our advertisers include companies in a variety of industries with a mix of local, national and international campaigns. Our data set is not necessarily representative of the entire market, but neither is the Dow Jones Industrial Average.”
So, in 2012 you would have been able to generate a net return of $2380.95 for your $1000 expenditure, now the value has been reduced to just $763.36. Which means instead of profit, you have a loss of $1617.59. This shows that to gain the same profit as you would have done in 2012 your conversion rate needs to increase from 1% to 3.11%. Check out the following table for additional information:
| Year | CPC | Click Received / $1,000 | Sales (1% CR) | Net Profit ( $20/Sale) |
|---|---|---|---|---|
| 2020 | $2.62 | 382 | 38 | $763.36 |
| 2019 | $2.14 | 467 | 47 | $934.58 |
| 2018 | $1.58 | 633 | 63 | $1,265.82 |
| 2017 | $1.02 | 980 | 98 | $1,960.78 |
| 2016 | $0.92 | 1,087 | 109 | $2,173.91 |
| 2014 | $0.84 | 1,190 | 119 | $2,380.95 |
After analyzing the data, we can easily understand the benefits of successful conversion rate optimization. In today’s world with trillions of websites out there, multiple modes of advertising available to everyone from paid to organic or print media and digital media etc, users are much more aware and also blind to marketing efforts.
In this changing world, we need to have a strategy which can reduce user bounce rate and exit rates from a website or application. We need to display trust, security, quality of services and products to the users and, in addition, we need to reduce friction and distractions for all sites visitors.
A step-by-step analysis of the sales funnels, analytics data as well as heat map data can help you find the conversion leaks within and on your website or application. So, to maintain the profitability, if you can spend as little as 10% of your marketing expense for a conversion rate expert, it can increase your overall website revenue drastically. Stop going off of gut feeling and other methods and start investing in hiring a professional conversion expert today. Remember, you’ve got a money leaking website that needs to be fixed! And then start seeing what kind of revenue you can really be making.