By Michael Scharff, Evolv AI
For most digital leaders, doing business online is about solving two specific problems: getting visitors to their digital properties (customer acquisition) and getting those visitors to become customers (driving conversions). With the pressures to drive growth at an all-time high, many companies are focused on improving their customer experience (CX) to drive more business. But the reality is that despite increasing resources to drive more traffic and conversions, the returns are diminishing.
Companies Are Spending Too Much On Driving Traffic
Today, most companies are battling to get traffic and paying more and more on digital ads and pay-per-click search. Recent surveys show that U.S. digital ad spending will increase by 25.5% this year, the fastest growth rate since 2018. In the UK, 74.8% of total media spend is digital, with Google accounting for 39.6% of the total digital ad spend and Facebook 28.9%.
Companies are creating more customer funnels and building dozens or even hundreds of landing pages to better connect with different customer segments. The name of the game has become figuring out how to stay ahead of the ever-changing algorithms of Google, Facebook, Amazon, and others. For many companies, this has resulted in a very complex and unmanageable maze of digital properties with little ability to know what is working to engage visitors and customers better.
Companies Are No Better At Driving Conversions
Looking at conversion funnels helps to visualize the amplitude of the problem. Global averages show that only 43.8% of visitors make it to a product page in the first place, and only 14.5% end up adding an item to the shopping cart. From there it gets worse, with the global average conversion rate at 2.27%, which declined year on year from 2019.
Putting some real numbers to this: a website that gets 250,000 unique visitors per month with an average order value of £100 has a potential monthly revenue of £25 million. That means, at a 2.27% conversion rate, a company can only expect to get £567,000 of that £25 million – that is a lot of lost potential business.
Going Beyond Customer Acquisition And Conversions
The answer is reasonably simple and requires a shift away from acquiring more visitors and marginally improving how many convert. The race to get more visitors is simply a losing battle, with costs rising and diminishing returns every day. The solution is to focus on CX and doing more with the visitors and customers that visit a company’s digital properties.
AI Is Uniquely Suited To Solve The CX Challenge For Companies
Companies need to go beyond simply testing and focus on continuous optimization. Artificial Intelligence or AI-driven optimizations offer a different approach by constantly working to find the best digital CX. It starts by identifying the key performance indicators (KPIs) that a company needs to achieve and using real traffic from live visitors and customers to experiment with different experiences.
A Real-World Example Of AI Optimizing CX For Significant Growth
In 2018 a major Mobile Operator was running on average 100 optimization experiments per month to increase conversions and drive growth. Their focus was on selling upgrades to existing customers through phone upgrades and more expensive plans, as well as accessories and insurance policies. In 2020, the same team using AI-driven optimizations was able to serve up more than 500,000 unique ideas to customers, resulting in an increase of conversions and an overall growth of 370% or 3.7 times over 18 months for their online sales.
This was accomplished by focusing on several aspects of the customer experience, including cart abandonment. The results were fewer customers dropping out at the checkout point and increased revenue per transaction. They accomplished this astonishing growth by focusing their efforts on providing a highly relevant customer experience and continually experimenting at a scale and speed previously unattainable.
Using AI, they were able to find the low-hanging fruit in terms of winning experiences. The AI went beyond individual ideas and experimented with many combinations and variations. Finding winning experiences resulted from thousands of ideas and combinations, which the AI methodically sifted through quickly and efficiently. This worked because the AI used responses from real visitors and customers to learn what worked and what did not. As winners emerged, more traffic was dynamically allocated to those ideas allowing the Mobile Operator to drive results immediately. The team running the optimizations also leveraged the AI’s ability to add new ideas and modify and remove existing ones without interrupting the experiments or resetting any learnings gained. This ensured they kept delivering even better results and continuously adapted to changing market conditions.
It Is Time To Flip The Equation On Its Head
It is time for companies to stop chasing search and marketplace algorithms and guessing how to drive more conversions. AI-driven optimizations put the power back in the hands of companies. AI delivers results from actual visitors and customers with the ability to pause low-performing ideas, add to high-performing ideas, and change ideas without having to restart the optimization or lose any of the gains already realized. This delivers a new way to drive growth and stay agile to respond to customer needs and market forces quickly.
About The Author
Michael Scharff is the CEO of Evolv AI.