So you have an e-commerce or SaaS website, and you’re starting to suspect that your sales copy … sucks.
Like, really sucks.
Ever since you launched your product, you’ve noticed symptoms of Toxic Copy Syndrome breaking out across your website like a bad case of acne.
Symptoms such as:
- Bounce rates so high you don’t even check GA anymore.
- Email campaigns that generate as much enthusiasm as a letter from the IRS.
- An alarmingly sieve-like unsubscribe rate.
- Leads that appear to have Alzheimer’s, because they can’t ever seem to remember what your product actually does and why they should care.
You finally decide to bring in a fixer — also known as a professional copywriter. But like most startup owners, you’ve never hired a copywriter before and don’t have a clue what you should pay for one.
At one end of the spectrum, you’ve got freelancers on oDesk claiming they can produce “killer copy” for $12 an hour. At the other, you’ve got premium CRO consultants cheerily citing rates 10 to 20 times pricier without batting an eyelash.
What gives? How much SHOULD you pay for memorable, high-converting copy?
The answer, as usual, comes down to: “It depends.”
But not on what you might think.
Let’s Be Clear: Copy That Actually Converts
Doesn’t Come Cheap
Before we go any further, let’s just agree on a few points…
Decent copy takes time & skill.
Consistently high-converting copy takes time, skill, research, and statistical validation. If you’re outsourcing the job, this will cost you money — often quite a bit more than you might expect for what appear to be, you know, just words.
But on the flip side, we all know that effectively optimized copy can have an unbelievable impact on your sales performance.
Heck, the CRO case studies CopyHackers, Unbounce, and ContentVerve have published over the last few years are enough to make a startup owner downright salivate:
Just look at all those sweet, sweet conversion lifts …
So alluring …
So cost-effective …
So statistically significant …
Before you get completely seduced by these delicious case studies, repeat after me:
“In the world of CRO, not all percentage points are created equal. “
Depending on your business, a 25% conversion lift could mean an extra $100,000 in profit a year … or an extra 5 bucks.
Like I said, it depends.
This is why it’s absolutely crucial — before you start cold-calling copywriters and negotiating fees — to step back and objectively calculate how much value conversion-optimized copy is likely to generate for your business.
… because the hard numbers you end up with might just surprise you.
Introducing the One Metric to Rule Them All: Your cLTV
The key to accurately estimating how valuable CRO will be for your business is calculating what’s known as your Customer Lifetime Value (cLTV). Once you know your cLTV, budgeting for CRO — or any other marketing project, for that matter — becomes child’s play.
In a nutshell, your cLTV tells you — on average — the total amount of revenue a new customer will generate for your business over the long term. Once you know how much money your average customer is going to bring in, you have a clear ceiling on how much you should spend to acquire new ones (in other words: a limit on how much you can spend to increase paid conversions without going into the red).
If your cLTV is relatively high, then investing in professional CRO usually makes sense.
If your cLTV is low, then outsourced CRO is probably the last thing you should be thinking about.
Let me illustrate this with a few examples:
Example A: The Business That
Doesn’t Need CRO (Yet)
Let’s say an e-book author came to me looking for help with his landing page copy.
“My copy is terrible!” he writes in a slightly panicked email. “I need copy that converts like crazy and I need it YESTERDAY!”
We hop on Skype and he tells me he’s selling a $10 e-book and generating about 10 sales a month.
Right off the bat — thanks to the power of cLTV — I know that no matter how valuable CRO can be for an online business, a conversion optimization expert is not what this guy needs right now.
How can I tell? It’s easy, once you know what to look for:
Clue #1: He’s selling a one-time product for $10. This means his customers will buy once and won’t come back. So his cLTV comes out to:
$10 per order x 1 order/customer = $10
Each additional paid conversion he acquires from my services will increase his business’s revenue over the long term by … 10 bucks. That ain’t much.
Clue #2: He’s making 10 sales a month. Even if I wrote pants-droppingly good copy for him and increased his sales by 200% — a % lift any CRO expert would blog & tweet about — this would only generate an extra $200 per month for his business:
10 sales x 200% x $10 per order = $200 per month
Clue #3: As I mentioned before, high-converting copy takes time & money. Even if I charged just $1500 for his project, it would take this guy nearly 8 months just to break even.
Based on this breakdown, it’s pretty clear that professional CRO should not be at the top of this guy’s priority list. (In fact he’d probably better off brainstorming strategies to increase his cLTV, not his conversions.)
Now let’s look at a business for whom investing in CRO would be a no-brainer, based on its cLTV.
Example B: A Business That’d Be
Stupid NOT to Invest in CRO
Let’s say this time I get a project request from a tech startup. They sell a subscription invoicing service for $20 a month, and have determined that, on average, their customers tend to stick around for about 2 years. They currently get about ~10 paid signups a day.
With just these 3 data points and the magic of cLTV, I can quickly see that this business would score huge long-term wins with some solid CRO:
Clue #1: Their cLTV is relatively high. Their monthly fee might be just $20, but each customer pays the fee an average of 24 times:
$20 per order x 24-month retention = cLTV of $480
Clue #2: They’re acquiring new customers at a rate of 10 signups per day, which comes out to about ~300 signups per month. Even if I help them gain a modest increase in paid conversions — say a 10% lift — my services would generate an additional $14,400 in lifetime revenue for them within the first month alone.
$480 x 300 signups x 10% lift = $14,400
Clue #3: Based on the fact that they stand to generate so much value from CRO, we both know that investing the time & money required to get solid results will be worth it. Even if I charge $5,000 for the project, they’re likely to earn 3 times as much back in paid conversions within a matter of weeks.
Why Lifetime-Value-based Pricing
Just Plain Rocks
Ever since I discovered how effective cLTV calculations can be for budgeting CRO, I’ve gotten in the habit of using it during initial project consultations.
I won’t lie, plenty of new clients are surprised when they ask me for a quote and I reply by asking for a breakdown of their sales stats.
But despite the occasional raised eyebrow, I’ll be sticking with cLTV-based budgets from now on for 3 extremely good reasons (and I’d argue that you should, too):
1. cLTV-based fees are honest and objective.
Personally I’m not a huge fan of the time-consuming song & dance that comes with proposal-based negotiations (well, really, who is?).
cLTV-based projections are fast, transparent and 100% objective. We take a hard look at your data, quickly determine how much business growth could realistically be achieved with a given project, and decide whether it makes financial sense for both parties. No song & dance. No smoke & mirrors. Just a handful of honest numbers and a dash of common sense.
2. cLTV-based pricing filters for data-driven clients.
If I ask a new client what their average order value, retention rate, and profit margin is and they bashfully admit they don’t know, this is a pretty strong indication that their analytics & KPI tracking need work.
Conversely, if the client enthusiastically rattles off these numbers without a second thought, that’s a good indication that we’re on the same page, and we’ll be able to hit the ground running (erm, or testing).
3. cLTV projections reveal the true value of great copy.
I think it’s pretty fair to say that most people don’t really know what’s involved in writing great copy. I’ve read project requests that demand “elegant, short copy like Apple’s” and then offer 300 bucks for a site-wide overhaul. I’ve met business owners who scope their copy needs based on the number of words they need to “fill” the boxes in their wireframes.
cLTV-based pricing reminds clients what CRO copy actually is (i.e. copy that takes whatever form it has to to stoke customer motivations and minimize friction), and makes it clear, in no uncertain terms, what it can achieve for their business.
P.S. Want to start calculating accurate budgets for your own CRO projects? Download my CRO Budget Calculator spreadsheet and find out how much CRO is worth to your business (includes version for subscription / SaaS products!)
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~ Salvador Dali