How To Use Chaos Theory To Optimize Your Sales Funnel

This post is a portion of this bigger post that I recommend you read first; however, if you don’t – you’ll still gain some valuable insights!

Preface

The sales/marketing funnel is a system made up of several parts. All parts must work together in order to maximize the desired results.

Sales Funnel System

What Is Chaos Theory?

Chaos theory is a field of math that studies the behavior of dynamical systems that are highly sensitive to initial conditions [Wikipedia]

This can best be illustrated through The Butterfly Effect:

It has been said that something as small as the flutter of a butterfly’s wing can ultimately cause a typhoon halfway around the world – Chaos Theory

Essentially, there can be some small, and seemingly meaningless change or event that results in a totally different and unexpected result. For example, a butterfly flapping its wing that causes a typhoon.

But, let’s keep this conversation in context of your sales funnel.

The Butterfly Effect On Your Sales Funnel

You have your system, like the diagram above displays, and at the top is your Traffic Source [initial condition].

Let’s say you’re using Adwords to drive traffic to your sales funnel and you decide to make a change to your campaign.

You add the negative keyword – free.

You probably shouldn’t have been using that keyword anyway, because nothing on your site is free, but you didn’t know negative keywords existed until a few minutes ago. Lesson learned.

So, after you add your negative keyword – your system conversion rate shoots up 350%. Because now you’re driving much more qualified, better, traffic.

Who’d a thought that one, four letter, word could change the entire system that much?!

That’s Chaos Theory in action.

Applying Chaos Theory To Your Sales Funnel

There are three rules to applying Chaos Theory to your sales funnel:

  1. Start At The Top
  2. The Further Down, Make More Significant Changes
  3. One Change At A Time

1. Start At The Top

The effects of the changes you make will trickle down.

If you make a change to your ad, it WILL impact how well your squeeze page performs, which will impact how well your emails perform, which will impact how well your sales pages perform.

If you make a change to your final sales page, it’ll only impact the conversion rate of the sale.

When it comes to optimizing your sales funnel, you need to start at the top – with your traffic source.

Heck, if you can really nail down the first two parts (traffic and squeeze page [landing page]), and only do a mediocre job on the emails and sales pages – you’ll be able to create awesome sales funnels!

2. The Further Down, Make More Significant Changes

The further down in the sales funnel you make changes, the more significant the changes need to be.

For example, at the top – adding the negative keyword “free” could have a dramatic impact on the whole system. Whereas, on a sales page, changing the color of a button will result in insignificant changes.

When testing later sections – make big, bold, changes.

Change the whole layout. Change all the wording. Heck, change the product (if it makes sense).

Don’t waste time testing colors of buttons. Please.

3. One Change At A Time

The third and final rule is the most important – only make one change at a time.

How?

  • You have your “before” system conversion rate – write it down.
  • Make the change.
  • Wait until you have enough statistical significance [defined below]
  • Attain your “after” system conversion rate – write it next to the “before” system conversion rate.
  • Compare the two.
  • If “before” is better than “after”, revert back to “before” setup. If “after” is better than “before”, keep changes.

Without having super fancy tools and a PhD in mathematics, this is the only way for “normal” people to test their system – ONE CHANGE AT A TIME.

I mean, how else will you know if what you changed worked if you change everything all at once? You’ll be right back where you started, albeit with a new, un-optimized, system.

Statistical Significance

Comparing the before and after isn’t hard, but it will require discipline.

First, you’ll have to segment your audience based on “before” change and “after” change. The easiest way to form each segment is based on date: If the person entered your sales funnel before the date of change – they’re in segment A. If they entered your sales funnel after the date of change – they’re in segment B.

* Disclaimer: Date is not necessarily the best choice because different date ranges may yield different results, especially if your business is seasonal. The best option would be to run the tests simultaneously; however, this is more complex to implement.

Now, you have to wait until you reach statistical significance.

Fortunately, there are free calculators to help you with this!

Get Data Driven has a nice, simple one – that works, so we recommend it.

Get Data Driven - 1

So, how do you use it?

  • You see the two segments - A and B, just like we separated above, based on "before" and "after"
  • The number of visitors on this page was - enter the number of individuals that clicked on your ad
  • The number of overall conversions was - how many people, ultimately, made the purchase (remember, it's the whole system)
  • Conversion rate - calculates the conversion rates for you
  • Your results - tells us how different our two segments are based on a percentage of certainty

Certainty?

Right!

You want to be certain the change you made is actually creating the results and not some random event.

The goal is 95%, or greater.

Anything less, and you're left with too much room for error.

Look at this example:

Get Data Driven - 2

Kind of surprising, right? We're only at 81% certainty.

You'd think Segment B is clearly better; however, based on the numbers ... it's not ... and it would be too risky to assume B is better than A.

So ... how do you get to Statistical Significance?

Simple answer - more visitors and/or more conversions:

Get Data Driven - 3

Notice how we still have the same, exact, conversion rates ... but, now we're 96% certain that Segment B (the "after" changes segment) is better.

Now, we can keep the changes we made as permanent changes, and start a whole new test!

Summary

  • Changes you make at the top of your sales funnel affect all subsequent portions of the system.
  • Nail down the first two parts of the sales funnel - traffic source and Squeeze Page before spending tons of time and effort on the remaining portions.
  • When you do make changes to the bottom half of the funnel, make sure they're big, bold, changes.
  • Patience is a virtue. It's fun and exciting to change a bunch of things and think you're making a difference; however, it's not an accurate, nor productive way to optimize your sales funnel.
2017-07-02T11:55:34+00:00

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