Is AI-based CRO the future of marketing?

Is AI-based CRO the future of marketing?

17th October 2023

Right now, every marketer is being told to ‘do more with less’. In other words, they need to optimise; to get better results out of what they’re already doing. And someone who knows a lot about how to do that is Julian Thorne, COO of AI-enabled CRO solution, Sub(x).

Where AI solutions like ChatGPT come up with the next ‘best’ (AKA most likely) word in a sequence, Sub(x) comes up with the next best offer or action to offer website visitors based on their unique circumstances.

Rather than merely aggregating behaviours to create cohorts, it works on an individual level using a combination of entirely first-party real-time and historical data. Using over 50 data points from scroll depth to user history, a series of different AI models then work out which factors are most relevant to taking an action or not taking an action. Et voila! You have now maximised the likelihood of that visitor doing what you want.

Using AI for tasks like this isn’t new. While everyone obsessively bangs on about the power of generative AI, the world of optimisation AI has made huge strides in relative silence, with big businesses and tech experts already making the most of it. But this is the first time that this technology is available in a format accessible to laymen.

This democratisation has the power to revolutionise the way SME marketers work, levelling the playing field and allowing smaller businesses to compete against their giant rivals unlike ever before.

But does the readiness of solutions like Sub(x) mean that every marketer should bin off their traditional testing playbook?

Hasta la vista, A/B?

Naturally, AI-powered CRO provides better ROI than traditional testing methods. A/B testing may have been a faithful friend for decades, but it’s only really useful when you know nothing much about your audience beyond how to get in touch with them. After all, how do you decide what’s worth testing, and who gets to choose? These decisions all take time, they’re completely subjective, and can often lead to inadvertently ignoring big opportunities to boost conversion.

Julian cites an example where a previous client decided to serve its visitors a three-month subscription offer instead of a discounted one-year subscription offer because the former provided higher LTV in an A/B test. But the results showed that there were still plenty of people who would prefer to pay for the year up front — just slightly less of them. Just imagine all the year-long subscription sign-ups they missed out on as a result.

In contrast, an AI optimisation solution like Sub(x) would’ve intuited the signals that a visitor was more likely to want the shorter or the longer subscription, then served them the appropriate offer instantaneously, increasing conversion across the entire audience without hours of human bias-fuelled back-and-forth.

It sounds like a miracle cure for marketers being asked to ‘do more with less’, but there’s one small catch. The data-set used needs to be a certain size to accurately spot the correlations between visitor data and the amount of interaction an offer receives. If your offer gets a high number of clicks, you don’t need as many visitors for the AI to work its magic. Likewise, if you’ve got a low number of clicks, you need a bigger audience — 500,000 unique hits per month, to be precise.

Those who don’t have that level of traffic yet may need to rely on traditional tools for now, but if you’re lucky enough to be pulling those numbers already, you can realise the benefits of AI-based CRO immediately. Well, providing you can get your finance team on board with it — but Julian doesn’t reckon that’ll be a problem.

Finance teams: you’re going to love this (eventually)

Having worked in subscription management since his professional life began, Julian has pinpointed two key evolutions. ‘Businesses have, over the years, moved from product-centric to customer-centric, which means marketing has come more to the forefront,’ he says. ‘The other big change that I’ve noticed is that marketing and finance are working together these days. They’re working on the same metrics.’

In contrast to the siloed olden days, today’s CMOs and CFOs tend to speak the same language, with finance teams becoming increasingly well-versed in marketing terminology over the last five to ten years. Julian attributes this to an increase in third-party investment.

‘CMOs are obviously interested in CFOs because that’s where the money is,’ he says. ‘But CFOs are increasingly interested in CMOs because investors increasingly understand the return on marketing spend and speak the same language.’

‘Rather than looking at a P&L in a year, the CFOs are thinking, “What value am I creating?” Because marketing doesn’t deliver in the month, does it? You spend it in that month, you don’t get it back in that month — that’s called sales. Whereas marketing creates future value in order to justify that spend. The CFOs need to understand that. And they do because the investor community understands that.’

But speaking the lingo doesn’t necessarily mean that finance departments aren’t going to take a bit of convincing to embrace AI-based CRO.

‘Finance understands A/B testing. Everyone understands A/B testing. It’s not a difficult concept to grasp, testing two things and then there’s a winner and a loser,’ says Julian. ‘With AI, there’s not a winner and a loser. There’s just the right offer to the right person. So there’s a slightly more sophisticated story that needs to be told for people to understand that.’

To mitigate cold feet around moving on from split testing, Julian likes to refer to it as ceding control, rather than letting AI replace the existing process — or the marketers involved, God forbid. ‘We talk about delegating responsibility to AI, which I think is quite neat because you don’t delegate something unless you trust the person you’re delegating to.’

And generally once a finance department tries AI for CRO and sees an improvement, they do trust it. Especially when they see the amount they can save on media spend because of it. ‘Why are you spending more money with a third party when you can’t convert that audience
when they land on your website?’ says Julian. ‘If you can turn around and say, look at the increase that AI is delivering when that audience arrives, then that frees up more budget from the finance director to grow your business.’

And it’s not just finance teams that need a shift in mindset. Marketers can help the process and put CFOs at ease by focusing on value creation, rather than activities alone. There’s often a disconnect where marketing teams are too concerned with the metrics on their outputs rather than outcomes the business cares about, like CLV or CCA.

The perks of AI-based CRO for your business are clear but, for marketers in particular, half the benefit of embracing AI is the freedom to stop obsessing over engagement or particular tactics, and start focusing on the success of the company — an attitude that’s likely to get your C-suite’s attention for all the right reasons.

And if AI CRO can transform your media spend ROI via your inbound channels, just think of the success you could achieve if you applied the same across all of your outbound activities, too. Now that’s doing much more with less.

Listen: From closing the loop on media spend to eradicating the limitations of human subjectivity, get the full picture of how AI can help you get more out of your marketing in the full podcast: A/B seeing ya! Is AI the end of split testing?

Written By
Ornella Weston is the managing director of boutique agency Duckman Copy Ltd. Throughout her career, she’s written everything from white papers to websites, from billboards to board game instructions. Now it’s time to add op-eds to the list. The marketing world is full of flops and failures, often at great...
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