So you spend all this time optimizing your PPC campaigns. CTRs are good and increasing. Costs are declining while traffic is increasing. However, your conversions are not trending the way you want or you are converting but like any good, competitive human being, you want more.
Its time to start the cycle of landing page optimization.
Question: Why not just start making changes to see if your landing page's conversion rate increases? Good question. I would respond with a question, "How well do you know your target market?" Its a basic marketing mistake to assume that you already know the best way to communicate with your market. Granted in more traditional forms of media you have to take that leap of faith, but not on the internet. Further more, one might say, we will make the changes and just watch the analytics. True you could do that but analytics is more for answering post-mortem "why" type questions.
Take it from me, and I know from experience, you do not want to be in the situation of figuring out which version landing page worked better based on performance data. Its doable, but it creates an extreme mess of data that is way better to avoid.
Landing page optimization takes two pages (or mulit-variables) and gives you a nice clean answer. If you want to know why one worked better than the other, use your analytics and conduct more tests.
Now, back on topic. The concept is simple. Continuous improvement. Obviously, you start with a leap and put something out there and see how well it converts. Allow some time to steep. You want to build up a good baseline in your analytics. Now create a page with minor variations (I should say variation, to keep the test pure), and run the optimizer for at least two weeks. If you are using Google Web Optimizer, it will tell you when there is enough data to give a statistically significant result. During those two weeks you should be watching the analytics, making observations and readying the next variation.
Now I think that most successful people in the PPC world generally have analytical, logical, scientifically oriented minds, but I will say this anyway. Apply the scientific method. Generate a hypothesis and test it. Be deliberate in this method, that way you can keep your tests clean and truly start to learn about the market.