Conversion Rate Definition: How to Calculate Conversion Rate

Conversion rates compare the number of visitors to a site or ad against the number who complete a desired action. As an example, suppose one hundred people visit your homepage but only five of them purchase a product on it. This indicates you have a five percent conversion rate.

For many businesses, conversions occur when potential customers become paying customers. In other instances, they might happen when someone follows a social media page, signs up for an email list, or downloads a white paper. Companies and entrepreneurs use strategies ranging from search engine optimization (SEO) to social media marketing to improve their conversion rate optimization (CRO).

Conversion rates are a sign your marketing strategies are working. They’re one of the key performance indicators (KPIs) you can use to see if you’re getting a premium return on investment (ROI) on your ad and outreach budgets. For instance, a low conversion rate indicates you’re spending more on a pay-per-click (PPC) strategy than competitors with a higher conversion rate do. If you can bring in more customers for less money, you’ll increase profitability for your business.

A good conversion rate is one indicating you used your lead generation to convert as many new customers as possible. The average conversion rate might differ from one industry to another. For instance, e-commerce conversion rates often clock in lower than those of B2B businesses. To determine what makes for a good conversion rate, look into what the average one is for your industry and then aim to top it.

Even though calculating a conversion rate might sound complex, it’s very easy in practice. Follow these simple steps to calculate your own:

• Assign your two metrics. To define your variables, define the audience you’re going to study as well as the desired action you hope they’ll take. Suppose you’re targeting one thousand people to subscribe to a streaming service. The website traffic this campaign generates in general constitutes the first metric, whereas the number of people who subscribe comprise the second one.
• Collect your data. Now that you know the types of conversions you hope to monitor, sit back for a predefined period of time to let your campaign take effect. Tracking website conversion rates can take weeks, months, or even years as you see how effective your marketing campaigns are. You can still try out A/B testing and other strategies throughout this predefined period.
• Divide conversions by interactions. The conversion rate formula template stays pretty much the same no matter which exact metrics you’re using. Suppose five hundred of the people your ad campaign targets become website visitors. These are your interactions. Now imagine fifty of those five hundred become subscribers. These are your conversions. Divide fifty by five hundred and you get 0.1, or a ten percent conversion rate.

A high conversion rate will improve your business’ bottom line. Keep these tips in mind as you strive to meet your conversion goal and increase your company’s profitability:

• Alter your CTA. Talk with your marketing and sales teams about how you can generate the most effective call to action possible. A clear and compelling CTA has the best chance of bringing in a high number of people to convert. Aim to create a sense of urgency and need in your customers, as well as a firm feeling your company can help deliver on this desire.
• Clarify your value propositions. To increase your number of conversions, make sure your users know what you’re offering in the first place. Imprecise value propositions can sink marketing campaigns. Define just what you want to pitch to your potential end users and coordinate your strategy around stating this in clear and attractive terms. Include customer testimonials attesting to your success in delivering on these value props.
• Do market research. Talk to consumers about what is or isn’t working about your conversion messaging. Ask users what makes them tick and tailor your marketing to their suggestions. This can help improve your click-through rate and make conversions more likely. Digital marketing is ultimately an interactive process between businesses and end users.
• Offer more incentives. You might need to offer perks to consumers as you seek to boost your overall conversion rate. As unique visitors visit your site every day, give each of them a tangible reason why they should complete a conversion for your business. For example, if you’re trying to get more people to sign up to your newsletter, you could offer them a discount code to your online store for doing so.
• Overhaul your branding. If you’re not noticing any improvement in your conversion tracking over an extended time period, it might be time for a holistic brand overhaul. Take a look at whether there are any impediments throughout your sales funnel. Reach out to your target market to see how you can rebrand in a more appealing way.
• Try A/B testing. Conversion optimization relies on a lot of trial and error, and A/B testing will help you accomplish this in an efficient, effective way. In this style of testing, you come up with two separate marketing strategies and track their performance simultaneously. After the campaigns are over, take stock of which had more success. Make your assessments as to why one proved more effective than the other, and double down on the strategy in the future.
• Tweak your UX. It’s possible your user experience (or UX) is making it difficult for your potential customers to complete conversions. Perhaps the checkout screen doesn’t follow an intuitive design pattern, or maybe your landing page is hard to navigate. If you tweak your UX to make it more user-friendly, you have the potential to increase conversions.

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