Conversion Rate: Everything You Need To Know!
Key Performance Indicators (KPIs) have been around for decades. It's a tried and tested way to track how your business and employees are doing on a daily, weekly and monthly basis. One of the most important KPIs for digital marketing, sales and businesses is the conversion rate that happens when people visit your website or shop page on social media.
You don't need to track this metric on a daily basis unless you are in the early stages of developing a marketing strategy, it's usually reserved for weekly/ monthly meetings where you review the data with the relevant members of your team. Sometimes the information can be misunderstood, or lost in a noisy digital work environment. So, here's everything you need to know.
What is the conversion rate?
Before explaining how to calculate the rate of conversions, we need to clarify what a conversion actually is. The slight issue is that this can mean lots of different things, depending on your particular brand or business. For example, your goal for converting a customer into a sale may be to direct them (funnel them) into a certain part of your website, where they sign up for email marketing. Another brand could be simply be converting abandoned carts into sales via retargeting ads... as you can see, defining a 'conversion' is something you need to establish for your particular situation before calculating the rate.
The conversion rate itself is always displayed as a % (percentage). The core idea is that the conversion rate will clearly tell you how successful your goal is, based on the theory of 'the higher the better'. In broad terms it tells you: X number of people visited your website and out of X number only Y number went through with the desired action.
There are sources online for specific industries that can show you (on average) where conversion rates should be sitting. It's worth doing your research to find out what your brand should be aiming for. You don't want to be beating yourself up for having a conversion rate of 15%, when for your sector the industry standard is only 6%... so invest research time, and read up on current rates.
The great news is, through your team meetings you will already know what you want your customers to do, and your marketing arm will be well-versed in ideas about how to get you there. All you need to do is remember to monitor your conversion rate, and adjust your campaigns accordingly!
How do you calculate the conversion rate %?
The traditional formula is: Conversions / Visits = Conversion Rate
As with deciding on what you want to measure a 'conversion' as, you will also need to define what a 'visit' is. These could be on a more granular level such as clicks or sessions. Our advice is to look at the tool you are using to give you your metrics and insights, then use the terminology it uses. That way it avoids confusion when pulling reports.
Here's a straightforward example of retrieving your conversion rate. The brand is defining a conversion as a visitor who submits their email address and information to receive a newsletter:
- 1,122 September website visits
- 61 people during September submitted their email details and agreed to be signed up for a news letter
- 61 conversions/1,122 visits = 5.4% conversion rate
This brand would have already researched into the industry average for their particular sector, so if they see that the standard is 3%CR they can report that they are doing well. Yet, if the industry is running at 9%CR the brand will need to look at what part of the customer journey is preventing a higher uptake in signing up for newsletters.
That's why it's so important to measure the conversion rate. It is an immediate indicator of what's working in your marketing strategy.
What else does conversion rate affect?
A lot of businesses rely on GA (Google Analytics) and this is why it is essential to define what a conversion is for your brand. Google won't have any context for what your specific goal is if you are using it 'straight out of the box'. You must ensure that you have your Goals set up correctly, and continue to test them as time passes.
Alternatively, you may have inherited your set up, or be using it based on generic built-in metrics. When you are speaking with your tech and marketing people, make sure that you map out what you are looking for, and that every part of the reporting has been checked to focus on this. It is critical to find out if your tech stack and tools can deliver the right information to you before you start creating reports.
A good place to start with this is filtering and segmentation. Some key areas you should be looking at filtering are:
- By campaign or imitative
- By source or channel
- All website/page traffic
- By conversion type
- By pages/events/ actions taken during the session
How can I improve my conversion rate?
There's no quick-fix for this, because each business will have their own customised goals. Saying that, there is a broad area that you may want to concentrate on: traffic sources optimisation. Looking at your SEO, retargeting ads, ad creative, key words and everything that initially shows your website to a potential customer. The more people that click on that first offering = the more traffic you'll get.
We have plenty of blogs about what consumers are looking for in their online shopping journey in the 2020s - lots of things have changed since digital marketing was introduced 15+ years ago.
If you'd like to discuss anything with us, please use the contact section to set up a phone call!