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Does it sound like a religious metric or a tough-to-calculate marketing metric?
No matter what it sounds like, in reality, the conversion rate is an easy-to-calculate metric that measures the effectiveness of advertising campaigns.
The conversion rate indicates how well your ads performed and how successful they have made your audience do what you want them to do. In a nutshell, the higher your conversion rates, the better!
Today’s post is all about conversion rate. I’ll take you through its definition, conversion rate formula, conversion rate calculation with examples, and 10 actionable tips to improve your conversion rates.
A conversion rate can be defined as the percentage of website visitors, out of the total visitors, who take actions and complete and desired goal (conversion). In simpler terms, a conversion rate is the percentage of users who converted out of the total number of website visitors.
Generally, your marketing strategy defines the user actions mentioned here. They may be clicking on an ad, viewing a second link, downloading a digital asset like B2B eBook, signing up to receive the latest updates and offers, or subscribing to the company newsletter.
It is needless to say that a higher conversion rate indicates campaign success. It signals that your marketing efforts have been fruitful – your target audience wants what you’re offering, and they can get it easily!
Elaborating further, in the marketing world, conversion happens the moment a user responds to a call-to-action or CTA. This can mean:
Having hundreds of leads isn’t enough. If none of these leads convert, it will kill all the fun. No?
Let me give you something to think about. Suppose you had 500 people signing up for your mailing list in the previous month. Your first reaction would be, ‘Yay! Let’s celebrate!’😁
But if you discover that 500 signups came from more than 50,000 website visitors, perhaps, you’ll no longer want to celebrate 😔. That’s because 500 signups out of 50,000 people would mean only 1% conversion rate, and that calls for tweaking some of your content.
A high conversion rate is indicative of success. It tells you how effective your marketing efforts are. In fact, the conversion rate is one of the most accurate metrics to determine the effectiveness of your marketing campaigns.
Conversion rates compare and contrast the performance of multiple advertising channels. They do not always mean clicks. Conversions can also happen further down the funnel. For example – Marketers can identify valuable users by calculating the percentage of users who install an app or take an in-app action. Marketers can feed this information into the funnel to better target and optimize campaign performances.
When used in the right way, conversion rates analysis can disclose the most effective channels for advertising your product. Also, it can guide your strategic decision-making.
Conversion rates also give you insights into your segmentation efforts. Once you know your conversion rates, you can create better marketing campaigns for social media and other channels. You can target specific users better based on their location, different categories, interests, buying pattern, and more.
Perhaps, you haven’t heard before that conversion rates are often categorized as micro and macro conversions.
Macro conversions are the user actions that represent your organization’s primary goal. For instance, if you have an eCommerce website, the macro conversion is likely buying a product.
Micro conversions refer to micro goals. They are the user actions that are either;
In an eCommerce website, adding a product to the cart can be considered a micro conversion as it is necessary to achieve the macro conversion of making a purchase.
Let me give you a few examples of macro and micro conversions.
Macro conversions may differ by industry. Here are a few common examples:
Coming to micro conversions, they are pretty common across different industries. A few examples are:
So far, so good! Understanding conversion rates is pretty easy, no?
Now, let’s have a look at the conversion rate calculation so that you can determine your conversion rate.
Here are three conversion rate formula that you can use based on the gathered data.
Conversion Rate = Total number of conversions / Total number of sessions * 100
Conversion Rate = Total number of conversions / Total number of unique visitors * 100
Conversion Rate = Total number of conversions / Total number of leads * 100
Note that, all of these conversion rate formula are valid. You can use conversion rate calculation depending on what you are defining as your conversion event and how you measure traffic.
With the given conversion rate formula, conversion rate calculation is easy. Here's a conversion rate calculation example to help you understand the formula better.
Suppose you are a B2B SaaS company and your conversion goal is to have the leads go through the sales funnel and finalize the purchase of your product.
Your company gets 100,000 leads in September; your sales reps close 2500 deals out of these leads. So, what’s the conversion rate?
Conversion Rate = Total number of conversions / Total number of leads * 100
= (2500/ 100,000) * 100 = 2.5%
So, your conversion rate calculation tells us that your company has a conversion rate of 2.5% in the month of September.
Suppose you gather the required data, perform conversion rate calculation and find your conversion rates. How will you know if your calculated conversion rate is good or if you need to improve?
So, in this section, I will tell you everything you must know about a good conversion rate.
A good conversion rate is much higher than you think. Conventional wisdom says a good conversion rate is between 2 percent and 5 percent.
If you have a conversion rate of 2 percent, you have entered the ‘good conversion rate bracket,’ but you can still improve. A jump from 2 to 4 percent indicates a massive celebration, as you have just doubled your conversion rate. Well, congratulations, but you are still sitting on the average performance bench.
Then, what is a top-notch conversion rate? The straightforward answer is 10 percent. Regardless of your industry, you are doing well if you have a conversion rate of 10% and above.
Going by the 2022 statistics, the average conversion rate for websites is approximately 2.35% across all industries. Though certain industries will have higher conversion rates than others, the recorded conversion rate is 11% for the best-performing websites.
Did you know there’s a huge difference between the top-performing companies and the worst-performing ones regarding Conversion Rate Optimization (CRO)?
The top 25% of websites have a minimum of 5.31% conversion rate, and the top 10% have a conversion rate of 11% or more. That’s around 5 times more than the average rates.
Considering all the given numbers, if you think you can take your conversion rates higher, then you surely can. Here, I have listed 10 effective ways to improve your conversion rates.
Though call-to-action or CTAs are small buttons on your website, they play a huge role when it comes to conversions. Easy to miss out on, CTAs are the links that direct visitors to take specific actions.
For B2B SaaS companies, ‘schedule a demo’, ‘book a call’, and ‘contact’ are a few common CTAs. Other than these, ‘register now’, ‘add to cart’ are typical to eCommerce websites.
One effective way to improve conversion rates is to experiment with CTAs. Not only with the CTA text but also its position and color. You must focus on how prominent it is and whether or not visitors can clearly see the CTA button.
Optimizely experimented with their homepage CTA and changed the text from Get Started to Test it Out. It resulted in a 27% increase in conversion rates. Quite convincing, no?
So, start experimenting with your CTAs. Change the language, position, and color and see what works best with your target audience.
When claiming something, back it with evidence. Today’s consumers are smart, and they won’t believe in anything blindly. Hence, social proofs are another effective way to improve your conversion rates.
Research says that 79% of customers consider online reviews as personal recommendations before making a purchase. So, adding social proofs ware necessary to make people trust you. Here are a few ways to add social proofs:
Keep your buying process easier to improve your conversion rates. Today’s consumers have a much shorter attention span compared to what they had a decade ago. As Google provides instant access to millions of websites, consumers keep jumping from one site to another.
Etsy experimented with its user experience by adding 160kb of hidden images to slow down its mobile pages. As a result, Etsy witnessed a 12 percent increase in its bounce rates. This indicates that your website design must be as intuitive as possible so that your users do not feel overloaded and the pages load quickly.
To keep things super simple on your website, consider the following.
Pop-ups can catapult your conversion rates. According to a study, the average conversion rate of pop-ups is 3.09 percent. When planning to work on pop-ups, you can consider these quick tips to make the most out of them.
Combine all of these tips to improve your conversion rates. While the pop-ups will do their work of boosting conversions, they won’t disturb your visitors as well.
If your website pulls visitors in way too many directions, rising bounce rates are confirmed. To avoid that, keep your landing page clear, concise, and easy to navigate. Check the elements. If it’s not necessary, remove it. Stick to what your visitors look for and what they must know about you.
Here’s what you must include:
Besides these, product videos or demonstrations, and live chat boxes can be included too. However, regardless of what you include, always keep in mind to remove distractions. Once you eliminate all distractions, you can pull the visitors' attention to your product offering only.
‘We finish what we have started’.
If you think that’s my philosophical quote, it’s not so. It’s a psychological principle called the Zeigarnik Effect. This principle says that humans tend to complete the things they start.
So, when you are making an offer, ensure that the first step towards accepting the offer is super easy. If it’s not easy, people won’t even get started with the process. For example, ask for the person’s email id to start with. Avoid offering them a full-length form at the initial stage. The easier the first step, the higher the chances of conversion.
In other words, shorten your form.
Imagine an eCommerce store that has all your favorite products at amazing prices. But it requires you to submit a long form to sign up. What would your immediate response be? Let’s check out another website.
Though long forms can help businesses gather more customer information, they can quickly annoy the customer too. Step into the shoes of your customers to understand how it would feel to spend so much time filling up several form fields when all you want is to buy the product, fast.
So, reduce this frustration (and bounce rates) by keeping your web forms short and sweet. Consider collecting only the important information and see the magic.
If you’re still finding it hard to believe, here’s evidence. Marketo experimented with its form length to see if it affected the conversion rates. Their conversion rate was 10 percent with a long 9-field form. When the form fields were reduced to 5, the conversion rate jumped to 13.4 percent.
More than 50% of marketers use A/B testing to boost conversions. Several companies perform A/B tests across their sites regularly while others perform mostly on their landing pages.
A/B testing allows you to evaluate all website elements to check what’s working and what’s not. The more you experiment, the more you’ll find out what’s hampering your growth. Here are a few quick tips to use the A/B testing results to your advantage.
It is tough to find out what offers attracts customers the most. So, you have to keep trying out different offers to finally find out what clicks with your target audience.
Don’t overlook the importance of picking the right offer for your customers. See what works the best – a money-back guarantee, limited-period deals on specific stuff, discount coupons, promo codes, gifts, or something else.
These offers play a huge role in impacting your conversion rates. Hence, they must appeal to your target market. So, experiment with offers and keep tracking the results. Eventually, you’ll find the one that wins customers over.
Selling a good quality product is not always enough. You must think about meeting customer expectations when increasing your conversion rates.
According to a report by PwC, 32% of all customers would stop doing business with a brand they love after one bad experience. You can imagine the loss if you start losing one-quarter of your customers every day. So, working on providing a good customer experience is a necessity.
Here are a few tips to keep meeting (and exceeding) customer expectations.
All these customer insights can help you make your user experience more satisfying. Thus, your chances of conversion will be higher too.
Though your conversion rate calculation may show high conversions, you need to evaluate your cost per conversion too. With lower conversion costs, you will have more ad spend to run more marketing campaigns. In short, you’ll earn a higher return on your paid campaigns with a low conversion cost.
Here are 5 tips to lower conversion costs.
Companies often tend to overlook the performing ad copies which result in the ads performing on an average level. To realize the full potential of these ads, ensure to keep the ad copy crisp and interactive. Test new messaging and present it to your audience. See what works best. Avoid repetition of punchlines and phrases. Also, use action words like, ‘get in touch’ ‘contact us’, ‘ get a quote, and more.
Review your keywords on a regular basis regardless of your experience in PPC. Though there’s much to know and understand about keywords, the first thing that you must see is which keywords are converting and which aren’t.
Once you identify the low-converting or non-converting keywords, look at their total clicks. For instance, if a keyword generates 5 conversions, pause it. But if it receives 10 clicks in the initial stage, that’s a 50% conversion rate. That means you should keep the keyword for your campaign.
Once you pause the low-converting keywords, your cost of conversions will also reduce.
The landing page conversion rates differ. So, make sure to review all of them. Don’t invest too much time in checking only on the performing ones or only the ones with low conversion rates. Go through all of them and tweak them here and there. Make changes where necessary.
Also, send more visitors to the best-performing landing page to boost your conversions. Once your conversion rates go up and eventually, your conversion costs will be reduced.
Every PPC campaigns require negative keywords. Using negative keywords in your ad campaigns makes them more effective. These keywords prevent your ad from targeting unlikely leads. Moreover, your ads reach people who are more likely to convert into loyal customers. As a result, your ads become more targeted and targeted ads reduce conversion costs.
Conversions do not happen at the same rate all the time. So, you have to find out the peak time of conversions, that is when conversions are most likely to happen. Then you can run your ads in those specific hours to make them more targeted.
The more targeted your ads are, the higher will be your conversion rates. Thus, your overall conversion costs will be reduced.
The plentiful information on conversion rate makes it clear that it is one of the most significant marketing metrics. It tells you what percentage of the traffic is actually taking action.
Now, when it comes to improving your conversion rates, bear in mind that tools like RevenueHero can help. But how?
RevenueHero can qualify your incoming leads and automatically route them to the right sales representatives, superfast. Also, the platform makes it super-easy for prospects to schedule instant meetings considering their and the sales rep’s availability. Hence, your sales reps can leave everything up to RevenueHero and focus on conversions. They can prepare better and close more sales.
Learn more about RevenueHero here!
Assign meetings to the best rep right on your landing page