Conversion rate: Meaning, examples and how to monitor it.

What is a conversion rate?

A conversion rate is the percentage of users who complete a specific action – whether that’s buying a product, completing a form or clicking on an advert.

Conversion rates can apply to a range of channels, from website conversions to other digital platforms, such as email and social media. Each channel comes with its own types of conversions.

For example, a conversion on an ecommerce website might be your customer adding an item to their basket and checking out. For lead generation campaigns, your conversion rate might measure the number of people that sign up to your email newsletter. It all depends on what you want the user to do.

You can then tailor your conversion rate calculations to measure the success rate of your desired action.

Why are conversation rates important for your business?

Conversion rates don’t just reveal how many customers take action. They also show you how optimised your marketing is, and how your website is performing.

Strong conversion rates mean visitors become customers, weak ones indicate areas for improvement. Here are some other reasons why they matter:

Measure and compare your different marketing channels.

Conversion rates can help you identify which campaigns, platforms, or channels are driving the most valuable actions. You can use this information to budget accordingly and allocate resources to where they’re needed. It lets you do more of what works and gives you a chance to improve those that don’t.

Improve your targeting further along the sales funnel.

Gain insight into consumer behaviour at different stages of the customer journey. This lets you refine messaging and offers, helping you to reach the right people at the right time.

When prospective customers are likely to buy, that’s when you go all in with your efforts. You’ve got to learn to strike while the iron is hot.

Maximise return on investment (ROI).

Calculate the true value of your marketing spend. How much are you getting in return for what you’ve invested? Small increases in conversions can lead to bigger profit margins, especially if traffic and advertising costs stay the same.

How to work out your conversion rate.

To calculate the conversion rate is easy – all you have to do is divide the total number of conversions by the total number of visitors exposed to that action. Multiply the result by 100 to get the conversion rate percentage.

For example, if your website had 50 conversions the previous month and 500 visitors, you’d divide 50 by 500 to get a conversion rate of 0.1 – or 10% once you’ve multiplied by 100.

Total Conversions / Total Audience x 100 = Conversion Rate.

What is a good conversion rate?

A good conversion rate is highly dependent on the context, such as the type of conversion and channel you’re measuring. For example, a good conversion rate on an email campaign might be different to a good conversion rate on a targeted social ad.

Most ecommerce websites in the UK have a conversion rate between 1 and 4%. This range allows for differences across industries. For example, the benchmark conversion rate for an online fashion retailer might be different to a travel website – as the way users interact and engage with these websites and industries often vary.

Tips to help increase your conversion rate.

Having the knowledge of what it entails is one thing – knowing how to increase conversion rate is another. In essence, it means making it easier for users/visitors to act. This is why it’s useful to know about conversion rate optimisation (CRO).

Some tips to help boost it your conversion rate might include:

• Identify key conversion journeys.
  Map out the journeys customers take to complete actions. Identifying these areas can highlight where it’s strong, and where improvements are needed. Build on the good, smooth out the bad.
• Use A/B testing to trial different components and designs.
  Test out different scenarios to see which ones pack a punch with your audience. For example, have different titled headlines, calls to action, and even layouts. Play around with the colours. Data-driven insights take out the guesswork and give you concrete actions.
• Improve the user experience.
  Avoid confusing, over-cluttered website layouts, and make the design clear and easy to use. Also, test your site to see how fast it loads, as slow speeds can discourage users.
• Craft compelling calls-to-action (CTAs).
  Make calls to action benefit driven, with enticing language used to encourage action. For example, “Sign up for exclusive offers”, or “Get an instant quote”. Avoid click-bait style language such as “Click here now”.
• Build trust with social proof.
  Share your customer reviews and ratings, or include direct quotes from previous users. These signals can show potential customers the positive experiences people have had with your company.