Conversion Rate - Definition, Calculation, and Importance

The conversion rate is the proportion of website or landing page visitors who complete a desired activity, such as filling out a form or clicking on a link. Conversion rate is an essential statistic since it indicates how effectively your website or landing page converts visitors into clients. If your conversion rate is low, you’ll need to work on optimizing your website or landing page to make it more effective.

Conversion rate is one of the most valuable metrics for assessing the success of your advertising campaigns. They must be driven to do more than click on your ads to become more complicated consumers.

What a customer means to you is determined solely by your business model and the goods or services you provide. As a result, there are many kinds of conversions. A conversion can imply anything from one to many things, such as submitting forms, buying products or services, upgrading accounts, signing up for subscriptions, etc.

In other words, the conversion rate is a measurable process that tracks how many visitors convert into paying customers.

Unlike other measurement types such as click-through rate or cost-per-click, the conversion rate immediately informs you about the success of your marketing efforts and what you can do to improve them to achieve a high conversion rate. Higher conversion rates are expected as a result of improved marketing.

What is Conversion Rate?

Conversion rate is the proportion of visitors to your website or landing page that convert (do what you want them to do). A “conversion” might be virtually anything depending on your company’s objectives, but here are a few examples of typical conversions:

  • Purchasing anything
  • Submitting a form (lead gen form, contact us, or other similar forms)
  • Calling your company
  • Downloading a white paper or other content
  • Registering for a webinar
  • Clicking on an ad
  • Joining a social media community
  • Downloading a file (trial software, eBook, mobile app, etc.)
  • Upgrading their service
  • Engagement (time on site, repeat visits, number of pages visited) with your website

There are many alternative actions that users can take on a website, but this should give you an idea of what a “conversion” is. In general, a conversion is an observable action that leads to the development of a paying customer in a critical manner.

Why Conversion Rate is Important?

Conversion rate is important because it is one of the most significant indicators of how effective your website or landing page is at converting visitors into customers. It’s a valuable tool for comparing and contrasting the performance of several advertising platforms. Conversion rates are critical when launching mobile users acquisition because they can show how effective each campaign has been. They may also be used to establish ROI goals as campaigns are expanded.

Its importance for each marketing type are listed below:

  • From a business standpoint: A high conversion rate means that you can effectively turn visitors into customers. A low conversion rate indicates that you need to improve your website or landing page to make it more effective.
  • For SEO Marketing: Conversion rates are essential for SEO because they can help you identify which keywords are driving traffic that converts and which keywords are driving traffic that does not convert. This information can improve your SEO efforts by focusing on the more likely keywords to result in conversions.
  • For Content Marketing: The conversion rate is vital for content marketing because it can help you determine materials that effectively convert visitors into customers. You may use this information to improve your content marketing efforts by creating more effective content to convert visitors into customers.
  • For Email Marketing: The conversion rate is essential because it can help you determine which emails effectively convert visitors into customers. You can improve your email marketing efforts by creating more emails that effectively convert visitors into customers.
  • For SMS Marketing: Conversion rate is critical since it can help you identify which text messages are more successful at converting consumers into clients. You can enhance your SMS marketing efforts by coming up with new text messages that convert customers into customers more frequently.

Conversion rates do not have to be measured in terms of clicks. They may also refer to conversion events that occur later in the funnel, such as the percentage of users who install an app or complete an in-app activity. It is crucial for advertisers and marketers since it allows them to identify high-value users. This data will help improve targeting and optimize campaign performance by feeding it back into the funnel.

Conversion rate analysis can tell an advertiser which channels are most effective for promoting a specific app, allowing them to assess the effectiveness of their content and use it to help make strategic judgments.

Where is Conversion Rate Used?

Companies use conversion rates to measure various aspects of their marketing performance. The most common use of conversion rates is to measure the success of a website or landing page in turning visitors into customers. However, conversion rates may also be used to measure the success of the following sectors:

  • Email campaign: Conversion is used to determine the percentage of email recipients who take the desired action, such as clicking on a link or completing a purchase.
  • SEO marketing: In SEO marketing, conversion is used to measure how many people who visit your website actually buy something, sign up for a mailing list, or download a file.
  • PPC Advertising:  Conversion is used in PPC advertising to measure how many people who click on an ad actually buy something, sign up for a mailing list, or download a file.
  • Content marketing: The percentage of people who read your article and then take the desired action, such as clicking on a link or signing up for a mailing list.
  • Social media marketing: The percentage of users who click on a social media post and then take the desired action on the landing page.
  • SMS Marketing:  In SMS marketing, it measures theproportion of customers that receive a text message and then do what you want them to, such as clicking on a link or making a purchase.

The goal is to choose a time duration that is short enough for you to track conversion across several periods. You don’t want to calculate the conversion rate once a year if your entire measurement period is one year long.

You want to use a long enough duration that you can get an accurate reading. Unpredictable fluctuations in the market may distort your conversion rate statistics if you don’t give the whole measurement period enough time to balance out.

Additionally, your conversion rate calculations should consider the length of time it takes for you to develop new features. You shouldn’t wait until the end of the quarter to perform a conversion rate calculation if you have a significant update each month.

A single update might have a different impact, resulting in a different conversion rate. It’s essential to plan when your period covers multiple significant upgrades.

How to Calculate Conversion Rate?

Conversion rates are the number of ad interactions linked to a conversion in the same period divided by the total number of conversions.

The most frequent way to calculate conversion rate is to count individuals based on a specific person, no matter how many times they buy during the period. Counting each customer as many times as they make a purchase is the other option.

The best approach is to adhere to the same rule used in counting baseline visitors, but either method will suffice as long as you apply it consistently.

You can calculate your conversion rate by dividing the number of visitors by the amount of sales in this manner: Conversion rate = (Conversions/ Total visitors) x 100%

For instance, let’s assume that you have a monthly conversion rate of 2,000 purchase orders. Your shop’s conversion rate is 10% (2,000/20,000).

Another formula that you can use: Conversion rate = (Total number of Sales/ Number of Unique Visitor) x 100%

It indicates that the conversion rate is 1% of your site made 50 sales in a month and had 5,000 unique visitors.

You may use either of the two methods for your company. It is based on how you would monitor your site and gather data.

What is the Formula of Conversion Rate?

There is three simple conversion rate formula that you can use depending on what you are measuring:

  • Conversion Rate = Total number of conversions รท Total number of sessions * 100% Conversion rate is the percentage of visitors who convert to customers.
  • Conversion rate = Total number of conversions / total number of unique visitors * 100%.
  • Number of signups / Number of leads * 100% = Conversion Rate There are three ways to calculate a conversion rate.

There is more than one conversion rate formula because calculating conversion rate is directly affected by what you’re measuring.

The simplest and more general way to calculate conversion rate is to divide the number of conversions in a given timeframe by the total number of people who visited your landing page or homepage and multiply it by 100%.

What is a Good Conversion Rate?

Good conversion rates vary significantly based on your traffic quality, sector, company, product, and even the specific conversion action you’re tracking. As a result, while there are plenty of conversion rate statistics available, what constitutes a reasonable conversion rate will be specific to your business and marketing campaign.

It’s also vital to note that a conversion isn’t always the same as a transaction. While conversion rate is an important indicator, the aim of most marketing efforts isn’t to create conversions; it’s to produce sales.

What are the Factors that are Important in Conversion Rate?

Six common factors significantly impact conversion rates in a marketing campaign.

  • Value Proposal: The first factor is the value proposition. The key selling point or reason to buy is communicated on the landing page. If it’s unclear, generic, or doesn’t match what the customer is looking for, they’re likely to leave without converting.
  • Relevance: The visitors to your page must easily find what they need. Page visitors quickly scan your site for keywords, so you must consider the best ways to showcase them.
  • Clarity: Clarity is essential for keeping people engaged with your message. If the language on your landing page is confusing or hard to understand, people will quickly lose interest.
  • Design: The look and feel of your page is another critical factor in determining whether or not people convert. If it’s cluttered, outdated, or difficult to navigate, they’re likely to leave without taking any action.
  • Distractions: Reducing distractions on your page can help improve conversion rates. If there are too many elements competing for attention, people will have a hard time focusing on any one thing.
  • Calls to Action: The final factor is calls to action. Your page should have a clear and concise call to action that tells visitors what you want them to do next. They’re likely to leave without converting if it’s not immediately apparent.

What are the Tools to Track Conversion Rate?

Tools to tract conversion rates are important for understanding how well your landing pages or website is performing. Increased conversions directly result in higher sales and revenue. If you’re a marketer, one of the most critical tasks is to increase conversions.

To determine whether your marketing efforts are effective, it’s important to have access to conversion data from your website, marketing campaigns, and sales calls. Five of the best conversion tracking tools are listed below:

  1. Google Analytics
Google Analytics

Google Analytics is a free tool that you can use to measure website traffic and track conversions. It’s one of the most popular analytics tools available, and it’s easy to set up and use.

You may study groups of pages using content grouping, but you’ll use User Explorer to analyze a specific user’s activity. With machine learning, Google Analytics can produce unique insights that allow you to anticipate which customer will generate the most money or convert.

Google Analytics has the following features:

  • Data analysis and visualization
  • Reporting
  • Custom reports
  • User ID tracking
  • Event tracking
  • Cross-device reports

Price: FREE

Advantages: Using Google analytics offers various services and a whole world of information. It provides excellent features for website analysis and tracking visitor behavior, with the ability to drill down into data as required.

Disadvantages: The main disadvantage of using Google Analytics is that it can be quite complex for novice users. In order to get the most out of the tool, you need to have a good understanding of how to use it.

  1. Adobe Analytics
Adobe Analytics

Adobe Analytics is a powerful, paid tool that’s used by some of the world’s largest companies. It provides detailed data and insights into customer behavior, allowing you to track and optimize conversions.

It’s best to use Adobe Analytics to examine user flow, track key performance indicators (KPI), and analyze conversion rates. Users of Adobe Analytics like the visually appealing reports that are simple to comprehend.

  • Adobe Analytics has the following features:
  • Data collection and warehousing
  • Data processing and analysis
  • Reporting and visualization

Price: $150/month for up to 5 million hits

Advantages: One of the major advantage of using Adobe Analytics is that it can give users flexible segmentation in the report and offers various customization options. The tool also integrates well with other Adobe products, making it easy to use for those who are already familiar with the Adobe suite.

Disadvantages: The main disadvantage of using Adobe Analytics is that it’s a paid tool, which can be quite expensive for small businesses. In addition, it can be difficult to use for those who are not familiar with Adobe products.

  1. JookSMS Tracker

JookSMS Tracker is a paid tool that allows you to track conversion rates from your text messages. It’s an easy way to see how effective your text messages are in driving conversions. Presently, JookSMS is one of the most popular tools used to track text message conversions.

With JookSMS Tracker, you can track conversion rates by:

  • Campaign
  • Keyword
  • Device
  • Geography
  • Operator

Price: $49/month for up to 500 contacts

Advantages: The main advantage of using JookSMS is that it’s easy to use and integrates with major CRMs and marketing automation platforms. The tool also allows you to track conversions by campaign, keyword, device, geography, and operator.

Disadvantages: One disadvantage of using JookSMS is that it’s a paid tool and can be expensive for businesses that send a large number of text messages.

  1. Heap

Heap is an analytics tool that’s used to track user behavior towards your website and mobile app without writing code. You can create virtual events using this app even without coding or engineering background.

Heap also ensures that your data is correctly named, up to date, and trustworthy. The system relieves you of the burden of data acquisition so you can focus on decision-making. Retroactive Analytics on Heap uses past data to measure all of your key performance indicators in real time.

Heap’s features include the following:

  • Autocapture
  • Fullstory integration
  • Replay
  • User lifecycle analysis

Price: First plan is free, but if you want to access more features, the rates can go from $0 to 499/month

Advantages: Heap users find the tool efficient in data collection. It also offers a wide range of integrations, making it easy to use for those who are already using other tools. More over, the tool is affordable and has a free plan that offers basic features.

Disadvantages: One disadvantage of using Heap is that it can be difficult to configure for new users. In addition, some users have complained about the tool’s customer service.

  1. Crazy Egg
Crazy Egg

Crazy Egg is an analytics tool that allows you to see how users interact with your website. It provides data that can help improve conversion rates by showing you where people are clicking and what they’re looking at.

Crazy Egg records the entire session of your visitors on your site to see their habits. It also displays areas where certain users drop off during a purchase process. The platform overlays the actions of your site visitors over your web pages, so you can see what they’re doing there. You’ll get an extensive amount of valuable information about how to make your website more user-friendly and increase conversion rates.

Crazy Egg has the following features:

  • Heat map
  • Scroll map
  • Confetti report
  • Overlay report
  • A/B testing

Price: There are five price plans offered by Crazy Egg. There are free options but the paid rates start at $24 a month for tracking 30,000 page views and 100 records.

Advantages: Crazy Egg is easy to use and provides a lot of valuable data. It’s also affordable, with a range of price plans to suit businesses of all sizes.

Disadvantages: One disadvantage of Crazy Egg is that the free plan has limited features. In addition, the tool can be overwhelming for those who are not used to analytics. It can take some time to understand all the data that is provided.

How to Improve Your Conversion Rate?

You can start improving your conversion rate by employing conversion rate optimization strategies. Conversion rate optimization allows you to optimize specific aspects of your marketing campaigns, such as the landing page, homepage, or entire website.

It generally results in more conversions from your usual traffic, which helps you gain additional clients from the sample batch you already have. Check out these five effective methods to improve your conversion rate listed below:

  • Revise and Make a Personalized Offer: Generally, people don’t convert because they didn’t see an offer that applies to them. If you want to increase your conversion rate, then make sure that your offer is relevant to the product or service that you’re selling. You can also personalize your offer by using the customer’s name and including a sense of urgency in the CTA.
  • Improve Your Landing Page: The landing page is one of the essential pages of your website since this is where users first arrive. You should make sure that it’s well-designed, easy to navigate, and has a clear CTA. Another way to improve your landing page is by adding relevant images and videos that highlight your product or service.
  • Utilize Cart Abandonment: A study shows that 67.45% of online shoppers abandon their carts, but you can recover some of these customers by email marketing. You can send automated emails to customers who added items to their cart but didn’t complete the purchase.
  • Attract Customers With Remarketing: When someone visits your website, you can add a tracking cookie to their browser to target them with relevant ads. You can then show these ads to them on other websites.
  • Employ A/B Testing: A/B testing is a technique that allows you to test two different versions of a page against each other. You can use this method to test different headlines, images, or CTAs to see which one produces better results.

These are just some of how you can improve your conversion rate. Remember that it takes time and effort to see significant results, so be patient and stay focused on your goals.

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