Conversion Rate
The conversion rate is an online marketing KPI measuring the ratio of a website’s visitors to conversions. A conversion doesn’t necessarily have to be a sale or transaction, but could also include successful downloads or newsletter sign-ups. Conversion rate optimization is a central aspect of online marketing and search engine optimization, as an improved conversion rate can have a significant impact on lead generation, and therefore sales and revenue.
Conversion Rate Definition
The conversion rate describes the relationship between visits/clicks on a website to conversions. A conversion is the process of a potential customer becoming an actual customer. Conversions can consist of purchases or downloads.
How to Calculate the Conversion Rate
The conversion rate can be calculated in two ways. One method of calculating the conversion rate includes all recorded visits to a website, therefore including automated page impressions by bots, and repeated page impressions from the same user. This calculation is less accurate, unless a logfile analysis is used so that visits by search engine bots can be excluded.
Conversion Rate = (Number of Conversions x 100%) / (Number of Visits)
Here’s an example:
A marketing professional sells eBooks on their website. In the first week after the sales launch, the website gains 100,000 page views and his eBook is downloaded a total 100 times – which means:
Conversion Rate = (100 x 100%) / 100000 = 0.1%
For a more accurate calculation of the conversion rate, the page views in the formula need to be replaced by unique visitors or sessions, meaning a visitor is only counted once even if they visit the site multiple times. Cookies are usually used to identify visitors, making it possible to exclude multiple visits by the same user.
More accurate conversion rate = (number of conversions x 100) / (number of unique visitors)
For this calculation, a particular period of time is selected and only one conversion per unique visitor per day is calculated. The total number of page views doesn’t matter for the calculation.
Which conversion rate is best for my business?
In general, online marketing experts assume an average conversion rate in e-commerce of 1%, meaning that, in practice, every 100th customer buys something. Successful online shops usually work with a 10% conversion rate. [1] However, the conversion rate is subject to many factors such as range of products, prices and season.
A shop selling electrical goods for less than $10 could expect a higher conversion rate than a shop selling racing bikes for an average of $1000. Likewise, a shop selling Halloween products can expect a much higher conversion rate in October than at other times of year.
Therefore, for a luxury brand, it will be sufficient if just 1 in every 1000 visitor converts, whereas a shop selling cheaper goods will need to sell much more to gain sufficient profit.
A lower conversion rate is therefore not necessary the result of poor conversion rate optimization. Factors such as offer and revenue generation are more important. Lower visitor numbers can mean a higher conversion rate, but the profit can still be lower than that achieved by a higher number of visitors with a lower conversion rate.
Example:
100 Visitors x 3.5% Conversion Rate x 1,000 € Sales total = 3,500 € Turnover
500 Visitors x 2,5% Conversion Rate x 100 € sales total = 1.250 € turnover
Benchmarks such as Visits-to-Leads-Conversion and Leads-to-Customer-Conversion serve as orientation. A good conversion rate visits-to-leads is between 1 and 5 percent, and the conversion of leads to customers between 1 and 20 percent.
Factors that impact the conversion rate:
- Too few payment options
- complex log-in processes, for example too many formula fields or clicks
- unsuitable search engine advertising (SEA) measures: visitors expect something different from what is being offered in the ad
- Unsafe purchase process, for example without https
- Technical problems with the payment method, for example an incorrect redirect to PayPal
- Inconveniently placed buttons
- Captcha requestsArtikel über Captcha Abfragen, welche die Conversion Rate negativ beeinflussen. Accessed on November 13, 2013.[2]
- Fee-based downloads
- Poorly chosen landing page, or defect campaign links
- Lack of confidence building measures for the customer
- Slow loading page speed
- Information not being clear enough at first glance, such as regarding shipment or imprint
- Grammatically and stylistically incorrect texts
- Unreadable font and color
- Overloaded design
Conversion rate and search engine optimization
Essentially, the higher the bounce rate, the lower the conversion rate. In SEO, the Return-to-SERP-Rate also plays an important role. A website may have lots of traffic, but if the visitor leaves the page after a very short amount of time and returns to the SERPs, the conversion rate will sink significantly.
If prospective customers cancel the product selection or the purchase process shortly before the end of the conversion, this may indicate leaks in the sales funnel. With analysis tools, these leaks can be successfully located and closed, and in the course of this, the customer journey can be optimized to improve the conversion rate.
In the context of conversion rate optimization, the length of stay is also taken into account. In addition, an exact analysis of content, loading speed, and forms of shopping basket processes should be carried out. The latter elements also belong to the sub-discipline of shopping cart optimization.
Mobile User Experience and Conversion Rate
Access, visits and sessions via mobile devices are constantly increasing. A shop that is not mobile-friendly is increasingly confronted with a deterioration in its conversion rates. The average mobile conversion rate for Google Ads within the Google search network in 2018 is 3.48 percent, and 0.72 percent in the display network across all industries.[3]
Evaluations show that most mobile leads are made via smartphone access. The lead-to-customer conversion rate is higher for devices such as tablets. The most significant factors for a successful sales funnel are still stationary computers. The growing, mobile lead generation is an important indicator for maintaining or achieving conversion targets in the future.
Additional important KPIs
The conversion rate should never be evaluated alone without considering the relevant sales and revenue figures. Additional figures such as the ROI play an important role in measuring success. In companies, KPIs such as cash conversion rate should also be used.
Conversion rate with Google Ads
Those who work with Google Ads can set up conversion tracking to measure the conversions achieved with Google Ads. The advertising tool then displays the conversion rate by dividing the number of conversions by the total number of ad clicks. A a certain period of time is taken into account within which the conversion took place.
Conversions can be counted on Google Ads in the form of purchases, landing page views or customized goals that can be defined in Google Analytics. The definition of the Google Ads Conversion Rate is adjusted accordingly.
As part of conversion tracking, the CPC can also be used to determine the cost-per-conversion. The analysis also provides an overview of approaches to help to sustainably improve the conversion rate.
References
- ↑ Captcha Requests that have a negative impact on the Conversion Rate. moz.com. Accessed on 11/13/2013
- ↑ Why your CAPTCHA is killing conversions. Accessed on October 18, 2018.
- ↑ Ecommerce conversion rates – how do yours compare?. Accessed on October 18, 2018.