Conversion Rate

The Conversion Rate, indicated in percentage terms, is an online marketing KPI measuring the relation of a website’s visitors to conversions. A conversion doesn’t necessarily have to be a sale or transaction. The Conversion Rate can also mirror the relation of visits to successful downloads or newsletter sign-ups. Regarding the CRO (Conversion Rate Optimization), measuring the number of customers in relation to successful conversions belongs to the most important key figures. The CRO is usually an aspect of SEO (search engine optimization). It can improve lead generation as well as sales and revenue figures.

Calculating the Conversion Rate

There are two common ways to calculate the Conversion Rate. For the first one, all visits recorded of a website are being considered. Automated page impressions of bots or websites or repeated page impressions of the very same user are counted among it. That’s why this is the less accurate option. If merely a Logfile Analysis is used to measure the number of visitors, this method can however be used in order to get an approximation.

 Conversion Rate = (Number of Conversions x 100%) / (Number of Visits) 

Here’s an example in order to visualise the formula:

A marketing professional sells eBooks on his website. In the first week after the sales launch, his website gains 100,000 page impressions 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 Visits in the formula need to be replaced by Unique Visitors, meaning every visitor is only being counted once even if he visits the site multiple times a day. In order to ensure exact counting, websites usually use cookies to mark their visitors.

 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 number of Page Impressions doesn’t matter for the calculation.

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Benchmarks

In general, Online Marketing Experts assume an average Conversion Rate of 1% in e-commerce. This means in practice that every 100th customer buys something in the shop. Successful online shops usually work with a 10% Conversion Rate. [1] However, the Conversion Rate is subject to many more factors such as range of products, prices and season.

According to this, it becomes obvious that a shop selling electrical goods for less than 10€ principally features a higher Conversion Rate than a shop selling fireplaces for an average of 1000€. Likewise, an online shop’s Conversion Rate selling Halloween products will be many times higher in October as compared to the rest of the year.

This way it is enough for a shop for luxury goods if only one of 1000 visitors buys a product, whereas a shop from the area FMCG has to sell lots of products in order to generate a high profit.

Additional factors that can have an impact on the Conversion Rate:

  • too few payment options
  • complex log-in processes
  • unsuitable SEA measures: visitors expect something different from what is being offered in the ad
  • seemingly dubious order processes
  • Unsafe purchase process, for example without https
  • Technical problems with the payment method, for example an incorrect redirect to PayPal
  • inconveniently placed buttons
  • captcha requests
  • charged downloads

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 SERP, the conversion rate will sink significantly.

Moreover, the conversion rate should never be evaluated alone without considering the relevant sales and revenue figures. In practice, further figures such as the ROI play an important role in measuring success.

References

  1. Captcha Requests that have a negative impact on the Conversion Rate. moz.com. Accessed on 11/13/2013

Web Links

SEOmoz about Conversion Rate Optimization

Planning and checking your Conversion Rate Optimization

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