Conversion rate might mean nothing to most but for marketers it’s arguably one of the most important metric. It’s a way of measuring the performance of your advertising campaign.
While Cost Per Click only gives you the amount of money you pay per click, conversion rate tells you how efficient your marketing efforts were at getting people to do what you wanted them to do (this is what is called converting a customer). In general, the higher your conversion rate, the more efficient your marketing efforts were.
In this article, we’ll cover what conversion rates are, how you can calculate them and the most important part is how you can improve your conversion rate.
What is a Conversion Rate?
In simple words, your conversion rate is the number of visitors in percentage on your website or landing page that converts. Converting means anything you choose as a “goal”. The conversion metric depends greatly on your business goals, a conversion can be almost anything but here are the most common conversion types:
- Purchasing from your site
- Submitting a contact or lead gen form
- Receiving a call
- Entering an online chat conversation
- Entering a subscription
- Register as a user
- Download anything
- Using a feature of your app or a tool
- Upgrading your current plan
- Specific metrics such as time spent, number of pages seen, etc.
There are plenty of conversion actions, these are just the most common ones. From this, I’m sure you can start to grasp what a conversion rate is. It’s essentially any measurable action that takes a customer from point A to point B which takes them closer to being your paying customer.
How Do I Calculate my Conversion Rate?
Calculating your conversion rate is the easy part. It’s just a simple calculation where you need to divide the number of conversions you received in a given time period by the total number of visitors to your website & landing page * 100% to have in percentage.
Conversion rate = (conversions / total visitors) * 100%
Let’s take an example to make sure it was clear. Let’s say you received 19,456 visitors and had 2,456 conversions in the last 30 days. If we do the math with the above formula, we would get a conversion rate of 12.6%.
In fact, you might never have to calculate your conversion rate. Why? If you set up your tracking correctly, advertising & analytics platforms (Google Analytics, Google ads, Facebook ads, Youtube ads, etc.) will show you your conversion rate directly.
Another awesome thing about conversion rates is that you can choose to be very specific or broad when it comes to measuring the metric. There a few different types of conversion rates you can measure based on the situation to take a deeper look at your conversion rate performance:
- General conversion rate: the conversion rate of your entire website.
- Conversion rate per traffic source: measuring the conversion rate based on the traffic source
- Page-level conversion rate: the conversion rate received on a single page of your website.
- Marketing campaign conversion rate: knowing which marketing campaign brings the best conversion rate.
- Ad conversion rate: investigating which individual ad creative brought the best conversion rate.
- Keyword conversion rate: knowing which keywords bring you the most amount of conversions.
This is obviously just a general list. You could measure the conversion rate of pretty much any marketing effort to drive more performance by optimizing more efficiently. Traffic without conversion is bad! It’s why you might want to keep track of your conversions to bring traffic that drives conversions.
What’s the difference? Conversion Rate vs Click Conversion Rate
What if the same person converts multiple times on your website? Would this affect negatively you conversion rate metric? And, most importantly, should you count it as one or multiple conversions?
To deal with this conversion rate issue situation, marketers generally just dissect these two situations with different terms.
I’ll just mention again that your conversion rate is the number of conversions divided by the number of visitors to your website or landing page. To know this metric (no matter if someone converted 3 times), you just have to take the total amount of conversions divided by the total amount of conversions and multiply it by 100%. It’s what marketers call the “click conversion rate”.
Click conversion rate = (converting visitors / total visitors) * 100%
For most lucky businesses, the conversion rate will be identical to the click conversion rate. To keep this article as relevant as possible to the most amount of people, we’ll focus on conversion rate and not click conversion rate.
I’ll just mention that click conversion rate can be very useful when you have a lot of repeat conversions and you wish to see the actual percentage of your visitors converting.
Measuring the Right Data?
When it comes to conversion rate, it’s really important to only take into consideration de right data. For instance, sometimes people forget to exempt their IP address to measure their conversion rate on their website. They might have visited their own website 100 times and thus really decreasing their conversion rate.
You could also think you have a conversion rate of 100% but realize that you only had 2 visitors and so it’s not a statistically valuable metric. In order to measure your traffic sample, you need to make sure you had enough visitors.
For example, if you received only 50 visitors, it’s not meaningful enough to predict what will happen when you’ll receive 1,000 visitors. You might have received 6 conversions which would give you a conversion rate of 12% but when you get 1,000 visitors the metric could drastically lower.
I’ve seen people with 1,000% conversion rates. How is that possible? They didn’t set up their conversion tracking properly on their website and that’s a big issue. If your data is bad then anything you derive from it is bad.
Talking about data sample size, another reason why it’s important to have a large enough sample size is because there are always conversion errors. The reason why? There are a lot such as attribution windows and so on. The bigger your data sample size, the less errors can affect your conversion rate.
For instance, if you received 5,000 visitors on your website and received 500 conversions. If 10 of those conversions are errors, the difference in conversion rate would only be 0.2% which isn’t very significant.
For websites that don’t have huge amounts of traffic, we always recommend taking into consideration long timeframes. The reality is that even if the error is not on your website directly, platforms such as Facebook ads or Google analytics are bound to track bad conversions.
When it comes to choosing the right timeframe, we recommend taking a monthly snapshot of your website or landing page. Big websites such as Shopify might need to look at their data every day to be able to accurately draw conclusions from their test.
On the other hand, if you receive very little traffic then a 6 months timeframe might be necessary to truly analyze your data.
Is my Conversion Rate Good?
That’s a great question. In reality, conversion rates vary wildly based on your traffic source, industry, type of business, price point and conversion type. What tells if you have a good conversion rate depends on a lot of factors.
Arguably, every business owner should measure his conversion rate and try to improve it. Of course, if you are way below the conversion rate of your competitors then you might be due for a makeover.
It’s also important to keep in mind that as we’ve seen previously not all conversions are purchases. Purchases are probably the most difficult form of conversions online, it’s important to measure the right type of conversion with your competitors to get an accurate comparison.
Let’s take an example, let’s say you run a campaign on Facebook, Instagram, Google & Youtube while measuring your cost per lead. Your client makes on average $4,000 per new customer and has a 60% margin.
Here are the results of the initial campaign:
By analyzing these metrics, it can be easy to conclude that we should spend more on Facebook since the cost per lead is only $34.62, but it’s not the entire story. We would also stop advertising on Google since the cost per lead is really expensive.
Here are the results while accounting for the revenue made per traffic source:
With the revenue, it becomes extremely clear which advertising channel we should keep. Youtube is making us lose money and the other ones are giving us a 400% return on investment.
As you’ve been able to see, it’s important to take into consideration the entire data and all the relevant conversions. A good lead conversion rate does not mean that the revenue conversion rate is proportional. There are a lot of factors that come into play such as traffic quality!
How to Track Your Conversions
While most wouldn’t consider conversion rate the most important metric, it’s still a very good tool to improve your marketing efforts. In order to get an accurate conversion rate, you need to track your conversions. Most analytics and advertising platform can allow you to track your conversions right on their dashboard.
Since there are a lot of analytics and advertising platforms, I won’t cover all of them inside this article. I would probably need to write an ebook which wasn’t the initial goal.
I’ve decided instead to reference how to set up conversion tracking on the most popular platforms in the world:
To set up conversion tracking, it’s easier if you have a developper around but it can also be done by yourself. I’ll just emphasize how important this part of your conversion rate optimization is. Without proper tracking, none of what we spoke above and will spoke below matters.
Unfortunately, the Google Analytics Universal property will close down in 2023. The only available option will be the new GA4 property. Don’t wait too long, make the switch and get familiar.
Surprisingly, most companies are not leveraging conversion tracking. If you spend the time to set it up correctly, you would set yourself above the competition. Knowing which marketing effort brings the most revenue is quintessential to optimize in the long run.
Imagine running a Google ads campaign and knowing your cost per click, cost per lead but not knowing how much money you made from each campaign. You might want to optimize but you risk turning off a campaign that was bringing you the most amount of money.
By setting up your conversion tracking, you’ll definitely have more optimization in place than most of your competitors. While your competitors turn off campaigns that don’t bring them the most amount of revenue, you are able to bring sales by the truckload!
According to Hubspot’s State of Inbound report, 97% of inbound marketing campaigns fail without good analytics. By not setting up conversion tracking, you pretty much set yourself for failure.
What is Conversion Rate Optimization (CRO)?
Having a crystal clear view of your conversion and how to track it is one thing but leveraging the data to improve it is another.
Conversion rate optimization (CRO) is about optimizing your landing page or website to increase the amount of conversions received from your traffic.
What’s amazing about CRO is that you can get more out of what you already get. Say you receive 100 visitors and generate 2 conversions per day. If you would improve your conversion rate, you could get the same amount of traffic but this time generate 4 conversions (more money).
In your Facebook ads campaigns, you might be able to increase the amount of money you can spend per purchase and thus beat your competitors. If you make $400 per 100 visitors and your competitor makes $300, you will beat him over time.
In other words, if you aren’t currently optimizing your conversion rate, you are missing out on a lot of money.
How do You Start Improving Your Conversion Rate?
How do you get higher conversion rates and generate more money? It’s not as difficult as most say it. You can definitely improve your CRO to another level by putting a few efforts:
1. Landing Page Design
If you are running advertising campaigns on Google, Facebook, Youtube, Instagram or even Linkedin, then you should send your traffic to a landing page. There are probably more than a 100 reasons to do so but the biggest one is conversion rate optimization.
If you pay to bring visitors, you want to send them directly to a page that was built to convert visitors into prospects or customers. Landing pages are some of the easiest to optimize for CRO.
If you are still sending traffic to your homepage, you are probably missing out on a lot of potential new prospects and customers. I urge you to set up a dedicated landing page for your advertising.
2. Hypothesis Phase
Good conversion rate optimization starts with an idea, an hypothesis. It’s about researching and making an educated guess as to what will have the most positive impact at the fastest pace.
Here are a few things I personally recommend you get started with when it comes to hypothesis testing:
- Headline: these are the words people see as soon as they land on your website or landing page. Testing different headlines can make a huge difference in your CRO.
- Product: the better your offer, the more people will convert. Knowing what a good offer depends on your audience: what’s inside, the price, etc.
- Call-to-action: tweaking the words on your call-to-action can make a huge difference in your conversion rate.
- Media: having different images or videos can influence your conversion rate wildly.
Get your hypothesis ready, score them in terms of potential positive impact on your conversion rate and get tested.
I would also recommend taking into consideration the risk of negative conversion impact. For example, changing your price could have a drastic impact on your conversion rate positively or negatively.
3. A/B Testing
The most well-known way to optimize your CRO is to leverage A/B testing tools. If you have enough traffic, you can send some traffic on landing page A and landing page B and have metrics to know which page converts best. For most companies, this is the most efficient method to get better results.
To run an A/B test, you would only need to set up two different pages and split your traffic in two. For instance, 5,000 visitors go to page A and 5,000 visitors to page B.
To do such tests, you’ll generally need a CRO software. If you are convinced of the value of CRO, this is an awesome place to start. There is definitely some very advanced CRO software, but I listed some of the most popular basic ones:
- Google Optimize: this software is free, and it’s one of the most efficient ones. The problem is that the results are not real-time, depending on the urgency of your A/B tests, you might want to consider another software.
- Unbounce: a good A/B testing tool for landing pages. It’s a very efficient and user-friendly platform to get results on your tests.
- Optimizely: this software is a bit more expensive than the “Google experiments” software but it has some interesting features that can provide some additional useful insights.
- Visual Website Optimizer: VWO is cheaper than Optimizely and is very intuitive which is awesome for mid-size brands.
These platforms will enable you to see which variant of your test brought you the best results which will then help you optimize your results over time. Your website or landing page once optimized will be a competitive advantage.
Optimizing Your CRO by Traffic Source
After understanding that you can make tests on your website based on the hypothesis, it’s time to focus on the traffic sources. Your traffic source is where your visitors come from. For example, Facebook, Google & Youtube are all different traffic sources.
You might realize that your Google ads traffic converts way more than your Facebook ads traffic and is cheaper. So how do you improve your CRO by traffic source?
1. Deep-dive Research
Before working on any landing page or website, we always do a deep-dive research into the audience of our client and their competitors.
We ask ourselves questions which help us create everything with the user experience in mind:
- Have they advertised on this channel before? What worked and what didn’t?
- What do all your competitors seem to have in common on their landing page or website?
- What pushes your target market to purchase from you rather than another company?
- What does your target audience like? Follow on social media? Do they have specific demographics such as age, sex or income level?
Having all this information handy can help a lot when it comes to generating hypotheses. It will help you keep the user in mind and make efficient tests that are more likely to result in positive impacts.
2. Ad to Landing Page Congruence
It’s important that your ad resembles your landing page. Why? It’s because people are expecting a certain congruency between the two. The more congruent, the less surprise and the more conversions.
In a way, not only does your ad need to match your landing page but your landing page also needs to match your ad. You can start by finding an ad that works well and then match your landing page to it for instance.
Others call it the “scent”, we call it congruence at K6. The goal here is to make the process of clicking on your ad and arriving on your landing page as seamless as possible. Your website visitors need to immediately feel like they are in the right place.
3. Laser Sharp Precision
You might have different audiences or even different strategies based on the marketing channel. It’s why it can make perfect sense to have multiple landing pages depending on the situation that are adapted to each situation.
In fact, I would go as far as saying that the most audience-specific your landing page and the ad is, the more chance you have of converting visitors into customers.
They are tons of ways to further segment your audience and create an ad that links to a customized landing page. For example, you can use “single keyword ad groups” for Google ads, single interests with Facebook & Instagram ads, and so on.
Of course, don’t do that if you have a small advertising budget, but as you scale, you might want to personalize each experience gradually to improve your conversion rate.
4. Optimize for Conversion Rate
After you’ve done your research, set up your congruency and started personalizing the experience of your website visitors, it’s time to optimize your traffic sources. It’s about keeping what brings you money.
For instance, you might realize that Google ads bring you $4 out of every dollar you spend while Facebook ads bring you $0.7 out of every $1 you spend, no matter the tweaks you make.
At this stage, it might be wiser to focus on Google ads and even improve your conversion rate by making more tests compared to Facebook ads.
At K6, we always recommend having a testing a budget for new audiences and interests while putting most of your advertising on what you know is already working.
Once you have the right interest and audiences, it’s time to launch lots of A/B tests that will have a great impact on your results. We usually recommend finding the best audiences first before doing A/B tests because too many changing variables make it hard to know what worked.
Arguable, conversion rates are one of the most important digital marketing metric. It tells you how many visitors went from nothing to converting on your website. Visibility is great but conversions are much more valuable since they show that people are truly interested in your brand.
It’s now your turn to leverage what you’ve learned in this article to improve your conversion rate. You know how to calculate conversion rates, how to track it and how to improve it. It’s more than most website owners.
If you need help with anything related to CRO, we’d love to help! Don’t hesitate to drop us a line here!