Conversion rate is a vital digital marketing metric that every business should monitor to determine success. Whether you are experiencing a poor conversion rate, or you’re not sure how to calculate it, we’ve got you covered.
What are conversion rates?
Conversion rate is an important metric in digital marketing that every business should be looking at.
The result of every marketing campaign is to generate sales. Yet a customer may take several conversions or actions before they reach the desired outcome and spend money with you. That may include signing up for a newsletter or downloading a content offer.
These conversions are essential for guiding customers along the buyer’s journey, and tracking these steps enables you to see how well each of your campaigns is performing at every stage.
The conversion rate gives the total percentage of users who performed a specific action out of the total number of visitors. Typically, this will be displayed as a percentage. The higher the percentage, the better as it shows your marketing is effective.
Measuring your conversion rate
Many businesses will set a conversion rate KPI (or key performance indicator) as it offers an accurate assessment of a marketing campaign’s success. Despite this, it’s difficult to state what a good conversion rate is. That’s because it varies depending on:
- Your business and industry
- Marketing source
- Average sales length
- Value of products/services
The conversion rate doesn’t just apply to form submissions. There are several places where it’s vital to measure success:
- General conversions from downloads, clicks, form submissions, etc.
- E-commerce conversions, such as purchases, added to the shopping cart, etc.
- Organic search conversions, pages or blogs read, etc.
- Social media, such as link clicks, direct messages, etc.
- Banner advertising and search advertising
As a benchmark, you can use the industry average to determine whether your conversion rate is good. Different industries have different averages:
- Agency 2.3%
- Auto 3.7%
- B2B e-commerce 1.8%
- B2B services 2.7%
- B2B tech 2.3%
- B2C 2.1%
- Dental and cosmetic 3.1%
- Finance 3.1%
- Healthcare 3.0%
- Industrial 4.0%
- Legal 3.4%
- Professional services 4.6%
- Real estate 2.4%
- Travel 2.4%
Industry conversion rate averages data from Ruler.
Why are conversion rates important?
We already mentioned that conversion rates are important as they give you a clear indication of how effective your marketing efforts are. However, there are lots of other reasons why you should spend the time to work it out.
Determining the number of visitors that complete an action allows you to identify areas of improvement. For example, if a particular form or landing page is not getting a high enough conversion rate, you can look at ways to improve this.
Optimising and improving your conversion rate is a sure-proof way of getting more sales without needing to increase traffic to your site. If you already attract sufficient traffic to your site, optimising your conversions makes more effective use of your ad spend.
The greater your conversion rate, the better your return on investment. Businesses that have higher conversion rates are more likely to see a great return on their investment as opposed to a business with a poor rate. Lower conversion rates typically equate to more expensive conversions.
High conversion rates also indicate that your website is meeting the needs and wants of your visitors. By better meeting the needs and wants of your customers, you build stronger customer satisfaction, loyalty, and trust.
How do you calculate conversion rates?
If you’ve never calculated your conversion rate before, fear not. It uses a simple formula that just requires your total number of conversions and your total number of clicks. You can typically find this information from your website analytics.
All you need to do is:
(Total number of conversions ÷ total number of clicks) x 100 = conversion rate
To give an example to show how it’s done. You have a landing page on your site for a content offer that attracts 2,300 visitors. Out of those 2,300 visitors, only 40 visitors filled in the form and clicked submit to download the content offer.
You take the total number of conversions (40) and divide that by the total number of visitors (2,300). That equals 0.017. Then to get a percentage, times 0.017 by 100. That means your conversion rate is 1.7%.
How can you improve your conversion rate?
If after calculating your conversion rate, you find it is lower than you expected, all is not lost. There are many ways you can optimise your content and site to improve your conversion rate. This is referred to as conversion rate optimisation (CRO).
Condense your forms
One of the most effective methods you can use to improve your conversion rate is condensing your forms. Research by HubSpot identified that the more fields a form has, the lower the conversion rate tends to be.
As such, it’s best to limit your forms to around 2 or 3 fields if possible (for signups and content offer downloads). The type of fields you include also matters. Single-line text fields have a much lower drop-off than larger text areas and drop-down boxes.
Make your value proposition clear
A value proposition is a statement that outlines why a customer should buy your product or use a service. An effective value proposition will outline how you’re different from competitors while also stating how your customers will benefit.
It’s also important that as well as writing an effective value proposition, you use it effectively. Begin by clearly providing your value proposition from the get-go. Then, ensure your copy, images, and subheadings reflect this.
Stating and reinforcing your value proposition across multiple site elements does wonders for boosting your conversions.
Add social proof
Social proof is a psychological concept that suggests people will copy the actions or behaviours of others. That’s why incorporating reviews and testimonials into your content is an effective method of improving your conversion rate.
Customers trust the reviews of others as much as a recommendation from a friend. Anyone undecided on whether to act can be persuaded by the effective placement of reviews. This can include a selection of product-relevant reviews or video reviews.
A/B testing
A/B testing is a popular method for improving conversion rates. Testing different elements, layouts, colours, and copy are all effective methods to determine the best for improving your conversion. This is done through split testing (or A/B testing).
The idea is that you run a test with two different variables, such as a different headline or CTA. Then using relevant A/B testing software ensures fair testing. Half of your visitors will see one variation while the other half will see the alternative variation.
After a set time, you see which of the variations performed the best in driving more conversions and make this the preferred option. Effective CRO will continually run A/B tests to determine what works best for your customers.
Start out easy
The Zeigarnik effect is a psychological principle that suggests that people remember interrupted or unfinished tasks more than completed ones. This ties into the tendency that people don’t like to leave things unfinished. The same applies to the conversion process.
To benefit from this, you must ensure the first step a visitor has to take is simple, such as just asking for an email address. You can then start to build on this by providing the rest of the form. Making that initial step greatly increases the chances a visitor will then follow through to the end.
Third-party signup
Instead of encouraging users to create a completely new account from scratch, you can implement third-party sign-up. That allows users to use an existing account on third-party platforms to register for your site, such as Facebook or Google.
This speeds up the registration process and eliminates form sign-ups while still providing you with converting customers.
CTA design
The language and tone you use in your call-to-action (CTA) plays a crucial part in whether someone will act on it. The colour choice can also have an impact. Effective CTAs will use effective written copy and striking colours to drive conversions.
Adding the word ‘yes’ to the start of a CTA adds a positive spin that is more likely to encourage someone to click. The same is true with colour. Using bold, bright, and striking colours stimulates attention and encourages action.
Find out more about the psychology of colour in web design.
Cart abandonment emails
Many e-commerce websites experience a problem of a customer adding an item to the cart and then not checking out. Setting up automated cart abandonment emails can be an effective method to remind users they left an item in the cart.
You can further improve the effectiveness of these emails by including a discount or offer to further encourage a user to convert. Most marketing email software should allow you to set up automated cart abandonment emails for better performance.
Add a sense of urgency
Adding a sense of urgency can have a positive impact on your conversion rates. Loss aversion or fear of missing out (FOMO) is a popular tactic in marketing to influence customers and for good reason. You can make use of the psychological principle to good effect for your conversions.
Adding a time limit, a sense of scarcity, or a limited value of a particular item are all effective methods to make use of loss aversion. However, it’s important to avoid fake scarcity as customers often see right through this.
Calculating and monitoring your conversion rate is vital for determining the success of your digital marketing efforts. If you find your conversion rate is not as high as it should be, following the tips above can help set you on the right track.