Conversion Rates — How Well Do You Understand This Metric?
Although conversion rates are arguably “one of the most common metrics used by marketers, sales folks, and business professionals”1, how well do CEOs and C-level executives understand this important metric? Maybe it’s time for a quick lesson. This GIM snippet will walk you through the basics — understanding, calculating, and tracking your conversions. At the end of the snippet, we’ll provide you with valuable resources on becoming even more proficient in managing and improving your conversion rates.
Step ONE: Understanding Conversion Rates
Many business owners are aware of the term “conversion,” but many aren’t necessarily aware of what it means or how to improve their website’s conversion rates. To complicate things further, different businesses have different definitions for “conversion” or different “types” of conversion. An eCommerce site, for instance, might consider each successful sale transaction a conversion. But for companies in industries that require an ongoing relationship with their customers, conversion is defined much differently. Consider language services providers (LSPs) that offer ongoing language solutions to corporations across industries. Sure, having one company reach out one time requesting interpreting services for one event “could” be considered a conversion, but LSPs are more interested in taking that one-time request and “converting” it into an ongoing relationship with that particular language services buyer. That being said, we found that Wordstream provides the most common definition that almost all industries can relate to:
Your conversion rate is the percentage of visitors to your website that complete a desired goal (a conversion) out of the total number of visitors. A high conversion rate is indicative of successful marketing and web design: It means people want what you’re offering, and they’re easily able to get it!”2
To ensure you and your team are on the same page with “conversion rates,” you must first clearly define what conversion rates mean to you. If you have several types of conversion rates that you’d like to track and build into your key performance indicators (KPIs), define these as clearly as you can and share them with your sales, content writing, and marketing teams. In other words, there is no sense in using the term “conversion rates” if you define the term differently from key players within your organization.
Step TWO: Calculating Conversion Rates
Generally speaking, a conversion rate is tracked as a percentage. In other words, it is the percentage of folks who took your desired action after visiting your site or clicking an ad, for example. With this in mind, you and your team can simply use the calculation:
Conversions / Visits (or clicks) = Conversion Rate
Let’s show this with an example. Let’s say that in August of 2022, your company received 2,000 website visits. That same month, you also received 100 contact form submissions.
100 / 2,000 = 10%
In this scenario, your conversion rate is 10%.
It isn’t that simple, and many companies make some serious errors. To delve a little deeper into the subject and ensure you are setting up, calculating, and tracking your conversions appropriately, check out Daniil Bratchenko’s article for The StartUp entitled, “Why Most Conversion Rates Are Wrong and How You can Do Better.”
Step THREE: Tracking Conversions
One common and effective way to track conversion rates is through Google Analytics. However, simply connecting your website to Google Analytics will not provide you with this valuable information. Within the Google Analytics environment, take care to set up and test your goals appropriately. If you miss this important step, Google Analytics has no way of knowing what a conversion means to you, so make sure to take your time here. And no, contrary to popular belief, it doesn’t have to be overly complicated or involve a team of technology gurus. You can handle this all on your own! We won’t go into great detail here, but encourage you to visit OptinMonster’s article on setting up your Google Analytics account.
Why Conversion Rates Matter
Do you have a specific person in mind when you pick up the phone to call someone? The answer is “yes,” of course. So, the same must hold true each time you attempt to reach your target market through your website, social media accounts, or paid advertisements. Taking the time to truly understand who your target market is, where they spend their time, and what their greatest pain points are, will help ensure that your efforts in reaching them will not be in vain. But what does any of this have to do with conversion rates? Let’s answer that question with a question. How do you expect to attract valuable visitors to your website — much less have them take your desired action — if you don’t even know who your audience is? Just writing about your products and services and throwing them out to the interweb is equivalent to shooting an arrow in the dark, hoping to hit anything. In other words, if you simply write whatever you want, whenever you want, if you simply throw money on a paid ad without truly considering who you are targeting, you are wasting your precious time, resources, and revenue. Don’t do that. Conversions matter because they show that you are attracting your ideal clients and that your efforts in attracting them have been intentional and successful.
What is the Ideal Conversion Rate Percentage?
Excellent question. The answer is that it depends on the industry. However, Wordstream has discovered that, regardless of the industry, an average conversion rate sits at 2.35%, while the top 25% sits at 5.31%, and the top 10% at 11.45%. Let’s take a closer look:
Data Source: Wordstream Wordstream aptly points out that regardless of the flux in percentages, the top 10% conversion rates are 3 to 5 times higher than the average for each industry. Want to improve your company’s conversion rates? You might want to take a look at:
- Optimizing your website for conversions
- Testing and/or modifying your service offerings
- Investing in PPC ads such as Google Ads
- Developing a consistent, targeted email campaign
- Testing and/or modifying how you interact with your target audience
- Becoming more actively involved on your social media accounts
- Ensuring “all” inbound and outbound marketing content is valuable and attracts your ideal market
**There are several additional steps you can take, but here are the two takeaways we hope you get from this snippet:
- Improving your conversion rates does “not” require a rocket science degree.
- Maintaining successful conversion rates “does” require ongoing maintenance.
Want to learn more? Looking for some additional support with your conversion rates? GIM Content Management’s digital marketing and SEO experts are here to help! Reach out today to discuss your advertising and marketing needs.
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REFERENCES 1 Morris, C. (2022, August 22). What is conversion rate & how do you calculate it. Search Engine Journal. Retrieved August 25, 2022, from https://www.searchenginejournal.com/what-is-conversion-rate/461109/#close
2 Conversion rate: What is a conversion rate? WordStream. (2021, December 7). Retrieved August 25, 2022, from https://www.wordstream.com/conversion-rate