Conversion Rate

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What is conversion rate? How to calculate conversion rate?

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Team Storyly
May 22, 2023
0 min read

What is conversion rate?

Conversion rate is a metric used in marketing, e-commerce, and other online businesses to measure the effectiveness of an advertising campaign, website, or marketing strategy. 

It is the percentage of users who take a desired action out of the total number of users who were exposed to the marketing material or visited the website. 

The desired action can vary depending on the context, such as making a purchase, signing up for a newsletter, or filling out a contact form.

Why Conversion Rate is Important?

Conversion rate is important for several reasons, as it serves as a key performance indicator (KPI) in various aspects of digital marketing, e-commerce, and online businesses. Here are some reasons why conversion rate is crucial:

Identifies Marketing Effectiveness

Conversion rate is important because it helps you evaluate the effectiveness of your marketing campaigns, website design, and overall marketing strategy. By analyzing the conversion rate, you can identify which aspects of your marketing efforts are working well and which ones need improvement.

Drives Revenue and Profitability

A higher conversion rate directly impacts your business's revenue and profitability. When more visitors take the desired action, it leads to more sales, sign-ups, or other valuable outcomes. Consequently, focusing on improving conversion rates can lead to increased business growth and success.

Enhances Customer Experience

Conversion rate optimization often involves improving user experience and addressing potential issues that may cause visitors to leave your website without taking the desired action. By making these improvements, you not only increase conversion rates but also enhance the overall customer experience, leading to higher customer satisfaction and loyalty.

Optimizes Marketing Budget

Understanding your conversion rates enables you to allocate your marketing budget more effectively. By identifying which channels and strategies generate the best results, you can optimize your marketing spend to focus on the most successful tactics, maximizing your return on investment (ROI).

Provides Competitive Advantage

Focusing on conversion rate optimization can give your business a competitive edge. As you improve your website, marketing campaigns, and user experience, you're more likely to attract and retain customers, increasing your market share and overall success in your industry.

How to calculate the conversion rate?

Conversion rate is calculated by dividing the number of conversions by the number of potential conversions and then multiplying by 100 to express the result as a percentage. For example, if a product page receives 2,000 visitors in a month, and the product is purchased 20 times, the conversion rate would be calculated by dividing 20 by 2,000 (.01) and then multiplying by 100 for a conversion rate of 1%.  

The visual displays the formula for "Conversion Rate". It is found by dividing the number of conversions by the number of potential conversions and then multiplying the result with 100. There is a Storyly Glossary logo at the bottom right.
Calculation of conversion rate

What are the main factors that affect conversion rate?

There are several factors that can impact the conversion rate of a website or marketing campaign.

Here are some of the main factors to consider:

  1. Website Design and Usability
  2. Target Audience
  3. Traffic Source
  4. Copywriting and Messaging
  5. Trust and Credibility
  6. Pricing and Offers
  7. User Flow and Conversion Funnel
  8. A/B Testing and Optimization

1. Website Design and Usability

An intuitive, visually appealing, and easy-to-navigate website is crucial for a positive user experience, which directly influences conversion rates. Factors such as page loading speed, mobile responsiveness, and clear calls-to-action (CTAs) all play a role in keeping visitors engaged and guiding them towards the desired action.

2. Target Audience

Understanding and targeting the right audience is essential for achieving higher conversion rates. By creating marketing campaigns, website content, and offers that resonate with your target audience's needs, preferences, and pain points, you're more likely to see an increase in conversions.

3. Traffic Source

The source of your website traffic can significantly impact conversion rates. For example, organic search traffic might have a higher conversion rate than paid advertising, as users coming from search engines are often actively looking for a solution. Optimizing your marketing efforts to attract high-quality traffic from the most effective channels can boost your conversion rates.

4. Copywriting and Messaging

Effective copywriting and messaging can persuade visitors to take the desired action. Highlighting the benefits of your product or service, using clear and concise language, and addressing potential objections can all contribute to higher conversion rates.

5. Trust and Credibility

Building trust and credibility with your audience is key to increasing conversions. Displaying security badges, customer testimonials, and social proof can help reassure visitors that your business is reliable and trustworthy, making them more likely to convert.

6. Pricing and Offers

The price of your product or service and any special offers or discounts can significantly affect conversion rates. Competitive pricing and attractive offers can incentivize visitors to convert, while unclear pricing structures or perceived lack of value may deter potential customers.

7. User Flow and Conversion Funnel

The user flow through your website and the steps involved in the conversion process can impact conversion rates. Simplifying the conversion funnel, reducing the number of steps, and eliminating any obstacles can help increase the likelihood of visitors completing the desired action.

8. A/B Testing and Optimization

Regularly testing different website elements, such as headlines, images, CTAs, and landing pages, can help you identify what works best for your audience and optimize your site for higher conversion rates. A/B testing allows you to compare the performance of different versions of a page or element and implement the most effective option.

These factors, among others, can have a significant impact on conversion rates. By addressing and optimizing these aspects of your website and marketing strategy, you can improve the user experience, increase conversions, and grow your business.

What’s a good conversion rate?

There is no standard for a good conversion rate that is consistent across industries and contexts, so it is best to compare your campaigns to similar ones whenever possible, taking into account factors such as location, audience, scale, industry, etc. Here are a few to start with:

Email campaigns: 2%

eCommerce: 3%

Google Ads: 5%

Landing pages; 2%

Food and Drink 5%

Wellness eCommerce; 4%

How to improve your conversion rate?

Improving your conversion rate involves optimizing various aspects of your website and marketing strategy to encourage more visitors to take the desired action.

Here are some suggestions on how to improve your conversion rate:

  • Understand Your Audience
  • Optimize Website Design and Usability
  • Improve Copywriting and Messaging
  • Build Trust and Credibility
  • Optimize Pricing and Offers
  • Simplify the Conversion Funnel
  • Utilize A/B Testing
  • Personalize the User Experience
  • Analyze and Track Metrics
  • Leverage Retargeting and Remarketing

1. Understand Your Audience

Conduct research to understand your target audience's needs, preferences, and pain points. Use this information to create relevant content, offers, and marketing messages that resonate with your audience, making them more likely to convert.

2. Optimize Website Design and Usability

Ensure your website is visually appealing, easy to navigate, and user-friendly. Focus on aspects like page loading speed, mobile responsiveness, and clear calls-to-action (CTAs) to enhance the user experience and encourage conversions.

3. Improve Copywriting and Messaging

Craft persuasive and engaging copy that clearly communicates the benefits of your product or service. Address potential objections and emphasize your unique selling proposition (USP) to make your offer more compelling.

4. Build Trust and Credibility

Establish trust with your audience by showcasing customer testimonials, case studies, and social proof. Display security badges and offer guarantees to reassure visitors that their personal information is safe and that you stand behind your product or service.

5. Optimize Pricing and Offers

Ensure your pricing is competitive and offers value to your customers. Test different pricing structures, discounts, and promotions to find the most effective combination for driving conversions.

6. Simplify the Conversion Funnel

Analyze your conversion funnel and identify any areas where visitors might be dropping off. Simplify the user flow, reduce the number of steps in the conversion process, and eliminate any obstacles to make it easier for visitors to complete the desired action.

7. Utilize A/B Testing

Implement A/B testing to identify the most effective elements of your website and marketing campaigns. Test various aspects such as headlines, images, CTAs, landing pages, and forms to determine what resonates with your audience and drives conversions.

8. Personalize the User Experience

Use personalization techniques to tailor your website content, offers, and recommendations to individual visitors. Personalization can improve the user experience and make your marketing messages more relevant, increasing the likelihood of conversions.

9. Analyze and Track Metrics

Monitor key performance indicators (KPIs) and other metrics related to your conversion rate, such as bounce rate, time on site, and pages per session. Use this data to identify trends and areas for improvement, and adjust your strategies accordingly.

10. Leverage Retargeting and Remarketing

Implement retargeting and remarketing strategies to reach users who have previously visited your website or interacted with your brand. This can help remind potential customers of your offering and encourage them to return and convert.

By focusing on these strategies and continually optimizing your website and marketing efforts, you can improve your conversion rate, boost revenue, and grow your business.

ABOUT THE AUTHOR

Team Storyly

Group of experts from Storyly's team who writes about their proficiency.