To evaluate your digital performance, you can't not know and calculate it-I'm talking about the conversion rate or conversion rate. Here I explain what it is, how it is calculated, why it is so important and what factors it can be influenced by.

In the world of online marketing, there is a secret weapon that could make a real difference to your success.

I'm talking about them, the so-called conversions.

Try to think: Every stage of a customer's experience with your company can be viewed through the lens of conversions.

After someone heard about you, did they get in touch with you?

After receiving complimentary content, did he purchase one of your products?

After purchase, did you actually use it?

And so on...

These are all conversions, steps from one step to the next: if you identify and understand them, you will have more tools in your favor to optimize different parts of your business.

That's why in today's article I want to tell you about the conversion rate: a metric that, when high, means more customers and better returns on the investment you make in marketing-and ultimately increased sales and revenue.

It's a critical KPI not only for targeting your traffic, but more importantly for turning that traffic into meaningful actions that fuel your growth-and help you outperform your competitors as well.

So let's get into it: read on to understand what conversion rate is, how to calculate it and why it is so important.

Conversion rate: what is it?

In marketing, conversion rate (translated "conversion rate") indicates the percentage of users who take your desired action by responding to a call to action, whether it's filling out a form, signing up for your newsletter, read an email or make a purchase.

It then allows you to evaluate the effectiveness of your communication and investment in getting new leads or new customers, based on your company's acquisition goals versus the total amount of traffic or interactions.

It's a metric that allows you to quickly see if a particular customer touch point is working well and is somewhat of a standard by which you measure key moments of the customer experience.

A high conversion rate is generally seen as a positive indicator: the higher it is, the more effective your content will be; it shows you how good your campaigns are and at the same time how you can optimize your strategies.

When to calculate conversion rate

As you have guessed, there is no one-size-fits-all case for conversion; in fact, it depends on your goals at various stages of business and marketing activities.

I have already brought forward the most common cases in which we can talk about conversion, but let's summarize here the main scenarios in which you might want to calculate this KPI:

#1 E-commerce transactions

If so, you need it to understand how many visitors make a purchase and thus evaluate the effectiveness of the product pages, payment process, and overall user experience.

#2 Lead generation

If your goal is to generate leads, calculating the conversion rate allows you to see what percentage of visitors are completing the desired action-from signing up for a newsletter to registering for a free webinar.

#3 Email Campaigns

Measuring the conversion rate of your email campaigns is used to assess the extent to which they are driving people to intended actions, such as clicks, sign-ups or purchases.

#4 Advertising campaigns

Understanding how many clicks are converting into desired results is critical to optimizing ad spend and targeting.

#5 Content Marketing

For content-based strategies, calculating conversion rates serves you well to see how well your content engages and converts visitors.

Essentially, you can calculate conversion rate whenever you want to evaluate the success of specific actions or campaigns, identify areas for improvement, and make informed decisions to improve overall performance. It is a valuable metric for ongoing optimization and to ensure that your efforts are in line with your business goals.

Rate Conversion: the formula

Calculating the conversion rate is easier than you imagine.

Simply take the number of conversions and divide it by the number of total interactions with ads (which can be traced back to a conversion during the same time period).

Let's look at the formula right away:

Conversion rate = (total conversions / number of visitors) x 100 

conversion rate

The number of conversions is the total number of desired actions taken by users; the number of visitors represents the total number of interactions with a particular web page, marketing campaign or platform.

Typical conversions are purchases, filling out forms, adding to a shopping cart, clicking on a call to action or any key performance indicator (KPI) worth noting for your business.

The result is usually multiplied by 100 so as to have a value expressed as a percentage.

We also give a couple of practical examples to better understand.

Imagine you have your online shop and receive in a given period of time 1000 visits from users; of those users, 50 then make a purchase. Your conversion rate will then be 5%:

(50 / 1000) x 100 = 5%

Or, imagine running a new ad on Google about your latest product, with the goal that users will click on it to visit your e-commerce site again and again. On the first day, out of 100,000 users who see it, 1,000 will click on it.

From here you can figure out how much the ad is converting by taking the 1,000 clicks (conversions) and dividing it by the total number of views (interactions):

(1,000 / 100,000) x 100 = 1%

So the conversion rate on this ad is 1%. (Ps. conversion rates for ads are also called "click-through rate (CTR)").

Or again: imagine that you have just sent an email campaign announcing the upcoming launch of a new product to 10,000 customers who have purchased from you in the past. Of those 10,000 recipients, 500 clicked to sign up for pre-order.

The conversion rate of that email is 500 divided by 10,000, or 5%:

(500/10,000) x 100 = 5%

Why conversion rate is important 

To determine the effectiveness of marketing, you need to know how many people respond positively to the stimuli you provide them.

Since the conversion rate compares the number of customer responses to the total number of contacts, it represents one of the most useful and accurate metrics to be able to do so.

Try to think: If 50 people signed up for your mailing list last month, your first instinct might be to celebrate and take the day off.

However, if you found out that those 50 endorsements came from over 50,000 people who visited your website, how would you take it?

In fact, this is only an 1% conversion rate, which suggests that you probably need to start changing your communication strategy.

In general, then, we can say that conversion rate is a very important KPI for several reasons:

  • It measures the effectiveness and performance of a website, landing page or campaign, giving you insight into how good your efforts are at engaging and persuading users to take the desired action;
  • It then helps you evaluate the ROI of your marketing activities;
  • It allows you to identify opportunities for improvement in your strategy;
  • By understanding which channels, campaigns or pages have higher conversion rates, you will be able to use and allocate your resources more efficiently;
  • When faced with specific goals, conversion rate is a direct measure and a tangible metric for tracking success;
  • In short, it is a key performance indicator directly related to the success of online initiatives and the overall health of your company.

What factors influence conversion rate?

At this point you might ask, what does a higher or lower conversion rate depend on?

conversion rate

There are several factors that can affect your conversion rate, here are the main ones to pay attention to in order to improve your overall performance:

#1 User experience

The quality of user experience while visiting your website is essentially determined by two factors: design and page loading speed.

The easier and more intuitive your site is to navigate, the more quickly users will find what they are looking for; this consequently decreases the bounce rate and increases the likelihood of conversions.

The same goes for loading speed: if too slow, it can cause frustration and early abandonment of the site.

Also consider the importance of a design that is mobile friendly, thus optimized for mobile devices.

#2 Call to action.

Whatever kind of action you ask your users to take, you must make sure it is highly visible, clear and engaging.

Place your call to action strategically and choose a design and color that is attractive.

#3 Contents

The content you offer to your potential customers must meet at least two requirements: one, clearly communicate the value proposition and benefits of your products or services; and two, be relevant, engaging, and able to meet users' needs.

In this way, thanks in part to persuasive copy, they will definitely have a positive impact on conversion rates.

#4 Enrollment forms

Propose simplified forms so as to encourage users to leave you the necessary information and avoid friction or difficulty in the conversion process.

#5 Targeted Traffic.

Make sure to tailor your messages to specific audience segments and attract the right users through targeted marketing initiatives, so as to increase the relevance and resonance of your communication and increase the likelihood of conversions.

Also consider retargeting and remarketing activities to remind users of your offer.

Related metrics

Like conversion rate, there are other very important KPIs related to the effectiveness of your digital campaigns: understanding them means having an overall view of the potential of your actions and your room for improvement.

Here are the key metrics related to conversion rate:

  • Click-through Rate: click-through rate (CTR) determines the percentage of people who actually click on your ad, showing interest in your offer;
  • Bounce rate: indicates the number of people who arrive on a page, perform no action, and then leave; it is a useful track to see if they do not convert because at first glance they do not find what they want;
  • Average session duration: is the amount of time a user spends on a page and can let you know how much they interact with it;
  • Marketing qualified leads (MQL): indicates the number of people whose contact information fits your target market; it is an important metric for tracing your ads to see if they not only convert, but produce qualified leads for marketing initiatives.

Conclusion

As you may have guessed, conversion rate is a valuable marketing metric: understanding, defining, measuring and improving it is very important to the success of your business.

Indeed, its optimization is a central aspect of any digital strategy.

Of course, conversions are custom-defined by you: whether it's an ad click, newsletter sign-up, or product purchase, always make sure that the definition of what you're counting as a conversion and what you're counting as a total audience is mapped in a meaningful way.

In this way you will be able to have a more accurate and more useful picture for evaluating the performance of your strategies.

But tell me, which conversion rates do you consider most important?

Let me know in the comments!

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