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What is Conversion Rate? How to Calculate and Optimize Your Conversion Rate to Increase Your ROI and Reduce Ad Spend

If you’ve been handling marketing campaigns for a while, you’ve probably come to rely on your click-through or cost-per-click rates to determine whether or not a campaign is doing well. Those are useful metrics that can give you a solid understanding of the finer details, but there’s a more factor to consider the overall effects of your efforts: Conversion rate.

When you know the conversion rate of your marketing campaign, you know exactly how much of your success (or failure) is coming from your marketing efforts.

However, understanding your conversion rate requires a bit of technical understanding and a little bit of math, that’s why Antonie Meeker, CEO of AM Marketing SEO explains this in plain English.

What is a Conversion Rate?

Before we talk about conversion rates, you need to know what a conversion is in the first place. Simply put, it’s when your lead does what you want it to do.

However, it’s a little more complex than that when you consider all the possibilities.

Usually, for businesses that sell goods to customers, a conversion is when a lead finally pulls the trigger on a purchase. They’ve “converted” from a site visitor simply browsing your product pages to completing a transaction.

Conversions can take other forms too, though. For example, if your main goal is to build an email list, conversions can be considered every site visitor who fills out the email form. If your website’s goal is to get people on the phone with your consultation business so you can put in the heavy lifting, then each lead that calls is a conversion.

You may even consider multiple actions to be conversions depending on your business goals. Let’s say you operate a travel blog. You want people to visit your site and stay on it long enough to garner ad revenue from the companies you’ve given advertising space to, but you also want people to sign up for your monthly newsletter and purchase recommended products via affiliate links. In that situation, each time a site visitor stayed on the site for your preferred amount of time, bought a product or filled out your newsletter form, you’d consider it a conversion.

Obviously, not all site visitors are going to become conversions. A lot of the people visiting your site will simply hop to another site to window shop a little more, decide your product isn’t for them, or otherwise do the opposite of what you want them to do.

Your conversion rate is the percentage of site visitors, from your overall visitor count or visitors from individual channels, who actually convert.

How Do You Calculate Conversion Rate?

Calculating your overall conversion rate can be done manually in seconds, and most marketing trackers do it automatically.

Choose a time frame such as one 24-hour period and determine how many conversions you made and how many people visited your website in that period. Now, divide the number of conversions you made by the number of overall visitors, and multiply the answer by 100%. That’s your overall conversion rate regardless of which marketing channel the traffic came from.

However, your conversion rate doesn’t have to be calculated in such a broad manner. You can also gather the exact same metrics and use the exact same formula to determine the conversion rate of each of your marketing channels. You just need to get the number of conversions made via that channel and the total number of people who came to your site from that channel.

This is key, because it allows you to readjust how you’re funding your ad campaign and where you’re focusing your efforts with precision. If you notice your Google Ads conversion rate is low, but your Facebook conversion rate is high, you can cut funding for your Google Ads campaign and pump it into the Facebook campaign.

Some of the top areas to check conversion rates for are:

·         Marketing Channels

·         Individual ads

·         Overall campaign

·         Single webpage

·         Site-wide

·         Keywords used

Tips for Calculating Your Conversion Rate Accurately

Here are a few things you need to do every time you calculate your conversion rate –you’ll be doing it a lot-.

Gather Enough Data:

This process will be different for everyone. If you run a high-traffic site, you can reasonably get enough accurate data in as little as a day. If you’re a low-traffic site, that same collection period might give you one or two conversions with a 100% conversion rate; which is nowhere near what you’ll see with a more substantial amount of data.

You also need to account for accidental conversions. While it’s fairly difficult to accidentally buy something, people can easily start a download or follow an advertisement link by mistake. Those don’t count as conversions since they’re highly unlikely to take any subsequent steps you may need them to. You can’t really prevent these or know exactly when they happen, but there is a solution.

Having a large collection of data will allow you to see a much more realistic and meaningful conversion rate, and it will also minimize the impact of accidental conversions.

For low-traffic sites, you may want to spend a whole month collecting data to ensure you have enough.

Understand Your Goals:

Conversion rates are pretty much the Wild West. There are so many factors that come into play that no one set of numbers is going to be optimal for every business. The industry you’re in, choices you’ve made with your business model, and everything else will determine what you need to expect as an optimal conversion rate.

Determine whether the goal of the conversions is to lead to sales down the road. If that’s the case, which it usually is, it’s imperative to use your conversion rate, the cost of each lead, and the profit each lead produces to determine the ROI for your individual marketing efforts.

While a conversion rate is perfect for gauging the effectiveness of your channels, your ROI will show how much that conversion rate is helping your overall goals.

Use a Tracker:

Tracking your conversions manually is not an easy task, and there’s a lot of room for error. Instead, it’s best to use tracking software designed to keep track of your site traffic and conversions.

Most site hosts and builders have some tools available to help with this, but dedicated trackers can organize that information more effectively, and they can even automate the whole process.

Rather than having to manually collect data, calculate it, and then determine how that fits into your goals, all of that information can be calculated automatically and displayed in a user-friendly manner on your dashboard.

This can be a life-saving tool as it not only saves you time and energy, but it removes the human error factor that can affect manual monitoring.

Optimizing Your Conversion Rate

Now, you know what your conversion rate is, and you want what every business owner wants: Growth and improvement.

How do you start boosting your conversion rate?

Well, it’s a bit of a process, but luckily, it doesn’t require you to spend a ton of extra money on new campaigns or anything. Instead, the bulk of the process will be focused on optimizing what you already have.

Since most people are looking to sell, I’m going to cover it from that angle. However, the process can be used to boost just about any form of conversion.

1: Landing Page

When you set up a bunch of ad campaigns to bring traffic to your site, you don’t want visitors landing all over the place. You have very little time to catch their attention and get to work. So, you need to ensure every lead coming in is seeing your best marketing material.

This is what a landing page is for.

Your landing page will be home to a quick, to-the-point, sales fiesta. This page should immediately catch the visitor’s attention, position you as not only an authority on the relevant topic, but also as the solution the visitor’s problem, and it should provide a quick and easy way to convert that stands out from all other information on the page.

2: Experimenting with Page Aspects

If you’ve made a landing page like you should have, you can continue using it for this step and most subsequent steps. Not only are they great for sales, but they’re also great for gauging the effects of minor changes.

There are four main parts to your landing page:

·         Headline

·         Offer

·         CTA

·         Media

Any of those four aspects can be just slightly off, and your conversion rate will crumble. Luckily, it’s usually just a matter of slightly altering each one until you see better results.

I recommend starting with your headline. Just like the news, a lot of people don’t read more than the headline unless you REALLY catch their attention. Push your headline heavily towards sales, and don’t pull any punches with it.

Then, it’s recommended to change the wording of both your offer and your call to action. The offer explains what you can provide the visitor with, and the call-to-action hooks them into committing to it. Making small tweaks to the wording might be the slight nudge you need to win over those leads that are simply hopping to a new site.

Finally, your media affects the entire presentation of your brand. Poorly placed imagery, videos that buffer forever or ruin the visitor’s experience, and other forms of media that aren’t implemented well can instantly ruin customer confidence and prevent conversions. Experiment with moving these around, increasing the quality, or otherwise optimizing the visitor’s experience while getting as much sales power from your media as possible.

Note: In order to accurately test these changes, you’ll want to use an A/B test. An A/B test, in its simplest form, would be you testing the original version of a landing page against a second landing page implementing the changes you anticipate will make the most impact. Ideally, you’ll make one change to the second page, split your marketing channel traffic between the two for a period, and check your results. Then, you’ll implement another change to the second page, and so forth.

You will need to use a secondary software made for conversion rate optimization for this, but luckily, Google Optimize does just that, and it’s completely free.

3:  Understand Your Target Audience

Before your landing page can be effective, you need to know who your target audience is, what they’re looking for, how they react to different marketing techniques, and any other useful information you can gather on that audience. This way, you can tailor your landing page to effectively market to that specific audience.

Look back on past campaigns or page layouts to see what worked and what didn’t work, research statistics showing their buying habits and which marketing channels they engage with the most, and take notes. Preferably, you should do this before you start building the landing page or doing any A/B tests, but it can be done retroactively, too.

4: Target Your Ads Effectively

If you can afford it, you can have your ads target every person on the internet a billion times a day. Your conversion rate won’t rise, and you’ll waste a ton of money. It’s not about using a big net. You have to target the leads that are most likely to convert.

If you’ve collected data showing that 90% of your conversions are coming from Google Ads, don’t waste time and money funding four other ineffective channels. Cut the funding and push the newly opened resources towards the Google Ads channel.

Targeting everyone possible gets your brand in front of people, but it doesn’t get it in front of the right people.