What is the conversion rate, and how is it measured?
It is a ratio that is calculated between a numerator and a denominator that returns a percentage. The formula is therefore simple: numerator / denominator = %.
The numerator is usually the number of objectives achieved in the period being evaluated. It will depend on what we want to measure; it could be conversions, sales, downloads, etc.
The denominator is the total number of opportunities attempted to achieve those objectives that we put in the numerator. For example:
I tried to close 100 customers and got two sales.
Two hundred people visited my site, and ten people called me.
I made 50 calls, and two answered.
As you can see in the previous cases, it is essential to be very clear about the objective you want to achieve and how many opportunities are needed. You can see different conversion rates (2%, 5%, 4%) that apply to different situations during the last points. Now let’s analyze the application to marketing and sales.
The conversion rate in marketing
The conversion rate is calculated by dividing: number of total conversions/number of total visits.
The definition of conversion will depend on each website: a download, a request for a quote, a registration, subscription to a newsletter, contact via a form, purchase of a product, etc. The important thing is to measure it because, without a doubt, what cannot be measured cannot be managed.
The easiest way to start measuring conversions is by defining goals and conversion funnels in Google Analytics, Google Ads, or Facebook Ads as appropriate.
Once configured, you can start measuring the behavior of visitors on the website and have a clear metric of where we are to start improving.
I am setting up goals in Google Analytics.
The correct measurement of goals is a fundamental part of website analytics. Google Analytics allows you to create different types of plans depending on what you want to measure:
Specific pages or screens that users visit: for example, when the person arrives at the thank you page after filling out a form or making a purchase.
The number of pages or screens they view in a session:
For example, you can set a target when the user has visited more than five pages in a session. the length of time they stay on the website or application, and
to the events they trigger while they are on the website or in the application: when they play a video or click on a specific button.
You can go to Google Analytics > Administration > View > Goals > Create a new Goal and follow the step-by-step to start measuring the goals.
After setting up your goals, the exciting thing is that in all reports, you will start to have new metrics related to conversions that will allow you to have a more accurate measurement. You will see how modifications, conversion rate, and conversion value will be available in Google Analytics. That’s halfway there!
Tip: if you have an active Google Ads account, we recommend linking it with your Google Analytics account and importing the goals to Google Ads so that the conversions are synchronized on both platforms, and the measurement is extended to Google Ads as well without the need for further parameterization.
How to improve conversion rate in marketing
The next step is to start working to increase the conversion rate and, with the same traffic, get a more significant number of customers. As we mentioned above, it is a matter of being more efficient once we know our metrics.
This discipline is known as Conversion Rate Optimization (CRO), and it defines itself quite well: it is the set of techniques aimed at increasing the conversion rate. When a company wants to improve the ROI of its Internet presence, working on conversion optimization is the most effective method to increase the return. For example, let’s analyze the following scenarios:
Scenario 1 Scenario 2 Scenario 3
Target (daily customers) 10 20 20
Traffic (daily visits) 1000 2000 1000
Conversion rate 1% 1% 2%
Customers 10 20 20
- Let’s start with scenario 1, in which we have a conversion rate of 1% (we don’t know if it is good or bad yet), and we have ten customers. What we need to ask ourselves is what are the ways to achieve 20 customers.
- If we go from scenario 1 to 2, we need to double the number of visits, which means a more significant investment in marketing to increase the number of visits. If the company has the capacity to invest and it is faster than working on all the optimization required to double the conversion rate, this will be a good solution.
- To move from scenario 1 to 3 requires increasing the conversion rate so that, with the same investment in traffic acquisition, twice as many customers are obtained. Although it may seem the most logical thing to do, the truth is that it may involve a lot of analytics, design, redesign, testing, and design work to double the conversion rate.
The ideal would be to double the conversion rate from 1% to 2% and then increase the traffic from 1000 to 2000. That way, you would go from 10 customers to 20 and then to 40. Not bad!
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