Conversion Rate

What is Conversion Rate? Definition, Formula, Importance, Optimization

October 22, 2021
12:00 am

Does your business have a conversion rate goal that you’re struggling to reach?

Are you unsure of the best next step to optimize your website for conversion?

No matter which scenario you face, we’ll show you how to calculate conversion rates, compare your company’s numbers to the competition, and how to boost conversions the smart way.

Let's get started.

What is conversion rate?

Conversion rate is the percentage of visitors who land on your website or page and then take an action, such as purchasing a product or submitting a form. The action a user takes can be anything you deem important for your business, even if it doesn't necessarily translate into sales or revenue.

The process of converting a visitor into a customer generally follows this flow:

  1. Attract - bring visitors to your website or landing page through a variety of channels like organic search (Google), social media posts, or online advertisements.
  2. Convert - the visitor is enticed by your call-to-action, product, or service and decides to take an action thus becoming a lead.
  3. Close - depending on the action took, the lead is pushed into the sales funnel where they are nurtured into becoming a customer. This can be done through emails, drip campaigns, outreach, and more.
  4. Delight - the customer is actively using your product or service, happy, and providing reviews or recommendations which improve your net promoter score.
Converting visitors into customers
Conversion rate is the percentage of visitors on a website or page that take an action.

A business can have multiple actions considered a conversion, each will also have their own conversion rate. Each action might be scored differently depending on their business impact. For example, someone signing up for a demo request might be significantly more qualified than a visitor who downloaded an E-book.

Why is conversion rate important?

Conversion rates are one of the most important metrics to measure for almost any business. Tracking conversion rates allows your business to monitor the effectiveness of landing pages and provides a scalable number to create a baseline for success.

Understanding the percentage of visitors that are landing on your website and taking an action will help drive business goals and decisions. Conversion rates also give your business a better idea of how attractive your product, service, or offer is and if the visitor is willing to purchase or provide information for it.

Here's a quick 5 reasons why conversion rate is important:

  1. Provides a single number to judge the effectiveness of a landing page or offer
  2. Influences business decisions in terms of what to improve or focus on
  3. Gives a better idea of scalability, increasing visitors will also increase leads or customers
  4. Shows how "in-demand" your product, service or offer is
  5. Increases the amount of leads added to your sales funnel

How to calculate conversion rate?

Conversion rate can be calculated by taking the number of visitors who completed an action (or converted), dividing that by the number of total visitors and multiplying it by 100.

For example: you have a landing page that brought in 5000 visitors and 1237 of them took the desired action. So if you use the conversion rate formula, of dividing 1237 by 5000, your conversion rate would be 24.74% (1237/5000) x 100.

Conversion rate formula
Conversion rate formula illustrated by HubSpot.

The formula for conversion rate is actually quite simple to use and most businesses should have the required data available through a CRM or analytics tool such as Google Analytics.

💡 Pro Tip: If your business uses Google Analytics, you can create a custom goal. Then set the conversion as reaching a destination (thank you page), duration, pages/session, or event. Because GA is already tracking the number of visitors to that page, your conversion rate would start calculating instantly.

What is a good conversion rate percentage?

There is no single "ideal" number for conversion rate, it all depends on the industry, item being promoted, and amount of average traffic to that page. Some sources might say between 2% and 5% while others like WebFX would mention over 10%. Depending on the item being promoted and the amount of traffic to that page, it could drastically change the desired baseline.

What is a good conversion rate percentage?
According to WebFX, a good conversion rate is over 10%.

Conversion rates vary by industry. They are subjective; a successful conversion rate for Company A might be a weak one for Company B. That’s why it’s important to understand how conversion rates pertain to your industry and individual business.

Lead generation conversion rates by industry.
How does your conversion rate stack up against your industry average? Image source: Euro 3 Plast

For example, a website with 100,000 visitors to a landing page that is promoting a newsletter signup might reach a conversion rate of 10% or more with no problem. However, a company that is selling a software with the same amount of traffic might float between the 2% and 5%.

To simplify it, a newsletter is completely free and doesn't require much thought behind completing an action. But, the software that costs money, would require much more of a business decision before converting.

How to improve your conversion rate?

In order to improve your conversion rates, you'll have to "optimize" your conversion process and funnel, aka conversion rate optimization (CRO).

CRO is achieved by theorizing potential reasons why customers aren't converting through your lead generation sources then coming up with strategies to improve these processes. It also helps to A/B test each change made to view the results side by side and determine which change lead to better conversion rates.

Here's 4 ideas to boost your conversion rate:

1. Revamp your offer

What are you offering your website visitors in exchange for their contact information? If you have low conversion rates with your free offer, there’s a good chance it’s not what your audience wants.

For example, are you offering generic information accessible with a simple Google search? Or are you offering readers a chance to grow with your content?

Provide more than one offer. A/B testing different types will help you learn what your audience wants. Maybe you’ve put together a thorough webinar with plenty of great information. But if your audience doesn’t respond to a webinar, try reformatting the information into a video they can watch on their own time.

 2. Optimize your website design and user experience

There have been many studies on what readers do when you change the color of a button or use a different font in a pop-up ad on your product pages. Sure, there are psychological effects behind online advertising design. But what’s more important to focus on if you have low conversion rates is user experience and personalization.

Most online visitors prefer a minimalistic approach to website design. Flashy banners on the homepage aren’t bringing in leads, they’re deterring them.

New visitors to your site stick around for less than 15 seconds. That’s all you get to make a great first impression, and there’s no room for error. If you want to know what users think of your site, just ask. Send out a survey and see what type of feedback you get.

If you’re making it difficult for potential customers to focus on what your website is trying to sell them or they can’t find the right landing page to move through your conversion funnel, it’s time to optimize your website design for simplicity and user-friendliness.

3. Implement video and other mixed media

Videos sell, yet many companies still shy away from them. If your written content isn’t sealing the deal with your visitors, see if a video provides the final push they need to convert.

You don’t need a fancy backdrop or expensive equipment. Your smartphone and a quiet room are enough. If you’re camera shy, let a charismatic employee do the talking. If you have the budget, you can have a professional animated video designed and produced.

4. Call a bit louder

Are a large number of people visiting your site not converting because you’re not asking them to? A website that doesn’t clearly state its intent will always have a low conversion rate.

Look at every page of your website. Is it asking the reader to do what you need them to do? Whether it’s to call for an appointment, complete a contact form, or download your ebook, don’t be afraid to make your request known.

Also make sure that it’s easy for your visitors to complete the task you’re asking them to do. They shouldn’t have to look for a contact form or track down a link.

The number of conversions you secure is directly linked to your sales and profits. If you remain authentic, transparent, and dedicated throughout the optimization process, you’re sure to see your conversion numbers increase—and for all the right reasons.

Converting visitors into customers is a top priority

If you plan on skyrocketing your revenue and sales, it all starts with conversion rate. How many people can you turn from visitor into customer.

In fact, it's actually quite simple to find out what is causing low conversion rates and most of the optimizations are quick and easy. The smallest changes into conversion rates can provide a significant boost to your business.

Whether it be a newsletter sign up, demo request, or selling a product, everything is measured with one single number: conversion rate. The higher your conversion rate, the better.

What's your conversion rate? How do you plan on improving it?

Let us know in the comments.

Also share this on social media to spread the word.


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