What Is a Conversion Rate?

PPC PPC Basics

The conversion rate is a critical aspect of advertising for all industries. When you want to understand where and how your ads succeed, you’ll need to understand the conversion rate.

Your ad’s conversion rate tells you how often your ad clicks turn into conversions. By the time you complete this article, you’ll know how to calculate a conversion rate and how you can improve yours.

What is Conversion Rate?

The conversion rate is the percentage of customer interactions that convert to an action, such as a sale or click. This percentage is based on the number of customers who complete the goal out of the total number of website visitors.

Who Should Use Conversion Rate?

The conversion rate allows advertisers across all industries to understand the user habits of site visitors. It’s helpful to business owners and marketing professionals because it highlights where advertising and marketing should make adjustments.

Why is Conversion Rate Important?

Many businesses have to work hard to stretch their marketing budget, which typically includes allotments for advertising and promotions. Studying the conversion rate of an advertisement or promotion using analytics, feedback, market studies, and A/B testing can help lower the number of marketing dollars that go toward ads.

The conversion rate for an advertisement can also help inform decisions on which products to promote, develop, or discontinue. Businesses can also use the conversion rate to address issues with web design and user interfaces.

Things To Note About Conversion Rate

There are a few essential things to consider about a conversion rate before continuing.

The conversion rate is subjective
There’s no one-size-fits-all solution to increasing a conversion rate
Finding the right campaign to boost your conversion rate takes time

How To Calculate Conversion Rate

To calculate a conversion rate simply divide the number of conversions (the desired action such as a purchase or a form submission) by the number of interactions in a given time.

One of the best things about digital advertising services is that they’ll calculate the conversion rate for you. That said, if you need to calculate it yourself, let’s use this simple formula to calculate website purchases:

Conversions / Site visitors x 100 = Conversion Rate

So, if your website had 5,000 unique visitors in one week and you sold 100 units of a product, your conversion rate would be 2%.

The conversion rate is a critical aspect of advertising for all industries. Conversion rate tells you how often your ad clicks turn into conversions.

What’s a Good Conversion Rate?

The average conversion rate for e-commerce is 5.2%. However, the definition of “good” regarding conversion rates is highly subjective and involves several factors.

Industry benchmarks
Source
Region

In other words, an apparel retailer in the US looking at email conversion rates will look for a different number than an automotive seller in France analyzing social media conversion rates.

A 5.2% conversion rate is excellent for the home improvement industry but well below average for food & beverage. So, to accurately determine which conversion rate you should aim for, you’ll need to take a look at your industry’s benchmarks.

How To Increase Conversion Rate

As you read over this article, you’re probably wondering, “how can I increase my conversion rate?” Unfortunately, there’s no quick and easy solution. Rather, there are things you can do to construct a cohesive ad campaign that’ll boost your conversion rate significantly.

Identify Your KPIs

Your key performance indicators, or KPIs, are the first thing you should define when creating a marketing plan. KPIs show what, if any, progress is made toward your intended result.

For example, if you want to increase your conversion rate, you’d examine

Ad-based revenue
Unique site visitors
How people are finding your content
What garners the most online interactions
User demographics

So, if you identify an increase in clicks from women aged 18-24 as a KPI, you’ll utilize your ad services analytics tools to gauge progress.

Conversion Rate, Revamp Your Website

Your website’s design can often decide whether or how much a user interacts with your content. When you craft your site, you should do it with user intent in mind. This means you’ll want to focus on several aspects, including

Menu design and placement
Eye-catching graphics
Rapid load time
Easy-to-use search function
Informative and useful content
Minimal use of popups and advertisements

These things will help make a user’s experience on your site effortless. For example, when an item’s page loads quickly, isn’t filled with ads, and has content that draws the eye, visitors are far more likely to click “add to cart.”

Learn to Use Analytics and Testing

The bread and butter of an ad campaign is analytics and testing. Using your ad service’s analytics tools will give you insight into user demographics and behavior. You’ll also be able to utilize A/B testing to determine which ads work best for specific targets.

Main Takeaways

The conversion rate is the percentage of site visitors that perform the desired action. Typically, you’ll examine a sale or interaction. There are many ways you can use the conversion rate to inform business decisions. In our next articles, learn how to calculate ROAS to make sure you are maximizing your advertising budget.

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