How do you calculate Conversion Rate Optimization

December 06, 2017 - 14:22

No matter the business you are into, if you have a web presence and you value leads/sales from online platforms, conversion rate matters to you. Through this article series, we will be taking you through the basic principles behind conversion rate and how it could be made better.

Understanding Conversion Rate

To start with, let's examine the term conversion rate. In general, conversion rate is the percentage of visitors that turn into customers in any online activity. Conversion rate is purely contextual. It varies based on business goals, industries, locality etc. If we are aiming for webinar registrations, then conversion rate is used to measure the effectiveness of campaigns for registration.

If we are aiming for leads, then:

Number of leads captured vs Number of website visitors define the conversion rate

The average conversion rate of worldwide online shoppers for first quarter of 2017 is 2.48%1. This means that, out of 10,000 people who visited the website, 248 of them purchased a product.

Here are some use cases that help you to understand the concept of conversion rate.

Use Case Instance 1: Kelvin owns a fitness centre in Sydney. He executed a Google ads campaign targeting young people living there. The landing page advertises a trial subscription which is offered for a period of 2 weeks. Campaign runs for 5 days. By the end of campaign, he gets 70 enquiries in hand for trial subscriptions. He spent USD 300 to bring the 60,000 visitors to the landing page. While considering the landing page visitors and enquiries, conversion rate will come to around 1.16%.

Use Case Instance 2: Travish is planning to launch a Smartwatch next month. It has exclusive top of the line features. The marketing team of Travish decides to promote it digitally to boost sales. For that, they create a conversion optimized landing page with pre-order form which displays the product features in an attractive manner. This page is also equipped with an AI based chat system that responds to user queries. For promoting this, they advertise over Facebook and Google network. Users from Ads will be taken to the landing page and from there they can pre-order the product with a special discount. By the end of first week, they get 3,000 enquiries from 20,000 landing page visits. The conversion rate for this engagement is 15%. To calculate conversion rate, we have to analyse the total landing visits and number of pre-orders.

Measuring Conversion Rates

Conversion rate(%) = (Conversions / Advt clicks)*100

Digital marketers also track conversion levels for different stages. Eg : Impressions to Clicks, Clicks to landing page visits, Page visits to enquiries etc. They also name it accordingly. Eg: Click Through Rate, Bounce rate, conversion rate etc.

Benefits of Understanding Conversion Rate

  • It conveys the real value of advertising engagement.
  • It helps to identify pit holes in campaign execution and correct it.
  • It ensures that the advertising spending/ expenditure is evoking the best results, thus ensuring great ROI.

In an upcoming article, we will be explaining about the factors that affect conversion rate and how to optimize it. Zyxware also helps clients in maximising their revenue through digital marketing initiatives. For knowing about the vast array of digital marketing services offered by Zyxware, get in touch with us.

Reference:
"Conversion rate of online shoppers worldwide as of 1st quarter 2017", Statista , Accessed October 2017

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