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Home > Blog > Digital Marketing > PPC >

What are Conversion Rates: How to Calculate Conversion Rate?

Conversion rate is the rate at which your website visitors complete a certain action (conversion). The conversion rate is expressed in the form of percentage taking into account the number of people who visited your website and those that completed a particular goal.

what are conversion rates

Unlike cost-per-click or click through rate, conversion rate takes into account the effectiveness of your marketing. It is crucial at getting people to do what you’d want them to do. If you’ve got a high conversion rate, it is a sign that your marketing is effective.

In simple terms, your conversion rate is the percentage of your website visitors who convert based on your business goals. Here is an overview of the different types of conversions.

  • Registering to a website
  • Signing up for a subscription (either free or paid like a newsletter)
  • Making a purchase
  • Submitting a form (lead generation form, contact us form etc.)
  • Using something (using an application/software)

Conversions are a measure of action that help to progress a prospective client to become a paying customer.


How to Effectively Calculate Conversion Rate

Calculating conversion rate is straightforward. What you’ve got to do is to divide the conversions you get in a specific period by the total number of your website visitors, then multiply by 100%.

Conversion rate = (conversions / total visitors) * 100%

For instance, if you’ve got twenty-five conversions from five hundred interactions, your conversion rate will be 5% (25/500*100). The great aspect about conversion rate is that it can either be specific or broad with your conversion rate as you would want to be. There are various types of conversion rates and ways to use the data when examining performance.

The Conversion Rate Formula

When calculating the conversion rate, there are three different conversion rate formula you can use.

Conversion rate = Your total conversions / total leads * 100%

Conversion rate = Your total conversions / the total number of your unique visitors * 100%

Conversion rate = Your total conversions / the total number of sessions * 100%

The reason why there exists more than one formula used to calculate conversion rate is because calculating conversions depends on your definition of a conversion. Depending on the formula you use, the denominator measures your total traffic while the numerator measures your conversions.

Here are a few questions you should keep in mind when or after using the conversion rate formula.

  • What’s a good conversion rate?
  • Can multiple conversion impact this?
  • Is it possible for a single person to convert more than once?

To solve this challenge, marketers use different specialized terms. Conversion rate takes note of the total number of conversions divided by the number of visitors. But, if you want to find the percentage of visitors who converted from a paid campaign, regardless of the number of times they converted, you should divide the converting click by total clicks then multiply by 100%. This is referred to as the click conversion rate.

The same case applies to the other types of questions; what you’ve got to do is use different formulas. You need to understand that these are flexible; it’s up to you to choose whether you should consider multiple formulas. This is especially the case if you own more than a single service or product you want to keep track of.

By taking multiple conversion rates into consideration, it indicates your willingness to get more details of your traffic and perfect your future marketing strategies. In most businesses, conversion rates are the same as the click conversion rate. The click conversion rate is particularly useful in instances where you receive plenty of repeated conversions. You want to get a better overview of the percentage of visitors that are converting.


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The Importance of Your Conversion Rates

Conversion Rates Refer to Events on Your Sales Funnel

It doesn’t necessarily refer to clicks; they still refer to conversion events on your sales funnel. For instance, you can calculate the percentage of users who complete an in-app action or install an application. This is an important consideration for marketers because they are in a position to identify valuable users quickly.

The information can then be sent back to the funnel, and this helps to target and optimize campaign performance.

An Effective Tool When Running Mobile User Acquisition

Conversion rates are useful when it comes to running mobile user acquisition. This is because it helps in measuring the success of your campaign. You can still use them to set your return on investment expectations, especially when you plan to scale a campaign.

Indicates the Channels Used in Promoting a Particular Application

If conversion rates are used correctly, they can indicate the most effective channels when promoting a particular application. This is valuable in ensuring that advertisers evaluate their copy’s effectiveness and use them in making strategic decisions. If you’ve got data that indicates your conversion is lower than you expected, they can still be used to highlight issues with an application user interface. This is especially the case when users are having difficulties signing in or taking into account the areas that need improvement.

What Defines a Great Conversion Rate?

If you want to know a great conversion rate for your business, you should have a baseline. This means that you should establish what your conversion rate is and what you wish to achieve in the next thirty days, six months, or one year. Going by the above formula, a good conversion rate varies depending on your traffic quantity and quality. It varies even further depending on the business you are conducting and the industry you are active in.

You need to understand that what qualifies as a great conversion rate is based on your business model and can be greatly influenced by your advertising campaign. Understand that it’s not possible to conduct conversion rate optimization until you know your services and products as well as the future customers they cater to.

What is a Good Conversion Rate?

A good conversion rate should be between 2 to 5% of your traffic. It would be best if you also took note that conversion is not the same as a purchase it depends on your goal of conversion e.g. if for you just a lead information is a conversion then it is fine but if your goal is to sell something then lead information is nothing until that person buys from you.

Factors that Can Impact Your Conversion Rate

Different factors can significantly impact your conversion rate. Here are a few you should know.

  • You have unsuitable search engine advertising (SEA) measures. This means that your visitors expect something different from what you are offering in your ad
  • Technical problems with your payment methods (A great example is an incorrect redirect to PayPal)
  • Slow loading page speeds
  • Poorly designed landing pages
  • Captcha requests
  • Unsafe purchase process such as websites without Https
  • Grammatical or syntax errors
  • Unreadable color and font

A Closer Look at Conversion Rate Optimization

Conversion rate optimization is a process that involves the improvement of a website so that more website visitors can convert. There are different aspects involved in its optimization, such as adding convincing information on your web pages, positioning of the call to action, website layout, and other designs such as your color choice.

Other technical qualities of your website, such as mobile-incompatible and slow-loading websites, can still make your website visitors leave. The other important aspect of conversion rate optimization is the method you employ to earn traffic on your website. Take note that it’s only the well-targeted ads that will appear to a client who is interested in what you’ve got to offer.

Therefore, this means that every ad click is most likely going to come from clients who are more likely going to convert.

You need to know that how you create your advertisement will have an impact on whether or not your visitor is feeling misled by your ad or is truly interested in your products. Making sure that your advertisements are well-targeted and represent what your clients will find on your website is part of its optimization.

How to Effectively Increase Your Conversion Rate

Now that you’ve got a solid idea of finding your conversion rate and what good looks like, it’s high time you learn how to increase it. Even if you are doing better than the industry average, your business will greatly benefit when you increase it. This is because higher values can lead to higher sales.

Here are a few optimization strategies you can employ when increasing your conversion rate.

Make Your Landing Page Responsive

If you place mobile user clicks through or an ad and find out that the site is too tiny to read or it’s broken, there is no way you are converting such users. This is the reason why you have to make your landing pages and conversion click through process optimized and responsive for mobile.

Have Clear Call to Actions

When a potential customer visits your website and likes what they see, they want to know what they should do next. If the information you provide doesn’t give them direction, you may lose such a valuable lead. By adding a call to action, you are leading your audience to the next step.

CTA buttons are important on your landing page because they help get your reader’s attention. When they decide to proceed, they know the next steps they have to take. When testing your call to action, you can try different phrases, colors, and buttons. It’s also important that you create specific CTA buttons. You shouldn’t just say, “call us today for a free quote,” Download your free guide,” or “click here.”

It would be best if you let your audience know what will happen once they click on a button. A good CTA doesn’t just improve your conversion rate, but it increases your engagement.

Use Videos When Engaging Your Audience

Video marketing is among the most effective conversion rate marketing strategies. Videos are an effective way to boost engagement since they provide your audience with valuable content. When integrated with landing pages, videos can improve conversions by up to 80%. It is one of the simplest ways to better your conversions.

When using videos, your audience can get valuable information with ease. Prospective clients find it convenient to watch a 40-second video than to read blocks of text. By combining important information and visual elements, you can use videos to create a positive experience for your audience.

A Closer Look at Mobile User Experience and Conversion Rate

Website visits using mobile devices are on the rise. So, if you don’t have a mobile-friendly website, you’ll constantly face deteriorating conversion rates. Take note that most mobile leads are made using a smartphone, and the conversions are higher for devices such as tablets.

The popularity of mobile lead generation is a critical factor when you want to maintain or achieve conversion target in the future.

Conversion Rate and Return On Investment

A good conversion rate is an indication of a strong return on investment. Let’s say that you spend $2,000 a month on content that gets you five hundred clickthrough rate and twenty thousand readers. This means that you’ve got a value of 2.5%, which translates to $4 per conversion.

If you get 800 clickthrough rate the following month, you’ll have increased your conversion by 4%. If your conversion has not changed from $2,000, each of your conversions will cost you $2.5 than $4 per month. This indicates that you are in a great place since you have attained more revenue without the need to increase your spending.

If your conversion significantly decreases, your return on investment is also likely to decrease significantly. This is because each of your conversion will be more expensive. When it happens, it’s probably time you should think about changing your marketing strategy.


unique ways to increase sales

Conversion Rate and Search Engine Optimization

If you’ve got a high bounce rate, you are most likely bound to have a lower conversion rate. You may have a website that receives a lot of traffic, but when website visitors leave your page after a short time then return to the search engine result page, your conversions will fall significantly.

If your prospective client cancels a purchase process or product selection shortly before a conversion ends, it indicates leaks within the sales funnel. By using analysis tools, you can easily spot and close any leaks. By doing so, your customer journey will be optimized to improve your conversion rate.

Conversion Rate Tracking

When it comes to Google Ads campaign, you can easily create conversion tracking to help you measure the conversions you have attained with Google Ads. The advertising tool will then display your conversion rate by dividing your number of conversions by your total ad clicks. A specific time frame will be taken into place within which your conversion has taken place. Your conversions can be counted on Google Ads as customized goals, landing page views, or form of purchase that can be defined in Google Analytics.

As part of conversion tracking, your cost per click can be used when finding the cost per conversion. The analysis is also important in providing a better overview of approaches that can improve conversion rates.

Incorporate Logos, Reviews and Testimonials

Many people hardly want to be the first to use a service or product. The best way to put their mind to ease is by providing reviews/testimonials from past clients. With social proof such as testimonials, you can always put your clients at ease.

Conversion Rates Based on Industry

The insurance and finance industry are leaders when it comes to conversions. Other industries that stand out include automotive, consumer service, and the legal industry. In most of these instances, some of the leading advertisers are not afraid to change their conversion flow or offer to improve their conversion rate. Some may even be taking conversion-boosting tricks like video landing pages.

Ecommerce clients don’t have a lot of options when changing their offer. This is why they suffer from a poor average conversion rate. They even have large inventories, making it challenging to fine-tune ad copies across the different e-commerce keywords. While removing the barriers to purchase is a critical CRO tool for e-commerce businesses, if you are using Google Ads to better your e-commerce business, your focus should be on improving keywords with high commercial intent.

Note that the average conversion rate of Google Ads across the different industries is 0.77% for display and 3.75% for search. So, if you are using display ads to drive traffic, you must pay more attention to audience optimization and ads’ placements.

A/B Test

You have to understand that conversion rate optimization entails gathering information that can over time, improve the performance of your landing pages and ads. One way you can achieve this is through A/B testing of the different components on your website.

The moment you make a small change on one variable, you are likely to receive an improved conversion to that change. When you undertake several ad copies and landing page tests every week, you are assured that your conversions will always improve. Gradually.

How PPCexpo Reporting Tool Can Better Your Conversion Rate

Even if you have thousands of clicks, it’s worth nothing if you aren’t getting a lot of conversions. When you’ve got a high conversions, you can be assured that your cost per click is worth it because it’s returning your business to profitability. If you choose to use the PPCexpo Reporting Tool, you can effectively deliver Google Ads Conversion rate report containing the value that can help prospective clients convert.

"What

You can access PPC reports from here.

You must check the conversion rate of your campaign on different metrics. This is an important metric that can help advertisers to scale their Google Ads strategy.

Tools That Can Help Improve Your Conversion Rate

Yes! A great tool that can come in handy in improving your conversion rate is PPC Signal. This is because it features machine learning and artificial intelligence features that generate signals when fluctuation occurs.

"What

You can access PPC Signal from here.

Once you realize that the conversion rate is dropping for a couple of days, you should take critical steps by exploring the signal and seeing the trend.

It’s possible to confirm whether your clicks are dropping or not. If you’ve got clicks that are dropping, there’s a good reason why your ad isn’t relevant to your clients. You probably may have made changes to your landing pages, or you are not getting impressions.

You should establish why your impressions are not being generated. It could be that your keywords aren’t triggering in the search terms. This means that you’ve got to focus more on search intent. This way, you can check location and device targeting while at the same time bring variations in your keywords. There are different reasons why the negative keywords aren’t letting your as get triggered.

That said, PPC signal can provide you with timely awareness that something unusual is going to happen. Based on such a signal, you can run a successful PPC campaign with a higher conversion rate.

Wrap Up

If you are running a digital marketing campaign, your marketing efforts goal is to generate leads. This includes capturing someone’s email and name when they download an eBook, a newsletter or other content such as free assessments or webinars. Therefore, the lead conversion rate is the percentage of the page visitors who turn into leads by signing up.

Aside from lead generation rate, there is also the sales rate. This denotes the percentage of website or landing page visitors who complete the sale you are pitching. As a marketer, there is something that you’re always selling, and in most cases, you can make a sales case on the landing page. Therefore, the sales rate refers to the percentage of visitors driven from a particular campaign and ultimately buying.

This in-depth guide has explored different aspects of conversion rate that should help you better understand how it works and how best they can be useful in your marketing campaign.

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