Do you ever ask yourself what is a conversion rate? Do you want to know why this concept is very important in the digital marketing world and why all digital marketers rely on it?
If so, then you're in the right place if you are:
- Junior marketer and making your first steps into the huge digital marketing world.
- Junior business pioneer and you need to know the basics of evaluation of marketing campaigns.
- Or you are someone who interested in digital marketing.
Here in this article you'll find anything you want to know about conversion rate, in this article you will get to know about:
- Definition of conversion rate.
- Practical experiments on conversion rate.
- Importance of calculating your conversion rate on marketing campaigns.
- What is the CTR and its relationship to Conversion Rate.
- How to make conversion rate not to fool you when evaluating your campaigns.
- How to improve conversion rate.
All of the above points will be explained in a simplified way to make it clear to you with a lot of practical examples so you know what is conversion rate, and how to depend on it in the right way as a digital marketer.
What is a Conversion Rate?
Conversion rate is a scale that used to measure different marketing campaign efficiency, it's mean the percentage of customers did the required offer from the total number visitors of that offer.
Let me explain it to you more, let say for example you made an advertisement for a discount on your restaurant, and you distribute your advertisement to 100 people, and then only 20 people came to your restaurant.
That means the conversion rate is 20%. As I mentioned a conversion rate depend on your demand that you request from your clients, which means the goal you want to reach.
The most famous of these demands are:
- The Sales.
- Fill out data forms.
- Contact your company by using phone.
- Send message through your cutting apps like whatsapp.
- Sign up on survey.
- Subscribe to your newsletter.
- Follow your account on social media like Facebook, twitter.. Etc..
Those demands called (CTA - Call To Action), and conversion rate calculated depend on the client's response to the CTA.
Now it's become clear to you a conversion rate is one of the most important factors you should keep in mind when evaluating any marketing campaigns whatever goal it was built for.
At the most whenever conversion rate is height that indicates your campaigns is successful and doing well. But be careful not to be fooled by statistics which I will explain it to you later.
How To Calculate Conversion Rate?
The calculating conversion rate is very simple as I mentioned in the previous example, all you need to know is the total number of visitors to your offer, and the number of clients who responded to your CTA.
Let's say you run a sponsored advetiesment on Facebook to get sales on some of the products on your e-commerce website, and after the end of the ad you found 1500 people visited your e-commerce and only 100 of them they actually buy your product.
So the conversion rate is 6.66% (100 / 1500 * 100). We can make more examples, but for now I believe you understand the conversion rate and how to calculate it.
Importance of Conversion Rate on Digital Marketing
As I mentioned before a conversion rate is very important scale to evaluate the efficiency of different marketing campaigns in every business over any platform, even on-road marketing campaigns.
This is not all about CR, there are a lot of reasons which makes all marketers interested on conversion rate on their different marketing campaigns.
1- Comparison Different Marketing Campaigns
We can use a conversion rate to compare between different campaigns to know which one of them will success initially.
Keep in mind a conversion rate is just a percentage, and it's not the only factor that used to compare between different campaigns.
2- Comparison Different Landing Pages
The landing page is a page that your client reaches out when he/her click on your ad, like products page on the previous example, which must be well-designed in an appropriate way to help your client make the decision you want.
That is why all marketer use conversion rates on landing pages to test their effectiveness and achieving profits.
Imagine you've done two ad campaigns similar to each other on almost everything, but the first one will lead the clients to landing page (A) and the other one to landing page (B).
After comparison conversion rate between this two landing pages, you will decide to choose the page that reach a higher conversion rate to use it continuously on your different marketing campaigns.
This tactic on comparison called (A / B Testing) and it's one of the important ways every marketer depends on it to improve conversion rate.
3- Testing Different Traffic Sources
Imagine that you have an offer for the same product, and you've made an advertisement for this offer with the same landing page, one on Facebook and the other one on instagram.
And the you find out that Facebook ad conversion rate is higher than the instagram ad conversion rate, this mean traffic came from Facebook is better for your offer.
This test used by senior marketer to choose best traffic source for their offers campaigns.
4- Testing Different Advertisments
If the conversion rate is high in ads that mean your ad is doing well and achieving results you want, this is the goal of knowing the conversion rate for each ad campaign.
5- Ensure efficiency of Your Marketing Team
If you were a business pioneer and you want to ensure that your marketing team doing good or not, just ask them a conversion rate they've reached.
Collecting data and comparison between different elements on marketing campaigns is essential step that all marketers depend on to evaluate and decision making.
Now you knew the importance of a conversion rate of different marketing campaigns, now I need you to know about another important concept related to conversion rate.
What is The CTR (CTR - Click Through Rate)?
CTR is a percentage of clicks on ads from the total number of views or impressions that the ad has achieved.
Impressions: is a marketing concept referring to to the number of impressions that your ad has reached, but not every impression became a click and not everyone clicks your ad and navigate to your landing page made a purchase and became a buyer of your product.
CTR is mostly being as advanced stage than conversion rate, it used to calculate the ad it every time an ad is too well it's mean it will get more clicks.
CTR doesn't use in marketing campaigns, but it's also used for interacting with search engine results, for example, if in one day 500 users wrote keyword on google search and one of your website articles appeared in the second position on the first page on google search, and your post gets 100 clicks that means 20% of CTR.
From this example, CTR being calculated as this formula (Number of Clicks / Number of Views or Imperssions).
Importance of Getting Accurate Information About Conversion Rate
Let me explain some examples to make it clear for you, to know that you need more info about conversion rate for each element of your ads or your campaigns in general.
Suppose that: you've found the conversion rate on one of your ads is 50%, wonder! What you concluded from this percentage?
- Your ad is awesome.
- Or your landing page is very good.
- Or your traffic source is too good.
What you say if
i told you the whole number of visitors of landing page is just 2..? Yes, just two persons who visit your landing page after watching your advertisement.
Do you think in this situation the conversion rate will be a scale of success of your campaigns or fail? Of course NO, because you need more experiment.
So firstable you need to make sure you've done enough experiments, and you've got a good amount of visitors to make sure your calculation is accurate.
Another example: Let's say you have two ads for the same product, the first one it is conversion rate is 8%, the other one is just 5%, wonder what one of these two ads is successful one?
If you chose the first one then let me tell you you're wrong, because there are a lot of info you need to know, LIKE:
- Has the traffic been same with these ads?
- What's the budget of each ad?
Let's say the traffic source is the same, and the first ad budget is 100$, while the other ad its budget is 20$, so don't you think the second ad is better?
Despite that the conversion rate in the second is less, while the second ad in the last way better for you from the first ad because it have less budget.
And if you spend 100$ on the second ad you'll get double of results. And this is the in the end from any marketing campaigns.
So don't decoy on the conversion rate and thinking that it's everything, you must have taken a look at every input and information before you judge any marketing campaigns.
Now you've learned in detail what is a conversion rate and its importance on marketing process, also you knew that the conversion rate is not enough to evaluate any marketing campaigns.
Now go and do some marketing campaigns paid or free to apply what you've learned here, don't forget to share this article if you find it useful, cheers.