A conversion rate (CR) is one of the most important metrics in digital marketing, but it’s also one of the most misunderstood.
A conversion rate is the percentage of customers who saw your messaging and reacted with a desired behavior. Many people assume that conversion rates are limited to purchases, but the truth is that they can measure several behaviors, such as getting a consumer to open an email, fill out a registration form, or schedule a free demo.
A conversion rate can constitute several different customer acquisition scenarios, and it’s essential to know which situation you’re dealing with before iterating your creative and messaging, and pouring more marketing dollars into your advertising campaigns.
To understand conversion rate optimization (CRO), it’s important to first understand what conversion rates measure. It’s a fairly comprehensive metric, which can (and should) be applied to every piece of advertising content because it’s impactful in determining what is performing and what is not.
There is a wide spectrum of desired customer behaviors to measure when considering your conversion rate. Understanding your conversion goals can help you determine the appropriate steps to take to improve your conversion rates.
Perhaps the most commonly tracked conversion is sales. In digital advertising, you can measure how many shoppers, for example, saw an ad on Facebook, clicked the ad, and made a purchase.
You can also narrow your metric in scope and focus exclusively on website activity, looking at how many on-site browsers abandoned a cart on the checkout page vs. how many shoppers actually made a purchase.
See what we mean? You can use several sliding variables to make your data points as insightful as possible. Additionally, you can track repeat purchases, mapping out customers’ lifecycles over specific timeframes.
If you’re running a paid media campaign on social media or with Google Ads, for example, another priority is tracking how many people served the ad clicked on it.
This can help you determine which messaging works better or which videos captivate more audiences longer, for example.
Another useful conversion, especially right now, is opting into email and SMS marketing. Consumers may be surprised to see the return of pop-up ads on websites, but advertisers understand just how valuable that data can be for marketing purposes.
If you have a pop-up on your site inviting users to opt-in to email or SMS marketing, conversion rate boils down to how many people share their email address or phone number.
You could report on traffic and see how effectively your ads garner interest from your target audience. In that case, consider treating conversions as website visits.
Another is submitting information. This is a valuable conversion rate if you’re trying to increase customer feedback or learn more about your consumer base.
Even though there are several factors to consider when determining which conversion rate you want to measure, the formula for any is quite simple.
Your conversion rate will equal the total number of conversions divided by the total number of possible conversions. That will give you a decimal, which you should multiply by a hundred to get a percentage.
For example, say you considered a conversion to mean when a customer adds something to their cart. If you had 100 site visits over the last week, and of those unique visitors, 37 converted by adding items to their cart, your conversion rate would be 37%.
So, how do you know if your conversion rate has improved? What does a good conversion rate look like? That’s where it gets a bit more complicated.
The truth is that conversion rates differ wildly from industry to industry, platform to platform, and quarter to quarter. The Google Ads search conversion rate for apparel brands, for example, averages under 3%, while the average vehicle conversion rate is close to 8%.
It’s essential to look at the macro and understand how your brand is faring compared to industry standards and your competitors, but at the end of the day, your biggest competition is yourself.
The sooner you start tracking your most critical conversion rates, the sooner you can start optimizing your campaigns and meeting your benchmarks.
That’s the real way to measure success.
Once you have a sense of your priority conversion rates and how you’re averaging over a given period of time, you can start optimizing your campaigns.
CRO is best left to digital marketing experts who understand the platforms on which your ads are running. Minor tweaks can go a long way; extensive A/B testing can help you develop a playbook of best practices to experiment with for the long-haul.
There are a few key levers to consider when optimizing your ad strategy.
First is your preferred channel and your target audience. You may not be reaching the right people in the right places, which can keep you from reaching new customers and increasing your customer base.
Next, you want to look at your creative. Is it visually compelling enough to stop the scroll and is the messaging saying all it needs to say? A/B test messaging and visuals, and implement best practices such as prominent and straightforward calls to action, which are proven to receive more clicks than clever ones.
Once you understand how your ads are performing in terms of conversions, you can start setting goals for improved conversion rates.
We do have a note of caution on that front, though: It’s easy to get ambitious with conversion rate goals.
Most conversion rates are in the single digits, which can feel discouraging, but remember that modern-day consumers are skilled at avoiding digital advertising. By this, we mean that consumers proactively avoid seeing advertising through the use of ad blockers, paying for ad-free experiences, or skipping optional ads.
Set realistic goals and prioritize small, incremental changes, not landslides.
Data is everything when it comes to digital marketing.
For instance, you should track your customer loyalty metrics, your customer retention rate, your churn rate, and other relevant metrics essential for retaining customers, such as customer satisfaction.
The brands winning today rely on real-time insights to optimize their spend and creative. That’s why leading real-time marketing agencies like MuteSix leverage robust and advanced measurement solutions when scaling brands.
The above data can be crucial in optimizing your customer retention strategy, which can increase your brand’s long-term profitability.
Remember, conversion rates are the first part of You want to boost customer LTV, so you need to measure these retention rates and optimize your strategy accordingly.
Conversion rates measure the number of new customers you bring into the funnel, but if you don’t focus on retention, your customer base won’t grow to its full potential.
Keeping an eye on your customer retention rate (CRR) and ensuring your average customer is a happy customer is the best way to supplement CRO.
To fully use this KPI, you want to explore it from all angles.
You won’t be able to tell how well an ad performs unless you have something to compare it to.
Make sure you are tracking various conversion metrics at all times. Within a single campaign, you should be able to see how your messaging and promotional offers are performing on each channel and in relation to other channels.
You can also compare your conversion rates to various past conversion rates. When is your conversion window? Is your spring campaign performing better than winter? How does it YoY? If better or worse, how has your digital ad strategy changed?
You can even dive deeper to create a more extensive visualization of the customer journey. If your first conversion rate measures how many shoppers clicked an ad, then start looking more at lower-funnel conversions such as how many people downloaded your app or made a purchase.
Once you have these various conversion rates, you can compare them to determine what is working and what is not. This can come down to messaging, imagery, or media.
Perhaps UGC is doing a better job of conveying your message, or ads featuring a celebrity are doing better than ads that don’t. Google might have a better conversion rate than Instagram or vice versa.
What’s also important is that you take this data and react accordingly. Too many marketers miss the chance to make optimization tweaks in real time. Not MuteSix — as the real-time performance marketing agency, we optimize our advertising by using performance that’s measured in real time to help you improve your CR and beyond.
Fluctuations in your conversion rate may be discouraging, but the truth is that they are important. Every piece of your data speaks to a necessary consideration, such as a shift in the platform’s algorithm, your messaging, or your consumers’ interests. As such, it’s important to consider these fluctuations.
Minor improvements in your conversion rates can boost revenue, offer more robust data on your consumer, and broaden your reach.
Don’t miss out on the opportunity to impact your bottom line. MuteSix offers complimentary marketing audits to custom tailor fast-to-market, integrated creative and paid media solutions to boost your conversion rates – no matter what you are selling or where you are selling it.
Conversion Rate Benchmarks: Find Out How YOUR Conversion Rate Compares | Word Stream
The Importance Of Conversion Rate Optimization | Forbes
Do CTAs Help to Improve Email Response Rates? | Campaign Monitor