What is Conversion: definition, formulas, and examples
By definition, a conversion is a change. In this case, it’s a change from a purely interested website visitor to one who carries out a certain action. This type of transformation, which moves the person down the sales funnel, is called a conversion.
Examples of conversions
There are many different types of target actions and, correspondingly, conversions:
✔ A user signs up for a newsletter
✔ A website visitor clicks on a link
✔ Content is shared by the user on social networks
✔ A website visitor buys a product
✔ A visitor carries out a download
✔ The registration for a customer account/profile takes place, etc.
What is the purpose of tracking conversions?
Since each website page has a specific goal, you can use the conversions to track how often you achieve them. Steps to the final goal – the so-called micro-conversions – can also be measured.
In most cases, the final major goal of websites is to sell products and thus generate profit. In this case, conversions also serve as a measurement of the website’s ROI.
If the design, content structure and user guidance of the website are correct with regard to the intended goal, conversions will occur. The conversions are shown as scalable criteria for the individual success measurement of your website.
How do you measure conversions?
There are three ways to get the data on the visitors’ website behavior to evaluate conversion.
1) Log analysis on the web server
The records of your web server provide information about the number of hits per page. However, this method of evaluation is not very meaningful for further conversion optimization.
2) Script tracking via internal means
Content management systems offer scripts that collect important data about the user’s behavior on the website. Depending on the provider, the numbers recorded are then shown in the back end.
3) Third-party tracking
Conversion rate in marketing
The term conversion rate is mainly used to control online marketing activities – it determines how many website visitors ultimately become the buyers of the product or service. To calculate the conversion rate, you need to know the number of visits and the number of transactions in a certain period:
Conversion rate = Number of transactions / Number of visits x 100.
This calculation gives a percentage – and the higher your percentage, the better. However, what was not taken into account in this simple conversion rate formula (and thus slightly distorted the result) is the fact that multiple visits or transactions by a single user are possible.
In order to receive exact undistorted results, only unique visitors should be used for the calculation, meaning each visitor is only counted once, regardless of the number of visits. Therefore, the more precise formula for the conversion rate looks like this:
Conversion rate = Number of transactions / number of unique visitors x 100.
Here’s an example:
An online store makes handmade jewelry for sale. In order to find out whether the recently carried out marketing campaign resulted in an increase in sales, the owners of the website get the following data: 200 (number of purchases) / 5000 (number of unique visitors) x 100. As a result, the calculated conversion rate is about 4%. This, in turn, is a good outcome for a company of this size.
What affects conversions?
On average, the conversion rate in online marketing is between 1% and 5% and depends on factors such as the level of brand awareness, item prices and the size of the offer. Some other factors that influence the conversion rate are:
If the visitors do not belong to the target group of a website, they are more likely to leave the page and therefore not act, i.e. convert, which will have a negative impact on the overall conversion rate. Reversely, if more visitors belong to the target group, the conversion rate will grow.
The quality of the website’s offer is also important for a successful conversion. If the website is not appealing or of poor quality, the conversion rate will remain low. This also includes whether the visitor’s expectations of the content are met: Are all the important statements present? Is the message in the copy and images what the target group expected?
For example, the content on a reputable financial consultancy website must provide certain statements about savings, services, location, and prices. It shouldn’t be just a plain-text offer overloaded with keywords, solely because those fit the target group and the conversion goals.
Here are some examples of what a quality offer must contain:
- Delivery times
- Product quality
- Payment methods
Another important factor is the user experience (UX), which is the usability of the website for the user. This includes:
✔ loading times
✔ placement of texts and images
✔ use of buttons
✔ website functionalities etc., to name just a few.
Additional factors here are user-friendliness, user guidance, and communication of the website’s offer. If the visitors of the website belong to the target group and the offer is of high quality, the conversion rate will be mainly influenced by the user experience. Conversion rate optimization can, therefore, mean adjustments to the layout, simplification, and creation of quality content.
What comes after a conversion?
Even after a successful conversion to a paying client, you shouldn’t drop contact with the user. A successful conversion can be the start of a long-term loyal customer relationship, which is then built through onboarding and great customer support.
Even after a conversion, such as a successful purchase, the customer needs to keep getting wooed. Therefore, it makes sense to use the data collected for newsletters, offers, or discounts that are specifically personalized to their interests for post-conversion marketing.
A micro-conversion, such as a click on the next page, can also be tracked and show you if there’s room for improvements in the user guidance in the purchasing process. As you can see, every conversion can lead to further steps in creating a perfectly optimized website.
What is Conversion Rate Optimization? (CRO)
Of course, every business wants to achieve the maximum possible conversion rate. Conversion rate optimization is a practice created just for that.
The first step is determining the current status of the page, its functionalities, and its efficiency. The page is also checked with regard to usability, user guidance, and goal orientation. Once you make the necessary changes, use A/B testing to check if the changes result in more conversions.
Conversion rate optimization should always be viewed as a long-term process covering UX, content, design, etc., that will also ensure long-term success.