What is...

Conversion

In marketing, a conversion is an action taken by a website visitor, that is considered profitable for the website’s owner, and is encouraged through call-to-action (CTA) messages. For a visitor to perform the desired action, the copy of your page, the design and usability elements have to work together in creating a seamless user experience.

There are various types of profitable actions that can be classified as conversions: purchasing a product, downloading an e-book or free material, watching a video or listening to audio material, subscribing to a newsletter, subscribing to a monthly membership. The user who responds to the call-to-action message “converts”, meaning that he goes from a simple visitor to lead or customer.

What is a Conversion?

We call it a Conversion when the recipient of a marketing message performs a desired action. Conversion is a very important metric in the marketing funnel, but it does not always mean a purchase. Conversions can also happen prior to a sale and are an indicator that a prospect has moved down the sales funnel.

Why do conversions matter?


Because that’s how businesses know whether their marketing funnels are working properly. Very few customers are ready to buy the first moment they’ve landed on a website. By setting multiple touchpoints and analyzing conversions at each one, leads can be pushed down the sales funnel. Conversions allow businesses to differentiate between visitors who are interested in their products and those who are not; a visitor who performs the desired action turns into a lead. 

Conversions can also help businesses identify problems with their website or marketing funnels. By analyzing the customer journey and finding bottlenecks, marketers can see what is or isn’t working, what sources of traffic bring the most customers, and which ones should be dropped.  

Bottom line: even though conversions are important, they are just a piece of the puzzle. Making sure that the customer journey is seamless, without any friction or objections, is key to increasing sales. 

Examples of Conversions

The definition of conversion also depends on the type of website you have. If you sell products, the conversion can be a purchase. If your website’s goal is to convince people to contact you or ask for pricing or offers, the conversion can be a form of submission. Even a phone call can be a conversion if that’s what your website’s goal is.

For B2B (business-to-business) enterprises or complex B2C (business-to-consumer) operations, a conversion can be visits to a key landing page, views of a marketing video, whitepaper downloads, newsletter signups, or form submissions.

In e-commerce, the most common conversions are subscribing to the newsletter, clicking on the CTA (call to action) in an email, or submitting a contact form on your website; of course, the ultimate conversion is where a user actually buys something from your website.

There is a multitude of tactics that help businesses increase conversions on their website, from UI/UX and how the website is structured (visitors are pushed towards a purchase using strategic patterns) to more subtle strategies, such as hiding the menu when the visitor begins to scroll down the page. 

Having a conversion strategy in place is essential for increasing sales. The process of finding ways to increase conversions is commonly known as conversion rate optimization (CRO).

Why Is Conversion Rate Optimization Important?

You might be tempted to think that businesses in retail don’t need to optimize their conversion rates because customers will always buy the products they need: if they’ve clicked on a product ad and arrived on the product page, then the sale is almost guaranteed. Right? In fact, this could not be further from the truth, and there are many reasons users bounce out of a page without buying (e.g. not trusting the seller, not being able to use their preferred payment method, or having to pay for delivery).

CRO is important because it allows online shops to make the most of the traffic they already have so that they don’t need to invest more in customer acquisition. Because the demand for online ads is growing day by day, so are pay-per-click costs. Businesses are constantly increasing their ad budgets, but since not all clicks turn into conversions, CRO becomes an indispensable method for keeping prices low while increasing revenue per visitor.

Let’s say, on your lead generation campaign, you have a conversion rate of 15%, you receive 5,000 visits a month, and the average order value is $30. This means you have 750 conversions per month and you make $22,500. By increasing your conversion rate even slightly, from 15% to 20%, you can get 1,000 conversions per month, thus boosting your revenue by 33%, to $30,000. 

How to Calculate the Conversion Rate

The conversion rate is the percentage of visitors to a page that completes a certain goal (specific action). Common conversion goals include:

  • Submitting information 
  • Signing up for a newsletter 
  • Calling a given number
  • Creating an account 
  • Form completions
  • Downloading a resource 
  • Engaging with a site (e.g. time on site, visits to certain pages, page count)
  • Making a purchase (the ultimate goal)

Choosing a specific conversion goal will depend on the nature of the business and the purpose of the website. Moreover, conversions can be divided into micro-conversions and macro-conversions. Macro-conversions are primary goals such as sales or quote requests, while micro-conversions only facilitate the path to macro-conversions (e.g. adding products to the cart).

Depending on how you want to define a conversion and how you measure traffic, there are multiple ways to calculate the conversion rate.

Common conversion rate formula is:

  • Conversion rate = (Total number of conversions / Total number of sessions) x 100
  • Conversion rate = (Total number of conversions / Total number of unique visitors) x 100
  • Conversion rate = (Total number of conversions / Total number of leads) x 100

Let’s take a practical example. If your website receives 13,000 visits a month from your ads campaigns and you get 2,600 conversions, your conversion rate is 20%.

CRO methods 

Every website is different, so there are many things online shops can improve upon to boost conversion rates for selling products. A proper conversion rate optimization tool is indispensable. Here are a few key factors for every retailer:

  • Focus on a segment at a time

The landing pages that perform best are those that provide immediate answers. Instead of stuffing your pages with general information to appeal to a broad audience, pick a segment and provide tailored answers. 

  • Create conversion-oriented content

The copy is probably the most important element of a website, and great marketing content can seamlessly blend conversion opportunities. Online shops often stuff their copy with keywords designed to appeal to search engines, but doing this merely puts customers off, which in turn has a negative effect on the conversion rate. Instead, retailers should make their copy appeal to human emotions and use fewer but more powerful keywords, with an obvious intent (e.g. dresses vs. discounted red dresses). Content marketing is now one of the trending topics in digital marketing, similar to social media and becomes more and more important in getting better conversion rates.  

  • Get rid of Flash 

Today, online shops get most of their traffic (and sales) from mobile devices and mobile ads. Therefore, using Flash, an outdated technology built with desktop users in mind, has a negative impact on users’ experiences on one’s website – not to mention the fact that search engines cannot crawl Flash elements so it does not help in search engine optimization (SEO).

Online retailers will see a considerable improvement in their conversion rate just by removing all Flash elements from their websites.

  • Perform regular tests

To improve a conversion rate, you need to set some benchmarks on form completionscontact form, phone calls, product orders. Performing regular tests and monitoring performance can help online shops establish marketing strategies going forward. Improving website content, ad campaigns (including mobile ad), call to action leads to better clickthrough rate obtaining successful lead generation campaigns. 

By identifying the top landing pages and comparing them to pages with high exit rates, businesses can identify the elements they need to improve in order to boost their conversion rate. Performing regular A/B testing to improve website content or refine strategies whenever possible is also important.

Conversion Testing

Testing allows online shops to measure the improvements that specific changes bring about on the website and landing pages. Conversion testing is about presenting different content to different website visitors and measuring the impact of the change on conversions and the conversion rate.

Why is testing conversions important?

Conversion example: Let’s say you have an online shop that has 30,000 monthly visitors and only a 5% convert. Your monthly revenue is $100,000. If you want to increase your monthly revenue to $150,000, you have two options: increase traffic by 50% and keep the conversion rate at 5%, or increase your conversion rate to 7.5%.

You can use Google Analytics to track conversions by setting goals or complex conversion funnels. 

Which do you think is easier to accomplish? Increasing traffic will require more money being spent on ads and probably a lot of time being wasted… Increasing the conversion rate, however, is more cost-effective and faster. Once you decide you want to optimize for conversions, you can use two methods: A/B testing and multivariate testing.

During A/B testing, you split your traffic in half and show 50% of your visitors your original homepage and 50% the new variation. At the end of the test, you’ll see which one performs better. A/B testing is better suited to online shops that don’t get a lot of traffic or when a fast conclusion is needed.

Alternatively, you can experiment with more variations at once, but to get an accurate result, you will need more time and a large amount of traffic.

CRO Metrics 

While doing CRO, you may think that the conversion rate is the most important metric you should track. Actually, it may not be – CTR (click-through rate) might be even more important. The higher the CTR is, the higher the conversion rate. 

Another important metric is the time spent on-page. Time is one of the most precious commodities for visitors, so if your users exit your website shortly after they’ve arrived, your content might not be that appealing to them.

Conversion depends on the bounce rate. Bounce rates in the e-commerce industry vary across sectors but typically stop at around 60%. Depending on the sector, top e-commerce websites tend to have a bounce rate of 36% or less. Reducing the bounce rate doesn’t automatically improve sales, but it does increase the chances that a visitor will eventually make a purchase.

Losing the sale at the end of the purchase process is a frustratingly common occurrence. This is known as the Shopping cart abandonment rate. Although CRO methods have been refined over the years, shopping cart abandonment has increased over the past decade, now reaching up to 70%.

What is a conversion in business?

In online businesses or eCommerce, conversion represents the term used to often describe the act of converting a visitor who browses your site to a paying customer. Conversion means an action that the customer is doing on your website and is measured by conversion rate — the percentage of visitors who take the specific action.

What is conversion in social media?

Specialists define conversion as, “The point at which a recipient of a marketing message performs a desired action.” In other words, conversion in social media is simply getting someone to respond to your call-to-action and could be clicking a link, liking a post, following your page or commenting. 

Shopping Basket