Have you ever wondered if it would be possible to get more paying customers from your current traffic? Or more revenue from your existing marketing campaigns?
It’s easy to be satisfied going from 0 to 5, if you have no idea there is a 10.
Whether your traffic arises organically through Search Engine Optimization (SEO), Pay-Per-Click (PPC), social media, or cold sales outreach, your goal is to convert as many of those visitors and leads to customers as you can.
This is what improving your conversion rate is all about.
In this, Part 3 of the 7-series Customer Lifetime Value (CLV) Optimization Process, you will learn ways to improve and optimize your conversion rate; also known as Conversion Rate Optimization (CRO).
If you haven’t already, check out Part 1 and Part 2 of this series:
First, let’s look at what conversion rate is and how it is calculated.
What is Conversion Rate?
In digital marketing, a conversion happens when a website visitor, lead, or prospect takes a desired action, which can include filling out a form, subscribing to a newsletter, calling the business, or purchasing a product or service.
Conversion rate is a standard metric used in digital marketing to measure the rate at which your traffic completes a desired action, out of the total number of visitors to your site.
Conversion Rate Optimization, or CRO, is the process of improving and optimizing your conversion rate.
All businesses have different goals and every marketing campaign has different desired outcomes.
For example, business consultants may use podcasts or webinars to attract their target audience. In return, the audience will submit their email address, allowing the consultant to build an email list for targeted marketing efforts.
If a consultant advertises for a specific service using Pay-Per-Click (PPC), such as Google or Facebook Ads, their goal may be to encourage their traffic to sign up for an offer such as a free consultation.
On the other hand, an eCommerce company might want to collect email addresses in exchange for a discount code. Or, they may have campaigns where the goal is to encourage traffic to make an online purchase.
Whatever your conversion goal may be, the higher your conversion rate, the more effective the marketing campaign is.
Simply increasing your conversion rate from 3% to 5%, with an average order value of $100 from traffic of 1000 visitors, means you will increase your revenue from $3,000 to $5,000!
That’s $2,000 extra revenue—a 67% increase— simply by improving your conversion rate.
If you optimize the conversion rate of your current campaigns, your Return-On-Investment (ROI) will increase, earning you more revenue for each dollar spent on marketing.
How to Calculate the Conversion Rate
The formula to calculate the conversion rate is:
Conversion rate =
(Number of goal achievements) / (Visitors)
While this may seem straight forward, one of the mistakes made by marketing specialists is an inconsistency with the method for calculating the conversion rate.
For example, Google Ads calculate their conversion rate this way:
Google Ads Conversion Rate =
(number of conversions) / (number of total ad interactions)
Depending on your conversion tracking settings, a single visitor may have multiple ad interactions. If that is the case, your result may be different from that calculated with the first formula.
On the other hand, Facebook Ads calculate their conversion rate as follows:
Facebook Ads Conversion Rate =
(number of conversions) / (number of visits)
Using Facebook’s formula, the results may be different than if you were to use the number of ad interactions or visitors instead of the number of visits or sessions.
So, what’s the solution to this inconsistency?
The best way to calculate the conversion rate is to determine what is most meaningful to your business, whether it is the number of visitors, or sessions/visits; what is important is that you consistently use the same method.
Myths About Conversion Rate Optimization
Conversion rate optimization involves many different factors, just as the sales process and marketing funnels may be different for each company.
The key is to look at the entire customer experience and encourage them to buy now (convert) wherever they are in their buying cycle.
While many marketers and business owners strive to optimize the conversion rate, there are a few myths surrounding this process.
Let’s look at some common myths and misconceptions around the conversion rate.
Myth #1: My landing page is not converting; I need to fix it.
A landing page is just one of the many moving parts in a conversion process. See below for an example conversion process. There are dozens of different routes a visitor can take after arriving on the landing page.
Are they finding all the information they need to make an informed buying decision? Is your price point right for your target audience? Is the page loading quickly? Is the checkout process seamless?
These are but a few examples of things that can slow down or hurt the conversion process; it is also very important to look beyond your landing page.
Myth #2: My target audience is not converting; I need a different audience.
Imagine you decide to split-test different target groups to help determine the best conversion strategy.
Just because one group has a lower conversion rate than another, does that mean that it is not a good target?
Several factors may affect your conversion rate including:
- a relevant messaging that influences your target audience
- an enticing offer that resonates with your target audience
- a proper platform that reaches your target audience
It is possible to have the right target audience but not the right strategy.
Myth #3: I have a good conversion rate, so it doesn’t need to be optimized.
So, you have a great conversion rate in getting visitors to submit a form. Great.
But are they highly qualified leads? Are they becoming paid customers?
Having a high conversion rate of under-qualified leads is a great way to waste your marketing budget.
Myth #4: I’m not converting enough; I must change something.
Earlier, we talked about the retail sector’s overall average conversion rate being 3%.
In other words, 97% of the time, the visitors you worked to bring to your site are not converting.
Does that mean something is wrong? Possibly.
Maybe, however, you just need to help your visitors move through your marketing funnel and along the buyer’s journey.
Instead of immediately jumping into changing what you have, review your marketing funnel to see if it is set up to succeed.
Not every visitor will convert on their first visit.
Your typical sales cycle may take a week, a month, or six months.
Throughout the buyer’s journey, work on educating them, triggering and keeping their interest, helping them with different options, and finally helping them make a purchase decision.
Myth #5: I need only one conversion rate.
A critical aspect of the Customer Lifetime Value (CLV) Optimization Process is segmentation.
Generalizing your data results across multiple groups of people can lead to irrelevant strategies and conclusions about any specific group.
The same thinking applies to your conversion rate.
Instead of simply applying one conversion rate across all of your target groups—which is merely your average—you can segment your visitors/customers before you calculate the conversion rate.
Questions to consider:
Do visitors from specific platforms convert better than others?
Is any specific demographic group converting better than others?
Do visitors of particular behavior patterns convert better than others?
Once you are able to segment your audience to evaluate their conversion rate, you can develop a strategy that impacts your business in a more meaningful way.
What’s a good or ideal conversion rate?
At what point should you be satisfied with your conversion rate optimization?
What is a good conversion rate?
To better answer this question, we need to distinguish between an average and a target conversion rate.
An average conversion rate is what your competitors and your industry experience across the board. For example, according to Unbounce, the higher-education industry’s average conversion rate is 2.6% while the vocational studies & job training industry’s average is 6.1%.
A target conversion rate is the goal you set to help evaluate your performance, determined based upon your industry’s average, past performance, room for growth, etc.
For example, if you are in the consumer electronics industry, which has a 1.4% average conversion rate, you can target the overall retail sector’s 3% average as your benchmark.
In other words, the answer to the question “what is a good conversion rate” depends on your business.
But isn’t it the higher, the better? Not exactly!
Given your team’s bandwidth, resources, and budget, your conversion rate needs to be carefully monitored and measured to find your optimal conversion rate.
At the end of the day, you have a lot more to focus on than only converting customers.
No single number can be identified as a good or ideal conversion rate.
However, you can find many studies and surveys that analyze your industry, sometimes even for your specific service or product.
If your current conversion rate is lower than your peers and competitors, perhaps you should use the industry average as your benchmark.
But how much money is enough?
Of course, the answer to that question is personal and subjective.
Don’t just settle on your industry average.
If your goal is a 5% or 10% conversion rate and you reach that goal, there is no reason to stop.
Remember, you’re spending your time, resources, and budget on getting visitors to your site. The more you can convert, the more efficient you become!
However, there is a point of diminishing return.
Given the time you have, your resources, and the budget you have to optimize your conversion rate, there will come a time at which you will no longer be getting a higher return for your effort.
This could be due to the level of expertise in Conversion Rate Optimization, a lack of segmentation for a targeted campaign, or a number of other reasons.
If you reach this point, you would be better off either getting some professional help or focusing on something which has a bigger impact on your business.
Most Common Areas to Optimize the Conversion Rate
Although there are many more possible areas, the following are some of the most common areas in which you can improve your conversion rate.
- Landing page:
- Does it talk about pain points and solutions, or address the WIIFM (What’s in it for me)?
- Does it use keywords that resonate with your audience or trigger their emotions?
- Does it provide, or have easy access to, relevant information, such as shipping, returns, lead time, etc.?
- Do you disclose all fees upfront so there is no surprise to cause them to abandon their cart?
- Is there a sense of urgency to take action now?
- Do you make it easy to make choices, such as size, color, alternatives, different models, etc.?
- Does it have a Call To Action (CTA) and a value proposition above the fold?
- Are you A/B testing different versions of the landing page?
- Have you tested your page title, buttons, colors, images, etc.?
- Mobile-friendly: is your site optimized for mobile performance?
- Checkout process: is it intuitive, quick, and simple?
- Offer: is it enticing and relevant to your target audience? Does your product or service benefit from a free trial or a sample?
- CTA or Call To Action: are you asking for a big or a small yes? Do you have a funnel that starts with a smaller ask before the big one?
- Forms: Is your form short and simple, asking only the minimal required information?
- Support: are they able to talk to someone via chat or phone before making a decision?
- Remarketing: do you have effective remarketing for visitors that didn’t convert the first time?
Tools to Help Improve the Conversion Rate
With the availability of technological tools, there are several convenient and easy ways to analyze your traffic and help increase your conversion rate.
Below are some of the most widely used free and paid tools to analyze and optimize your conversion rate.
- Web behavior analytics, such as Hotjar.
- Which part of the landing page are visitors most interested in?
- What do they click on?
- How much are they scrolling or reading?
- A/B Testing, such as Google Optimize or Unbounce.
- Which offer or CTA converts better?
- Which title or description converts better?
- Which image, color, or text performs better?
- Analytics reports, such as Google Analytics, Shopify Analytics, Magento Business Intelligence.
- Which pages do visitors land on?
- How many visitors are dropping off at the landing page?
- Which pages have the highest bounce rate? When do they leave your site?
- What are they searching for?
- Which pages are frequently visited after the landing page?
- Which marketing channels and campaigns bring in your traffic?
- Surveys, such as SurveyMonkey.
- What do they care about the most? What motivates their purchase?
- Why would they choose a competitor instead?
- What do they like or dislike about your product or service?
- What can you do to improve their experience with your brand?
Conversion Rate Optimization (CRO) is a process to help more visitors take a desired action, or convert.
Instead of coming up with new ways to increase your traffic, paying more in advertising, or targeting different audience groups, you can get more revenue and profit from what you already have, simply by improving and optimizing your conversion rate.
CRO is not a project.
Rather, it is an ongoing process that should be part of your overall marketing strategy and every marketing campaign that you run.
Before you come to any conclusions on whether your current Conversion Rate Optimization efforts are working or not, be sure to evaluate all of the factors that may influence the process.
Determine your conversion rate goal by referencing your industry average and your past performance history, until you hit the point of diminishing return.
Remember: most visitors will not convert on their first visit.
But, with the right remarketing and a marketing funnel, you won’t have lost these opportunities forever.
At this point, we’ve covered three out of seven steps in the Customer Lifetime Value (CLV) Optimization Process.
Part 3. The Ultimate Guide to Conversion Rate Optimization
Our next step will be to make the most of your conversions and maximize your Average Order Value (AOV).
In Part 4 of this CLV series, you will learn more about how you can maximize the value of each conversion by increasing the Average Order Value.