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Conversion Rates: What They Are and Why They're Important
Rick Henkin
What does "conversion" mean?Conversion simply means turning ("converting") your visitor into a customer, subscriber, registrant or whatever your goal is for them. You can have a thousand people a day visit your website, but if they all leave without responding to your call to action, it really doesn't matter how many visitors you have, does it? The assumption here is that you want them to do something- whether it's purchase, subscribe or sign-up. Tracking and improving your conversion rate is paramount to your goals. What is a conversion rate?Let's assume that your goal for your visitor is to purchase your product, thereby converting them from visitor to customer. The conversion rate is the percentage of those visitors who actually make the purchase. If you have 100 visitors and 2 buy your product, your conversion rate is 2% (2 ÷ 100). That sure doesn't sound like very much, especially when you consider that the other 98 people left your site without purchasing your product, but that's the average conversion rate on the Internet, which means there's a whole lot of room for improvement. You'll never have a 100% conversion rate simply because a portion of those that arrive at your website arrive by mistake. The rest leave because you didn't grab their attention quickly enough, explain what's in it for them and/or make it easy enough for them to follow the conversion pathway through your website. What should I measure?There isn't just one type of conversion that you should measure. Any action that you desire a user to take represents a trackable conversion rate and a potential area of improvement. The first thing to do is decide what your goal is, what is it you want to track. If you're running an email campaign, you might track the following:
If you're running a marketing campaign, you might want to measure:
On your website, you might want to track:
The list of measurements to track is really endless. I've only listed a few examples. You can hire an online firm to help you with this or you can do it yourself using analytics software, either paid or free such as Google Analytics. Why is it important?Here's why- Any increase in your conversion rate, no matter how small, can add up to a much larger increase in your sales and cash flow. Using our example above, if your product sells for $75 and you currently have a 2% conversion rate, that means for every 100 visitors to your site, you get $150 in sales (2 people out of 100 each paying $75 = $150). What if you just tested and changed a few items, like your headline or call to action button or image placement and your conversion rate increased to 3%? Now, for every 100 visitors, you get 3 sales at $75 each or $225, a 50% increase in revenue. Dollar-wise it doesn't sound like much, but what if your site gets a 1000 visitors or 5,000 or 10,000? A 50% bump-up in sales starts to add up to some serious money, very quickly. There are 3 other very important points to make here:
ConclusionThe great thing about the Internet is that for very little or no money you can test and re-test and make changes very quickly depending on your results. You let your customer tell you what works, not what you think might work. Your customer's perspective is the only point of view that counts. ARTICLE DATE: 2009-05-31 REVISED DATE: Share this Article as a Tweet on Twitter
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