Keep An Eye On Conversion Rates
Conversion is a vital metric in your marketing strategy. After all, it’s the primary goal of any business. From signing up for a new account to adding items to a cart and completing a transaction, conversions can look different for each business depending on their goals.
With conversion rate optimisation, you can maximise the impact of every part of your advertising spend and ensure that more prospects take action, whatever that might look like for your company. But how do you know if your conversion rate is actually good? And what percentage does a business need to hit in order to consider their strategy a success?
Calculating Your Conversion Rate
Before assessing the good and the bad, it’s important to know how to calculate your conversion rate. If you’re using a tracking program like Google Analytics, it’s as simple as logging on and searching for the data that’s been worked out for you.
For those looking to work it out manually, it’s a simple division. You need to know how many people visited a certain web page and how many converted on the offer on that page. You then divide the number of conversions by the total visitor count of the site and multiply the number by 100. For example, if 30 people out of 1000 visitors convert, your conversion rate would be 3%.
The Average Conversion Rate
For most businesses, conversion rates sit in the region of two and five percent. But most companies aspire to more than simply being average. They want to be at the top of their game in order to gain an edge over the competition. And in order to achieve that, they need to be exceeding the 10% mark for conversion, regardless of their company size.
A 10% conversion rate, or higher, is considered a “good conversion rate”. Some successful companies are even achieving 11% and higher. And while that might seem insurmountable to some businesses, especially those sitting at the lower end of the spectrum, it might be insufficient for others.
It’s important to note that a good conversion rate varies from business to business, as well as by industry. The goal is to understand conversion rates in your specific industry and base your performance against those figures, rather than taking on businesses in all sectors
Industry Impacts a Positive Conversion Rate
The conversion rates of different sites vary widely across sectors. Industry plays a key role in the immediacy of purchases and how valuable those transactions are. For example, businesses within the home and garden sectors or home furnishings typically have a lower conversion rate average of between 0.4 and 0.6%, according to the Digital Marketing Institute.
There are several reasons for this, from the fact that items for the home are usually larger ticket items that require more research and planning, to the fact that many people choose to buy these items in person rather than online. Likewise, travel has an average conversion rate of 0.7%, for the same reason–it’s a costly expense that most people don’t jump into lightly.
Compare this to the finance sector, which averages at 2.5%, and food and drink which enjoys a 2.4% conversion rate. Unlike big ticket items like a sofa or a holiday, food and drink is inexpensive and low-risk, so people are able to make a decision more quickly. Banks on the other hand have the benefit of customer trust and loyalty, which makes conversions more likely.
Variables At Play
Conversion rate, as demonstrated above, is incredibly contextual. It depends on a variety off actors, from the product type and the cost of that item to the traffic source and which device people are browsing on. More people are likely to convert on a desktop than a mobile, for example.
It’s also depend ant on the goals of your business. Since conversion rate is usually a term reserved for the percentage of prospects who become customers, if you’re trying to get people to download a PDF or fill in a contact form, your goals are considerably different. This can make basing your efforts off of ‘average’ conversion rates somewhat misleading
Average Conversion Rate Isn’t Enough
Conversion rates vary considerably across businesses and sectors. Some might struggle to reach 2% while others are achieving 10% or higher and still want more. In order to achieve a good conversion rate, it’s important to understand what the top businesses in your industry are doing to inspire your effort sand help you tailor your marketing accordingly.