Most of us track the success of a marketing campaign by the number of leads we get in the door. But leads are just half of the equation:
Leads x Conversion Rates = Sales
What does this mean? Assume you currently spend $1 per visitor or $10,000 on an online pay-per-click advertising. Currently only 2% of those visitors purchase your product. Compare the following four scenarios:
|Status Quo||Increase PPC Budget 50%||Increase Conversion Rate 50%||Do Both|
|Cost Impact||Up 50%||Up 50%|
|Sales Impact||Up 50%||Up 50%||Up 125%|
Conversion rate is not one universal number but a set of numbers that shows how effective you are at ushering leads through the sales process. Rewriting the equation above:
Conversion rate = number of goal achievements / leads
Depending on your marketing campaigns, leads might be:
Goal Achievements are typically steps in your sales cycle:
As you can see, conversion rates should be very specific to your business and customer sales funnel. Most companies have several conversion rates they track on a monthly, even weekly basis.
For an overall, up-to-date web analytics benchmark index, click here. Overall conversion rate for search visits is about 1.9%, for email lists 3.7%, and for affiliates 6.3%. (This data is also collected for certain industries: fashion and apparel, electronics, catalog, specialty, outdoor and sports, and software.)
But as shown in the example above, your most important benchmark is your past performance. Tracking and focusing on small incremental improvements in conversion will have a big impact on your bottom line.
What conversion rates do you track and how often? Share in the Comments section below.