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The One Number to Watch: Conversion
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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:

  1. Status Quo or leave the system as is.
  2. Raise your pay-per-click (PPC) Budget by 50% to attract an additional 5,000 visitors. At the same conversion rate, you will then have 50% more customers.
  3. Optimize your Website and increase your conversion rate by 50%. Here you do not spend any additional budget on PPC ads; however, your improved conversion rate results in a 50% increase in customers and sales.
  4. Do both. Increase your PPC spending and your website conversion rate. In this example, your increased PPC ad budget has resulted in 5,000 additional visitors. Your improved conversion rate results in a higher percentage of these visitors buying your products. The result is a 125% increase in sales from website optimization. Clearly, the biggest bang for your marketing buck.
  Status Quo Increase PPC Budget 50% Increase Conversion Rate 50% Do Both
Leads 10,000 15,000 10,000 15,000
Conversion Rate 2% 2% 3% 3%
Customers 200 300 300 450
Cost Impact Up 50% Up 50%
Sales Impact Up 50% Up 50% Up 125%

What exactly is Conversion rate?

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:

  • Website visitors (from search, online ads, referral partners)
  • Social Media interactions (followers, fans, interactions)
  • People signed up for your newsletter

Goal Achievements are typically steps in your sales cycle:

  • Signing up for an email newsletter
  • Filling out a Contact Us form
  • Calling your sales number
  • Walking into your store
  • Attending a presentation
  • Attending a demo (even online)
  • Sales
  • Referrals

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.

What is a “GOOD” conversion rate? 

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.

Jeanne RossommePresident, RoadMap Marketing
Jeanne uses her 20 years of marketing know-how to help small business owners reach their goals. Before becoming an entrepreneur, she held a variety of marketing positions with DuPont and General Electric. Jeanne regularly hosts online webinars and workshops in both English and Spanish.
www.roadmapmarketing.com | @roadmapmarketin | More from Jeanne

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