What does conversion mean?
Simply put, conversion refers to the process wherein a prospect takes an action that a company, brand, or marketer wants them to take, such as signing up for a newsletter, downloading a brochure, registering for an event, or making a purchase.
If you want to gain a deeper understanding of this topic, check out the FAQ section below:
Question #1: How do I calculate my conversion rate?
The process to calculate your conversion rate would depend on the type of conversion you are looking to achieve.
For example, if you are looking to get new sign ups for your newsletter, then you can calculate your conversion rate by dividing the total number of sign ups you get by the total number of people who visited the page where the call to action is displayed and then multiplying the result by 100.
So, if a total of 10,000 people visited this page and a total of 2,000 people signed up for your newsletter, then your conversion rate would be 20%. You get this number using the following formula:
2,000 (number of sign ups) / 10,000 (number of unique visitors) x 100 = 20% (conversion rate)
But you can also measure your sign ups against the total number of visits (also known as sessions) the page with the call to action got in this case, regardless of how many times each visitor dropped by.
So, if the page had a total of 100,000 sessions, 50,000 unique visitors, and 10,000 sign ups, then your conversion rate would be 10%. You get this number using the following formula:
10,000 (number of sign ups) / 100,000 (number of sessions) x 100 = 10% (conversion rate)
Again, the total number of unique visitors would not matter if you decide to use this approach to calculating your conversion rate.
But what if you define conversion as a lead turning into a paying customer? Well, all you have to do is divide the total number of leads that made a purchase by the total number of leads you tried to sell to and then multiply the result by 100.
So, if 2,000 out of, say, 10,000 leads made a purchase, then your conversion rate would be 10%. You get this number using the following formula:
2,000 (number of leads that made a purchase) / 10,000 (total number of leads) x 100 = 20% (conversion rate)
Question #2: What is the difference between click-through rate and conversion rate?
The main difference between click-through rate and conversion rate is the existence of a conversion event. We already know what conversion rate is and how to calculate it, so let us focus on click-through rate in this section.
Also known as CTR, click-through rate simply measures the total number of clicks a link got against the total number of people who saw it. It does not matter whether or not these clicks actually turn into sign ups, downloads, registrations, purchases, or any other type of event that indicates a successful conversion.
So, if you shared a link to a blog post on your Facebook page and you got a total of 100,000 views and 30,000 clicks, then your CTR would be 30%. You get this number using the following formula:
30,000 (number of link clicks) / 100,000 (number of post views) x 100 = 30% (CTR)
Question #3: What is the ideal conversion rate to aim for?
While conventional wisdom says that 2-5% is a good conversion rate to aim for, in reality, the target number would ultimately depend on what industry you are in, what type of conversion you are trying to achieve, and how established your brand is.
An easy way to find out where you should be in terms of conversion rates, however, is to take a look at how your top competitors are performing. If they are all doing anywhere between 8 and 10%, for example, and you are just at 2%, then it is time for you to reevaluate your conversion strategy.