Conversion rate is the percentage of users who have completed a desired action. Conversion rate is actively used in internet marketing and sales as one of the indicators of effectiveness. The desired action, or conversion, can be various processes such as subscribing to a newsletter, clicking on an ad, following a link, purchasing a product, filling out a form, and so on.
The conversion rate is expressed as a percentage. This indicator is calculated in all web analytics services and marketing tools. It is also easy to calculate it yourself. To do this, take the number of users who have completed the desired action and divide it by the total number of users, then multiply the resulting figure by 100%. For example, you have placed a data collection form on Facebook, which you need to generate leads. Now you want to know how successful this ad was, and your success criterion is the form completion. Let's say that 3000 users saw the ad, and 210 people completed the form. Then the conversion rate will be 7%.
Conversion rate is used in all marketing activities. It allows you to evaluate the success of a company's actions and find out how users react to advertising. A too-low rate indicates the inefficiency of promotion and the need for changes in advertising. In addition, the indicator helps to evaluate the financial feasibility of promotion. If the conversion rate increases with an increase in advertising investments, then the investments are beneficial.
Calculating the conversion rate in online sales is no less useful. The indicator can immediately tell about many problems. For example, you may find yourself in a situation where users add a product to the cart but refuse to make a purchase at the checkout stage. You will see in the analytics that the conversion rate in sales is too low and start looking for the reason. The problem may be in the complicated ordering process or poor website performance.
When evaluating the conversion rate, it is important to consider the context, namely the total number of users. If only 10 people visit a website, it is quite normal to see a conversion rate of 60-80%. However, it should be understood that as the audience grows, the conversion rate decreases, and achieving the same indicator will be difficult. For websites with a large audience, the conversion rate may be a couple of percents, but in quantitative terms, it will be thousands of people. For this reason, the conversion rate should be considered only in conjunction with other analytics indicators.