What is Conversion Rate?
A Conversion Rate is the percentage of people who take the desired action. In terms of online website application, conversion rate could be the number of people who visit your website and actually purchase a product or service. Other forms of conversion could include software downloads, registration, or newsletter subscriptions. Determining what is important to track and measure is the foundation to any good digital marketing campaign.
Why Conversion Rates Are Important For Your Website
Conversion is a very interesting metric in the marketing world. It can be extremely valuable to companies looking for answers. A common myth among business professionals is that creating awareness and directing traffic to your web page or into your store is the secret to making profits. While both brand awareness and traffic are important to any business, the numbers can be quite misleading.
Just because someone visits your website does not mean they’re going to purchase a product or service from you. Enter Conversion Rates. By examining how many customers are actually taking the desired action, you can better understand where you need to focus your efforts. Perhaps more emphasis should be placed on better staffing your store, or making your website easier to navigate, as opposed to forcing in as much traffic as possible. If consumers can more easily access products or services that meet their needs they’ll be more likely to convert.
Why Not Maximize Conversion?
If higher conversion means customers are buying a product or service from you, why would you not try to maximize conversions to make more profits? The answer is simple. You can only increase conversion rates so much before a threshold is met. Once you reach a certain point the cost to convert customers is simply too high. The solution is to optimize your conversion rate. You want to find the best value for your dollar, considering other factors when optimizing conversion. One consideration is elasticity. If customers are highly elastic (price sensitive) then they will only convert at cheaper prices or through free samples. If the customer is inelastic (not price sensitive) then you can get away with charging higher prices for your product or service. Therefore, the key to optimizing conversion is looking deeper into the numbers and not simply just focusing on brand awareness and traffic.