Conversion Rate Optimization: Calculations, Measurements & Best Practices
Conversion rate is one of the most important KPIs for digital marketers and their businesses, directly affecting a company’s pipeline and revenues.
In this context, digital marketers includes everyone from executives to acquisition managers, via the creative teams who are most involved in any reworkings to a website, or at least in conceptualizing these changes.
Their respective tasks may seem formidable without the knowledge of conversion rate optimization — what it is and how to achieve it. If envisioning UX practices for better conversions appears to be like treading through a deep, dark tunnel, fear not.
At Contentsquare, improving the digital experience is tied to our mission. But before you attempt to improve your UX for better engagement and higher conversion, you must have a sufficient understanding of what conversion rate optimization is.
This feature will teach you the basics of CRO — from what a conversion is to how it’s calculated to what makes a good conversion rate and industry benchmarks.
What is Conversion Rate?
Conversion rate is a calculation that involves the eponymous “conversions” — any desirable action(s) your site visitors take during their digital experience. Conversion rate doesn’t mean the same thing for everyone; it can range from the e-commerce meaning of a purchase to filling in a credit card application on a banking site.
Or, it can have the content marketing denotation, in which users who sign up for a mailing list or newsletter qualify as a conversion, which brings us to the definition of conversion rate.
In simple terms, it is defined self-evidently: the rate at which conversions occur on a website, mobile site or app. But more specifically, the meaning behind conversion rate lies in its calculation.
How To Measure Conversion Rate
The conversion rate is precisely the number of times visitors take a desired action on your site, divided by the total site traffic, the result of which is multiplied by 100, since it is expressed as a percentage.
This formula applies to various types of conversion, including e-commerce conversions (most often a purchase) and sign-up conversions (webinars, e-book downloads, etc).
As for the UX, there is no single method with which to quantify it, since UX is generally defined as the overall feelings your visitors have while navigating through your site. It entails the experience of site usability, frustration, engagement, satisfaction and much more. Because the UX is defined by so many qualities, it involves more factors to gauge, since unlike CRO, it is not a single KPI.
Landing Pages: The Origins of Customer Journeys
Conversion rate can be determined from two types of visitor journeys to a site, or their arrival at it. The first category falls upon both organic keyword search visits and paid search visits (ads), while the second category of site entries stems from URL visits, also known as direct visits to your website.
Molded by the UX, these subsequent journeys are invaluable for optimizing conversion rates. Those who click on a landing page from a keyword search or social media ad already possess some interest in your offering, since they not only looked up the keyword — or engaged with the ad — but entered your website through the associated link.
Besides social posts and ads, queries on search engines also lead users to landing pages. These are reached in the links below a website’s general search result — typically the homepage — in the Search Engine Results Page (SERP). They usually lead to specific products or pages, reflecting the query.
The other type of customer journey is derived from a URL-based, or direct visit to a site page. With URL-based visits to your site, the intent is less clear; some visitors may arrive at it for informational purposes while others may have a clearer objective. Even so, those who visit for the information may not be interested to sign up for your whitepaper, case study, email list or other content.
Obstacles and frustrations in the digital journey will impel your visitors to bounce from – or exit – your site. At worst, the visitors will head to your competitors’ sites. Thus, the experience a visitor has on your site and the way in which it helps them achieve their goal(s) are exceptionally important and it must be calibrated to ensure good conversions.
What is a Good Conversion Rate?
Generally, a “good” conversion rate constitutes one that is higher than the average. Averages can vary greatly from one industry to the next, and from one device to another.
We analyzed 528 million sessions on 137 eCommerce websites to determine average conversion rates for the travel, fashion, beauty, banking, finance, insurance, media/ entertainment and luxury industries, on both desktop and mobile. These rates differ across each industry, ranging from a low of 0.42% on mobile for luxury items, to a high of 5.79% on desktop in the beauty industry.
Overall, mobile conversion rates still have a long way to go to catch up with desktop averages, highlighting the need for a stronger CRO strategy for mobile.
In the fashion industry, for example, the conversion rate on desktop was at 3.02% versus 1.45% on mobile — almost twice as many conversions.
One of the sectors that appears to have reduced the mobile gap quite significantly is the banking and insurance industry, with a 3.85% conversion rate average on desktop versus 2.33% on mobile.
Additionally, although some of these rates may seem unfeasible, especially to those who are new to CRO, it is healthy to aim higher, and with the tools available to digital marketing teams today (analytics platforms, personalization engines, etc) the sky is the limit.
When to Think About Optimization
Patience may be a virtue, but who actually has the time for it when you operate a business or work in marketing? Since conversions are closely tied to revenue, the first time to think about optimization should come rather early on in your website development.
If it is your first iteration in establishing a website, there are general cautions you should take, such as assuring all site elements are operational, especially the ones that lead to a conversion. So make sure all on-site CTAs, links, form fields and the like work without any trouble.
For example, your business will inevitably lose revenue if the same link remains broken for even a moderate period of time, or during any UX mishap, like the checkout button being buried beneath the fold.
If you are in the redesign phase of your site, then you should learn from the old or current UX of your website. Take into account what hasn’t yielded satisfactory results from analyzing your consumers’ behaviors on your previous site.
You should start strategizing for CRO, as the aforesaid conversion rates from organic keyword searches and paid searches already have their own separate sub-discipline for optimizations. They are what is known as search engine optimization or SEO, and SEM, or search engine marketing. The former deals with optimizing organic search clicks, while the latter deals with optimizing paid searches.
Thus, conversion rate optimization primarily deals with optimizing the UX to improve conversions since the search-based conversions have their own optimization best practices (SEO and SEM). Either way, you need to improve visitor journeys so consumers can fulfill their digital goals painlessly.
Continuous Conversion Rate Optimization
Monitoring your visitors’ digital happiness is key to keeping your customers engaged and your conversion rate healthy. Improving your UX will result in longer site journeys, fewer bounces and a general positive sentiment about your website, which is inextricably tied to your brand.
If visitors have a poor experience on your site, they will leave, regardless of how good your product is. Optimizing your UX begins with analyzing your users’ behaviors. It is the only way to ensure a customer-centric CRO strategy based on behavioral evidence rather than intuition. Analytics today can keep you abreast of any behavioral anomalies and deviations on your site so that you can improve the experience quickly and continuously.
Only after you’ve analyzed how users interact with your site — what is effective and what isn’t — can you make results-yielding decisions for CRO.