“Getting traffic” isn’t necessarily “Converting”.
Even though you are getting thousands of audience, if none of them are actually purchasing, all the time and cost spent for your website and campaigns would be wasted.
“How can I check profitability?”
“Based on what standard can I say that my business is going well?”
In this blog, I’m going to talk about..
- What is “conversion” in E-commerce
- How to calculate conversion rate
- Factors to pay attention when calculating conversion rate
- What is actually “good” conversion rate
What is Conversion in E-commerce?
Conversion rate is by far the most important metric business owners need to keep close eyes on to achieve constant and increasing sales revenues.
According to Trachtenberg from BigCommerse, conversion rate is defined as “the percentage of website visitors who purchased something from your online store (in a set period of time)” in ecommerce.
Conversion includes …
- Email signups
- Sharing content on media
- Adding items to a wish list
- Adding items to a shopping cart
- An online sale
How To Calculate Conversion Rate
If you don’t want to know the logic behind, you can just use an automatic calculator here.
But the logic is actually very simple. Here is how it works.
All data you need for this is…
- Number of Clicks (= visitors) of a specific web page (Clicks)
- Number of people who actually converted (Conversions)
And use this formula: Number of people converted / Number of clicks x 100
Example: over the past 30 days, 1,500 people visited the landing page (the first page that users see when they open an add you posted). Out of those, 35 people signed up for the personal account and 20 actually purchased your products.
Conversion Rate in this case is:
35 + 20 / 1,500 x 100
= (approx.) 3.67 %
Factors to consider when calculating the conversion rate
According to The Daily Egg, here are some example factors you need to take into account:
- How many products does business sell?
- What are the price points compared to competitors’?
- What does the marketing copy look like?
- Does the company use images and videos to sell its products?
- What channels deliver the most traffic to the store?
In short, think about ANYTHING that is connected to the purchase of customers.
What is a “good” Conversion Rate?
Although what rate should pursue depends on which side of your business you pick, the safe way to do that is “to compare with the industry average”.
Here are some statistics showing average conversion rates depending on industry (2018).
Source: Mark. I.. (2019). Google AdWords Industry Benchmarks: Average Conversion Rate. The WordStream. Available/Retrieved from https://www.wordstream.com/blog/ws/2016/02/29/google-adwords-industry-benchmarks
Source: Mark. I.. (2019). Facebook Advertising Benchmarks: Average Conversion Rate. The WordStream. Available/Retrieved from https://www.wordstream.com/blog/ws/2017/02/28/facebook-advertising-benchmarks
The Daily Egg further mentions three relevant sides of the business when generating a conversion rate:
For…
- B2B websites: +/- 5%
- Landing pages: +/- 4% across industries
- Facebook Ads: +/- 9.21%
For further information, you can click here.
However, keep in mind that you always have to take into account the current situation of the industry and your business. For instance, right now the industry average has been marking an unusual rate due to the COVID-19 situation.
Was this blog insightful? What do you know more about?
Leave your comments below!
Bibliography
Irvine, M. (2019, August 27). Google Ads Benchmarks for YOUR Industry [Updated!]. Retrieved from WordStream: https://www.wordstream.com/blog/ws/2016/02/29/google-adwords-industry-benchmarks
Irvine, M. (2020, February 25). Facebook Ad Benchmarks for YOUR Industry [Data]. Retrieved from WordStream: https://www.wordstream.com/blog/ws/2017/02/28/facebook-advertising-benchmarks
Patel, N. (2018, October 23). What Is a Good Conversion Rate? The Answer Might Surprise You. Retrieved from The Daily Egg: https://www.crazyegg.com/blog/what-is-good-conversion-rate/
The Online Advertising Guide . (n.d.). Conversion rate Calculater . Retrieved from The Online Advertising Guide : https://theonlineadvertisingguide.com/ad-calculators/conversion-rate-calculator/
Trachtenberg, S. (n.d.). 33 Ecommerce Conversion Rate Optimization Steps Gueranteed to Increase Sales . Retrieved from BigCommerce: https://www.bigcommerce.com/blog/conversion-rate-optimization/#understanding-online-store-conversion-rates
