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How is Conversion Rate Calculated?

How is Conversion Rate Calculated?

When you're running some advertising campaigns online, surely you've heard this question from others: What is your conversion rate? Some people don't know about conversion rate and think it's a complex metric. But it's just a simple formula to measure the performance of advertising campaigns.

If you're also curious about conversion rate and what you need to do after reviewing the conversion rate, then keep reading this article.

In this article, we've covered everything about conversion rate, its conversion types, how it is calculated and the best ways to optimize your conversion rate.

Without any further delay, Let's begin!

What is a Conversion Rate?

A conversion rate is a simple formula that helps businesses measure the performance of advertising campaigns and identify the sales, profits/loss and marketing activities. This formula is used by businesses to find out the conversion percentage of visitors to your website/store or landing page. This conversion rate metric helps businesses identify their marketing campaigns' performance and optimize them for better results.

How to calculate the conversion rate?

The number of conversions is divided by the total number of visitors, a simple formula used to identify the conversion rate for any advertising campaign.

or

Conversion rate = (Total no. of Conversions / Total no. of visitors)*100

With this formula, you can find your business's conversion rate.

For example: If your ecommerce store gets 200 visitors and converts into 50 sales, then its ecommerce conversion rate formula is 50 divided by 200 and multiplied by 100, i.e., 25%.

If you're running an e-commerce store and want to analyze the performance of your store conversion rate, then you can use this ecommerce conversion rate formula.

Similarly, companies use other conversion rates to track their marketing campaigns as per results. CPL, CPC, CCR and CPA are the most common terms used in advertising campaigns to track performance.

Let's discuss this in detail!

CPL (Cost Per Lead)

CPL (Cost Per Lead) is a conversion metric used to determine the cost for each lead generation through advertising campaigns. Many businesses are using the Cost Per Lead (CPL) metric to find their cost per lead and try to optimize the campaign to generate a lead at less cost. The Cost Per Lead formula is:

Cost Per Lead (CPL) = Total campaign cost / Total amount of leads

CPA (Cost Per Action)

CPA (Cost Per Action) is used by businesses to identify the cost for each result. With this metric, we can find the cost for each result like sign-up, sales, form etc. Cost Per Action formula is:

CPA = Total campaign cost / Total amount of conversions

CCR (Click Conversion Rate)

CCR (Click Conversion Rate) is used by businesses to find out the conversion percentage of the total number of clicks. Click Conversion Rate formula is:

Click Conversion Rate (CPC) = Total number of conversions / Total number of clicks

CPC (Cost Per Conversion)

CPC (Cost Per Conversion) is used to identify the cost for each conversion. Businesses are using this metric to know the cost for each result. The cost Per Conversion formula is:

CPC = Total campaign cost / Total amount of conversion

These are some important metrics used to calculate the conversion rate. You can also use a conversion rate calculator to determine the conversion rate.

Types of Conversions

There are many types of conversions available that are used to calculate the conversion rate for different businesses. Here are some main types of conversions:

  • E-commerce store
  • Submitting a form
  • Sales call
  • Website engagement
  • Live chat engagement
  • Downloading file/ App Installation
  • Subscriptions
  • Free-trial
  • Account creation
  • Button click
  • Content share/engagement

These are some essential types of conversion that businesses use to identify conversion rates.

Why is Conversion Rate Important?

For businesses, the conversion rate is an important factor for their business growth. With conversion rate, it's easy to identify the performance of advertising campaigns on different platforms, which works best for their business, and what actions must be taken after reviewing the performance of advertising campaigns. Knowing how many people are interested in the product and buying it is important. Later you can change your campaign to target only potential customers to increase sales and business.

In simple words, conversion rate helps you know whether your efforts are put in the right place, or you need to make some changes to get the desired results. Companies need to keep analyzing their conversion rate to put efforts in the right direction and eliminate the things that affect their business.

How to Improve your Conversion Rate?

Conversion Rate is mainly used to analyze the performance of advertising campaigns and later make the changes in campaigns to get better results. It's also known as conversion rate optimization (CRO) to find out why you're not getting results in campaigns and the best way to resolve the problem.

Here are some effective ways to optimize your conversion rate:

A/B Testing

A/B Testing is the most preferred way to analyze your marketing campaigns' performance and find real insights. With A/B Testing, you can compare two advertising campaigns together and find which campaign works better.

Once you've set up two marketing campaigns and run ads for the same results but the different audiences, websites, and elements, then you need to consider these elements in A/B Testing:

  • Select which conversion results in you want to get: If you're going to analyze the performance, then you should choose the result you want at the end, like sign-up, sales, subscription, form, etc., so that you can easily find the conversion rate.
  • Find out where you're losing customers: Some people buy your products/services, but others leave your store without purchasing anything. So you need to identify those people, why they're going to the store, and why. Try to analyze their behavior and if something is distracting them from leaving the website.
  • Make a list of potential changes required: Once you've reviewed all the problems in your marketing campaigns that do not let your campaign reach your goal, then make a list of all the changes you need to make in your marketing campaigns and enhance the quality to get better results.
  • Setup A/B testing: You need to set up two separate campaigns with all the changes you need to do in a new campaign. So that you can expect better results and later compare again and do the changes accordingly.
  • Select the duration for the experiment: Basically, you need to do A/B testing till you can achieve your desired results and find profitable campaigns that give you amazing results.
  • Analyze your Results: If your major changes in the campaign give you desired results, then follow the process, and if not, then keep doing A/B testing and reach your desired results.

With continuous improvement in the campaign, changing the audience and doing A/B testing can help you increase your conversion rate.

Social Proof Notifications

Social proof notifications are one of the most powerful and in-demand marketing strategies many businesses use to increase their sales and conversion rate. You can add social pop-up notifications to your website to attract potential customers, generate quality leads and increase your sales. Social proof notifications are useful for e-commerce stores, websites and landing pages to display pop-up notifications and encourage visitors to take similar actions. To increase conversion rate and grow your business, you need to add social proof notifications. WiserNotify is the #1 best social proof notifications platform that supports 250+ platforms, including CRM, Landing Page builder, email marketing tools etc. With WiserNotify, you can display different notifications on your website and increase your conversion rate.

You can create a free account on WiserNotify and connect with 200+ platforms to display social proof notifications and increase your conversion rate.

Factors that affect the Conversion Rate

By analyzing the performance of advertising campaigns, businesses can improve the conversion rate, but other factors can also affect the conversion rate. We've handpicked some major factors that you should consider to increase your conversion rate:

  • Fewer Payment options
  • Poor landing page
  • Slow loading speed
  • Captcha requests to access the website
  • High-quality photos
  • Wrong colors selection
  • Unsafe payment process
  • The complex process of finding out something
  • Unreadable fonts
  • Wrong link added in buttons

And many more factors that can affect the conversion rate for any business. So it's essential to consider these factors and improve the marketing campaigns accordingly to improve the conversion rate and get better results.

Conclusion

Conversion rate is one of the essential metrics that many businesses use to analyze the performance of advertising campaigns and take actions accordingly to increase results. We hope this article helps you know everything about conversion rate and its types, and later when someone asks about it, you can confidently answer the questions. If you want to increase your business's conversion rate, follow the tips and create a free account in WiserNotify to display amazing social proof notifications and grow your business.