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Last edited: 27.09.2022
Have you ever wondered what CR, CRV, CRO, CTR, CPL, CPC, SEM, ROI (to name a few…. ) are and how they matter to your business?
Me too. I got tired of not being 100% sure what people are referring to in meetings when these acronyms come up.
1. Have you been in a similar situation?
I didn’t dare to ask anyone what on Earth they were talking about, so I did my research and decided to share my findings with others. Now you don’t have to go through the trouble of googling and reading everything there is on this topic, as I’ve summarized it for you.
If you want to understand what conversion rate is and why it matters,
Off we go!
Here’s a quick overview of the most used acronyms that are related to conversion rates. After the list, I’ll provide you with some examples of them to deepen your understanding. There’s an own section dedicated to conversion rates and optimizing them, but I’ll quickly introduce other relevant terms as well, because you need to understand what they mean in order to improve your conversion rate in the future.
Acronyms Explained
CTR can be used to figure out how well your keywords and ads are performing. It’s calculated by taking the number of clicks a specific link has and dividing it with the number of people that saw it.
It’s commonly used to measure online ad campaigns and the effectiveness of email campaigns.
For example, if you have a 60 clicks on one of your banned ads and 10.000 people have seen it, your CTR for that would be:
60/10.000 x 100%= 0,06%
CTR is a simple metric to use to track how many people you have been able to direct to your site. Anything that happens (or doesn’t happen) after you have the people on your site is related to conversions.
Measures how cost-effective your marketing campaigns are.
Wikipedia’s definition of CPL is: “CPL is an online advertising pricing model, where the advertiser pays for an explicit sign-up from a consumer interested in the advertiser’s offer.”
To simplify, CPL refers to how much money you have to spend to get a single lead. CPL doesn’t take into account how many clicks your ad has had, but focuses on how many people converted by, for example. submitting their email address to a form.
You can calculate your CPL by taking your total marketing spend and dividing that by the total number of lead you got.
Cost Per Click and Pay Per Click are synonymous and they refer to the cost of getting a single click on your ads on search engines, social media platforms and all other platforms.
This is a very common online advertising revenue model which is mostly used by advertisers that have a set daily budget for a campaign. Once you’ve reached your daily budget, your ad will automatically be removed from that website’s rotation for that billing period. In other words, you won’t exceed your budget.
You can calculate your CPC by taking the total ad spend and dividing that by the total number of clicks.
The problem with this model is that you can’t really make sure beforehand if you are getting quality clicks that will then also convert once they’ve clicked the ad. This model is also prone to have at least some accidental clicks, and each click costs you money.
Search Engine Marketing refers to a model where someone is paying search engines (such as Google) to increase their search visibility. Companies pay for their ads to appear as search results on the top of search engine result pages (SERPs).
Notice those little “Ad” marks? Yup, these aren’t organic search results, but paid ads. These companies have paid Google for certain keywords. When these paid target keywords are are googled, BAM, the ad pops up.
ROI in laymen terms= How much money you spent is compared to how much profit you made with that spending.
In marketing terms, this translates to tracking how much you’re spending in ads and how much those ads are creating profit.
ROI Formula:
So:
The higher your ROI is, the better you are doing. The only way you can start improving your ROI is to keep a close eye on your conversion rate.
You can measure your non-financial performance with Key Performance Indicators. Even though they don’t have a monetary value, they heavily contribute to the company’s overall profitability.
In the marketing context, KPIs are measurable factors that are tied to specific objectives of a marketing campaign. They are used to track progress during a marketing campaign and to measure the overall effectiveness of that campaign.
Some KPIs of marketing:
To summarize: Setting and tracking KPIs help you create strategic marketing campaigns and evaluate the results.
Search Engine Optimization refers to the process of improving the quality and quantity of the traffic to your website from search engines.
In English: By doing SEO, you aim to get more of your potential customers to find you by googling the products or services you offer.
Conversion rates are one metric to track while doing SEO. But before you can start doing SEO effectively (or at all) you need to understand what conversions are.
Here’s our beginner’s guide for doing SEO
There are many abbreviations to learn, but trust me: Once you start improving your marketing campaigns by implementing conversion tracking to the aforementioned aspects, you’ll soon be a native in using them yourself.
As you are now familiar with the abbreviations I’ll use them throughout this article. Since we now have the basics covered, it’s time to dive right into the actual topic of the day – Conversion Rates.
We’ve a lot of ground to cover, but let’s start from the basic concepts and move on to the bigger picture.
We’ll go over the following topics:
First, we have to understand what a conversion event is. Conversion events refers to any action you want your website visitors to make.
Examples of conversion:
The list goes on. To summarize, conversions aren’t just doing sales or something directly related to it, but rather they are KPIs that are relevant for your industry and business model. For instance, retail businesses have very different goals than people selling online courses.
Conversion count means the number of times an action has happened. However, it’s more important to focus on the conversion rate than on conversion count, because starting only at the conversion count might trick you.
For example, if you count how many times an ad was clicked, you’ll lack the information what happens once people are on your website. This is what you should track and aim to improve. That being said, each conversion event can have their own conversion rates.
Conversion rate measures how effective a webpage, email or an ad really is. It tells you how many viewers or website visitors performed the desired action once they were exposed to your content.
Refers to the process of increasing your conversion rate on your website or app.
Conversion rate is a metric that will help you track, improve and speed up your growth.
By collecting this sort of meaningful data, you can start comparing and contrasting how your ad campaigns are performing in multiple advertising channels.
If you don’t know what is working well, you can’t repeat it let alone improve the results.
Optimizing your conversion rates will:
Conversion rate can be calculated by taking the number of people that completed the desired action by the overall size of the audience. This number will then be converted into a percentage.
CRV = the conversions divided by the total visitors and multiplied with 100.
You can also see this number directly from your Google Analytics:
Even though it might seem simple on paper, there are many scenarios you should consider before you start to track your conversion rate.
Let’s look at an example:
Matt visits your site once while Amber visits five times within a week.
Ask yourself:
Both are correct ways to go about it, and you are free to choose whichever works the best for you. You just have to remember to be consistent and count with the same logic every time.
Another thing to consider is how to count users that are converting.
Matt buys one product from you, Charlene doesn’t buy anything, while Amber keeps on ordering more and more stuff and ends up making six purchases during the month. At the end of the month, your total sales count is seven.
Again, you have two options.
Feel free to choose either one of the options presented, but remember to use it consistently in all your measurements.
Okay let’s take an example:
You run an ad campaign on LinkedIn that reaches a total of 20.000 people. 500 people out of the 20.000 people clicked on the ad.
500/20.000= 0,025 –> Your conversion rate is 2,5 %
Now you have tested one ad which got a 2,5% conversion rate.
Once you have your conversion rate for one ad campaign on LinkedIn figured out, you can start figuring out what works and what doesn’t:
Launch the same campaign on different channels and compare results
This way you’ll figure out what is the most cost-efficient channel to reach your target audience.
In this scenario, I’d put more effort on LinkedIn than on Facebook, as there’s a significant difference in the conversion rate.
Modify the campaign and run it again on LinkedIn
This will offer you insights on what works and what doesn’t.
Campaign 3 clearly outperformed previous campaigns, even though it reached less people than the first campaign. Now that you have the data, you can start drawing conclusions on:
Once you start measuring your conversion rates, you’ll be able to analyze trends and to start improving your overall conversion rate. A higher conversion rate translates to more results with the same effort.
You can allocate the saved marketing resources to new and more effective campaigns to further boost your sales or direct them to other areas of your business.
As we’re now experts on how to calculate conversion rates, let’s now focus on increasing website conversion rates.
This part will focus on CRO and the nine most effective ways of doing it in the modern digital marketing era.
Be honest: When was the last time you did this? Do it, for example, with Google’s PageSpeed Insights. Now. The results will give you a baseline to start improving.
Here’s an example how they may look like. The greener, the better.
People are busy and they’ll quickly leave your page, if it isn’t loading fast enough (= within a few seconds).
According to research, one in four visitors will leave your site if it takes more than 4 seconds to load. According to Portent, conversion rates drop on average by 4,42% with each additional second of load time during the first five seconds.
So: Optimize your site speeds to get more conversions. Here’s one of our blog posts where you can find some additional information on improving site speed.
Sometimes, it’s the smallest things that bother us and make us leave a site without buying or signing up for a newsletter or discount code.
Such factors include:
You can run an A/B split test to test different versions of the same page, while only changing one aspect at a time.
In this example, by changing the call to action button from blue to green an adding an arrow improved the click rate by 20%.
Even though doing A/B tests to each tiny variable might sound like tedious work (because it is), it’s still worth the trouble. I’m not saying go through each tiny detail, but it’s a good idea to test out at least some aspects which you might have overlooked before. You’d be surprised about which aspects actually make a difference.
What is the smallest and most surprising tweak you made that ended up making a huge difference in your conversion rate? Let me know in the comments.
I’m always baffled at how seemingly random details make a big difference.
If you’re looking for an easy tool to do A/B tests, start your free 14-day Trustmary trial.
As your landing pages are the pages you are directing people to and which are designed to convert visitors into leads, they need to be on point.
Try using an online tool to get a user behavior report of your site to gain insights on what your visitors are doing on your landing page.
Crazy Egg is a nice tool. It gives you a heat map of what the visitors are clicking on or browsing on your landing page.
Once you know what they are interested in, you can try to improve conversions by tweaking the aspects you would like them to see.
Which one sounds more appealing?
or
Don’t be afraid to be clear about what you have to offer. The clearer your offer is, the more likely the right audience is to take on the offer.
After all, your products or services are developed to fulfill a very specific need. Be clear what that need is and how you are better than your competitors. That will for sure lead in a higher conversion rate.
Blogs are a great way to offer your customer helpful and insightful content about your industry and the problems you solve. In addition, your readers can be turned into leads.
However, you shouldn’t write a blog just because you hope it might improve your conversion rates. Write one, because you want to help and educate your site visitors. The results will follow. But only if you do a good job with your content.
Never forget that “Content is the reason search began in the first place.” as said by Lee Odden, who is a B2B Marketing Strategist, Author, International Speaker, and the CEO of TopRank Marketing.
That being said, once you have published some blog posts, you should start tracking how they are performing
Track at least these to get meaningful data:
Even though your CTRs would be through the roof, you need to make sure by tracking CVRs that those readers are becoming leads or customers instead of being just visitors. Once you have a baseline for both these metrics, it’s time to start the improvement phase.
Call to action is a term used in the marketing world that refers to any design element that’s purpose is to get the audience to perform a desired action immediately. In other words, to convert.Use CTAs to encourage people to convert immediately.
These are simple tricks to maximize people’s engagement to your site. No matter if you have a ecommerce site or a B2B service site, you need CTAs to make people convert.
CTAs may look different in mobile apps and on your mobile website, but they still work all the same.
For people to give you their contact information (or more importantly, money), they need to trust you. The easiest way to improve your conversion rate is to increase your potential customers trust in you.
Start using social proof (=people tend to copy and follow the actions of others) by adding testimonials and reviews from your satisfied customers. Adding social proof to your site is one of the biggest impact factors in terms of conversion.
Peter lives in Philadelphia and is looking for a contractor to fix his roof. He googles “roof contractors in Philly” and finds options online.
While Peter ponders which company he should request a quote from, a review popup from Company B appears on the lower left corner.
“Mike L. from Philadelphia just left us a review: “10/10, these guys really know what they’re doing”
Even though Peter was hesitant at first, because company B said that they operate in Pennsylvania and not specifically only in his town, he was convinced after seeing a review from the same city. Peter goes directly to the “contact us” page of company B and fills in his contact information to get a quote from them. Because company A wasn’t able to convince Peter in time, they were left without a conversion.
The same model works for all types of websites and services, but is especially crucial for tech companies. Use social proof and reviews to prove that your products or services create value and that you are a trustworthy company in the first place.
If you haven’t collected reviews and testimonials yet, start your 14-day trial with Trustmary now.
On top of getting reviews, using Trustmary enables you to:
“Grab yours now! Only 5 products left!”
“6 people are currently viewing the same hotel” (And there’s only 2 rooms left with a lower price)
“Sign up before the group is full. Only 2 spots left!”
“You have only 4 days left to claim your exclusive discount code via email”
When was the last time you bought something or signed up simply because the offer had a time limit tied to it?
The magic of building urgency is that it makes people scared that they are missing out on something great. Each and everyone of us is constantly looking for the best possible deals. By creating a certain amount of urgency in your offer, you can significantly increase the chances of getting more conversions.
Try to make your offers be valid only a certain time and you’ll be surprised how much revenue or results you’ll create the closer you get to the expiration day.
Keep things simple and remove distractions. Make user actions as frictionless as possible.
This doesn’t mean that you need to only have a “Buy here” button on your page, but aim to make your design user-friendly. Trust me, your conversion rate tells you exactly what works and what doesn’t, so make changes accordingly.
On the one hand, your website has one goal: Help you sell your products or services.
On the other hand, your website a an effective tool that can help your turn relevant visitors into customers later on, if they aren’t ready to buy at that moment.
By optimizing your conversion rates, you’ll enjoy the following benefits:
If you’re looking for a sign to start making conversion rate records, this is it.
A good conversion rate is very different for each industry. It depends on a vast variety of factors, such as:
Generally speaking, a good conversion rate = a conversion rate that is better than what it previously was. In other words, you’re competing against yourself. Use your own previous results as a benchmark.
However, to give you an understanding of how well you’re doing compared to your competitors, let’s dig right in.
Unbounce has used AI in their research to analyze more than 44.000 landing pages and over 33 million conversions. That has helped them to calculate some industry-specific averages (all CVRs combined and divided by their number) and medians (putting all CVRs to a line-up and taking the middle value) for conversion rates in 2021.
How do you rank up against some of these industries?
Below we’ll have a look at some industries and their specific features in more detail.
PropelGrowth set out to research what is a good conversion rate for a B2B business. Their method was to break down the funnel process based on lead qualification and to measure conversion rate in each step.
Steps of Lead Qualification:
Results:
Due to the typical length and complexity of the sales funnels in B2B, measuring conversions should be done at each stage of the funnel to figure out what needs improvement. Furthermore, according to this data you should prioritize conversion rate optimization on prospects who are further down your funnel.
A 2017 Moz e-commerce benchmark study showed that the average conversion rate for e-commerce websites was 1.6%.
To understand this better let’s break it down:
However, that 1,6% is only an average. It doesn’t say anything about how many products the website has sold or how expensive the products are.
A massive 2021 study of landing pages showed the median conversion rate to 16 different niche sectors. Across these sectors, the average median rate was 3,2%. The overall conversion rate average was 9,7%.
Such reports are highly valuable to marketing professionals that work in niche sectors, as they can compare their marketing data numbers to others in the industry.
It’s important to take into account that the customer journey on each of these sectors is unique in both their length and complexity. Not every conversion will have an impact on your revenue in short-time thinking, but every conversion is a step closer to growing your business.
Wordstream did a study on Facebook Ads in 2021 and concluded that the average conversion rate for all industries was 9,21%.
The top three performers on Facebook are:
We can only guess what makes these three industries to be on top of the list. I’m fairly confident that it has to do with the fact that Facebook is a platform where people are easy to target thanks to the vast amount of information they’ve willingly added to their profile (full name, age, gender, location, former education, places visited, movies/tv shows/music genres they like,…). After all, Facebook is a social media that is used to stay connected to friends and acquaintances.
All of the industries that are doing well on Facebook Ads have been successful in tapping into this information probably by knowing their target audiences and developing great strategies for reaching them. Here’s what to expect when doing Facebook ads.
Generally speaking, it’s hard to define an average conversion rate for all industries. It’s more beneficial to compare your conversions with your previous conversions than it is to compare your numbers against anyone else’s. It’s kind of like comparing a newcomer’s revenue to the revenue of a global organization. What’s the purpose?
After all, the way to grow is to concentrate your marketing efforts on CRO instead of comparing yourself against others.
However, we can draw some conclusions on average CVRs.
Always keep in mind the following:
You shouldn’t blindly stare at your numbers and think they’ll tell you the truth. They shouldn’t be treated as the green light at the end of the dock, but more as a guide through the sea of marketing data.
Here are some aspects to consider before blindly trusting the number you see in your Google Analytics.
It’s a no-brainer that you should care more about the traffic quality and source than just the conversion rates. Don’t focus on maximizing CRV at any cost, but rather on optimizing it.
For example, if your mobile app gets downloaded by potential users a lot but never used again, were those really worthy conversions?
After you’ve done some tests on your average conversion rates in different channels, you can better track what your ROI on them is. That’ll help you determine whether you should focus on (or maybe even ditch) a specific marketing channel.
Instead of focusing solely on CRVs, your goal should be to increase the conversion rate of qualified leads versus any lead.
Would you rather
OR
Even though these scenarios would have the same exact conversion rate the impact on your revenue is completely different. Focus more on your ROI (conversions are a part of that) than only staring at CVRs.
Always consider what kind of seasonal aspects influence your business in general.
I’d reckon it’s pretty hard to sell snowboarding gear in the middle of the summer no matter how optimized your website is. Seasons often have a direct impact on the number of people
a) visiting your site
b) converting from visiting
For B2B businesses, there usually is a drop in sales and conversion before major holidays. No-one wants to add to their already full schedules, but rather we try to tie any loose ends before the vacation starts.
Don’t be discouraged, if your conversions drop during a certain period. Before you start A/B testing like never before, check the following things:
It might be that your services or products just aren’t in high demand during a certain season.
If that is the case, you have three options:
If you could decide, which customer would you want to get?
Customer A brings you 3.000€ during the next five years.
Customer B brings you 6.000€ during the next year.
Customer C brings you 8.000€ during the next five years.
I’d personally take Customer C and aim to increasing their lifetime value even more during those years they are my customer. Customer Lifetime Value (LTV) is a term that refers to how valuable each customer is during their entire relationship with you.
Well, that’s the thing. It isn’t. And that’s the problem.
All revenue is good revenue, but you should pay attention to from which source you get your most valuable customers from. You can’t do that by only tracking conversions across different channels.
CVR is a great metric, but you have to take into account that it also has its limitations.
Simply staring at conversions will get you nowhere. Treat them as the great metric they are, but remember that they can be a misleading goal.
Once you have made the right call and decided that you need to optimize your conversion rates, you should go over this list to figure out which CRO tool would work the best for you. They are categorized by different purposes.
With Trustmary, you can A/B test which type of testimonial widget converts more. Additionally, you can test two different two testimonials to figure out which one brings more conversions.
You can use either A/B testing or multivariate testing.
Here you can find 5 social proof apps to consider using in 2022.
Share your favorite books, podcasts and other resources for learning more about conversion rate optimization in the comments!
What is a good conversion rate?
A good conversion rate is one of two things:
It’s highly likely that you don’t know if your numbers are better than your competitors, so I’d suggest focusing on your own long-term data.
What do I do with a conversion rate?
Analyze what are the reasons it looks the way it looks. If it’s high (over 15%), try to keep it up and to optimize it for even better results.
If it’s low (close to 0%), start optimizing your conversion rate now to get more sales.
What does conversion rate actually measure?
It measures how many people are acting the way you want them to compared to entire audience that saw your ad/app/email/website.
Conversion rate can measure, among other things, downloads of your app from the app store, sales from online shops, number of subscribers to your email list or asking for a quote.
Is 5% a normal conversion rate for an ad campaign?
It all depends on what is your normal. As conversion rates are highly variable, it’s always best to compare the stats of your ad campaign to the previous campaigns you did. This way, you can start to figure out what works on which channel and what needs to be improved.
What is a bad conversion rate?
The absolute worst conversion rate is the one you don’t know. Generally speaking, if your campaign, app or site aren’t performing as well as they did before, those conversion rates can be considered bad.
How does conversion rate optimization work?
Once you have all the marketing data available, you look at what has worked and what hasn’t. Then you focus your marketing efforts on improving those campaigns that did bad, bettering the ones that did good and enhancing your overall visitor experience to become frictionless.
When you are doing CRO successfully, you are getting more sales qualified leads and sales than before. Remember that increasing traffic isn’t a great goal to have.
Why should I spend my time on conversion rate optimization?
You get more results with less effort and a lower ad spend.
If that doesn’t sound good enough, you’re also gaining insights on your potential and current customers which will help you improve the customer journey and to grow your revenue in the process. If that doesn’t helpful, I don’t know what would.
