What is Conversion in Marketing?

Conversion is one of the most used terms in marketing. You must have heard terms like conversion, conversion rate, conversion rate optimization, and similar terms. But what is conversion in marketing, what role does it play in marketing campaigns, and how to improve conversions?

This article covers everything you need to know about conversion in marketing.

What is Conversion in Marketing?

A conversion is when a website visitor or customer completes a desired action on your website such as signing up for your newsletter. The action to be taken for conversion varies from business to business. Here are a few popular examples of conversion:

• Filling and submitting a form with contact details
• Signing up for the free trial
• Downloading a free resource
• Adding item to a cart
• Signing up for newsletter
• Completing a purchase.

Here is an example of website conversion in marketing:

Visitors who take the action and complete the goal are known as converted visitors. Not all visitors convert and complete the desired action on your website. A lot of them leave your website without conversion.

You need to maximize conversions. The higher the conversions, the better. This means the majority of people who visit your website take the action you want them to take. These conversions occur throughout the marketing funnel. Visitors and customers move from one funnel stage to the next by taking desired actions you have created throughout the funnel.

Micro Vs. Macro Conversions

There are two key types of conversions: Micro conversions and macro conversions.

Micro conversions are small actions that act as supporting goals leading a visitor towards the main goal. For example, downloading a lead magnet is a micro-conversion where the purpose is to collect user information for later use.

All such micro-conversions lead visitors towards the purchase. You can add several micro-conversions throughout the customer journey to help them move in the right direction and get what they want as quickly as possible.

Macro conversions, on the other hand, are main conversions that are translated into revenue. Purchase is a macro conversion for an ecommerce store while booking a hotel is a macro conversion in the case of a travel business.

Here is a breakdown of how several micro-conversions lead to a macro conversion:

Several micro-conversions lead the visitor to macro conversion (aka purchase).

What is the Conversion Rate?

To fully understand conversion in marketing, knowing the conversion rate is essential. The conversion rate calculates the percentage of visitors who complete the desired action. It is used to measure conversions in the form of a percentage.

Here is the formula for conversion rate:

Conversion rate = (Total conversions / Total number of visitors) x 100

If your website receives 100 visitors and 5 convert, your conversion rate will be calculated as follows:

Conversion rate = (5/100) x 100 = 5%

So, conversion rate measures conversions in the form of a percentage. This makes it easier to calculate and compare conversion rates across websites and marketing channels.

Why Conversions Matter in Marketing?

Businesses rely on conversions for making money. This is how it works. Ideally, you’ll want to have a conversion rate of 100% which means all the visitors who land on your website convert. But this doesn’t happen.

A good chunk of visitors leaves your website without conversion. You lose these potential customers. 

Optimizing conversion rate and reducing funnel leakages is the top priority of marketers. A higher conversion rate means more leads and sales. And this makes conversions a key concern for marketers. 

A mere 1% increase in conversion rate for a website means a lot. Let’s do some number crunching:

Now let’s increase the conversion rate by 1%:

A 1% increase in conversion rate with no other changes resulted in 2 new customers per month. Isn’t it great? This is what makes conversions a key metric for marketers.

Also, conversion rate optimization is the best way to increase sales without increasing the marketing budget. You can generate more sales with the same amount of traffic and increase revenue.

How to do it?

Read this article on conversion rate optimization.

What is the Average Conversion Rate of a Website?

Since conversion rate is a percentage, you need to know how well you are doing. If your website has a conversion rate of 1.3%, is it good, bad, or average?

A study found that the average conversion rate of a website is 2.35%. The top 25% of websites have a 5.31% conversion rate while the top 10% convert at a whopping 11.45%:

However, conversion rates vary from industry to industry. Credible businesses have a higher conversion rate. Think of Amazon. It has a significantly higher conversion rate as compared to a local ecommerce marketplace.

This means you don’t have to compromise on the conversion rate. Don’t settle for less. There is always room for improvement.

You need to find the cause of low conversion and fix it. Find out why people are leaving your website without converting. Here is an example:

You need to find the reasons for low conversion. This requires intensive experimentation and A/B testing. Find issues, create data-driven hypotheses, create variations, run A/B tests, and analyze results. This is the key to improving conversions no matter what sector you are in.

If you aren’t rigorously testing and experimenting with different variations of headlines, CTAs, images, form sizes, color schemes, offers, and other variables, you’ll never be able to increase conversions.

Conversions Are the Backbone of Marketing

Your marketing strategy and campaigns rely on conversions. You make decisions based on conversion rate such as pausing an ad having a low conversion rate. Conversions play a significant role in digital marketing as your revenue is directly linked with them.

Don’t underestimate conversions and conversion rate. Start optimizing.

Featured Image: Pexels