Determining Your Web Site's Conversion Rate
The success or failure of your web site greatly depends on two things that you should think about before you design a single page:- What the main goal of your web site is.
- How best can you design your site to achieve that goal.
If you expect your site to stimulate some form of action - such as having visitors filling out a form so a representative can contact them or having them purchasing a product - there are steps you can take to insure that your website is functioning at peak efficiency.
Since the focus of this article is analyzing conversions rates, it will be assumed you have set a goal and have designed your site to achieve that goal. We mention the importance of setting a specific goal for those who haven't done so.
A mistake often made by those new to internet marketing is to equate raw visitors with success. If selling advertising space is your primary goal that may be a good measure of success if the traffic is targeted, but if you're in busineess you usually want those visitors to actually do something besides simply reading your content and clicking on ads.
Whether you want them to make a purchase, subscribe to a newsletter, or some take some other action, knowing your web site's conversion rate can help you improve its performance. The percentage of people that actually take the desired action compared to how many raw visitors your site receives is called the conversion rate.
To find the site conversion rate, take the number of visitors per month and figure out the percentage of them that actually performed the desired action. Here's an example:
2,000 visitors
25 sales
1.25% conversion rate
To arrive at the conversion rate, take the number of visitors and divide that figure by the number of sales. In our example, 2000 divided by 25 equals 80, or one in 80 people took the desired action. Since conversion rates are best understood as a percentage, divide 100 by 80, which equals a 1.25 percent conversion rate. In other words, 1.25 percent of the visitors took the desired action in our example.
That figure could be misleading though. If the 2,000 visitors were those that came to your front page rather than just those who clicked onto a product sales page, it only tells you how well your overall conversion rate is, not how well your actual sales copy performs.
Suppose of the 2,000 visitors, only 900 visited your sales page. The conversion rate for that specific sales page would be 2.77 percent. That's a fairly good conversion rate. While it can be improved, you might first want to concentrate your efforts on getting more of your visitors to view your sales page in the first place.
Knowing your conversion rate, and monitoring how it changes after you make a tweak, will tell you if your changes are helping or hurting more quickly and more accurately than waiting to gain a "feel" for it. You should only make one change at a time or you won't know which changes are helping or hurting.
Knowing how to find conversion rates can also help set your advertising budget so it has a better chance of being profitable. To continue with the previous example, if those 25 sales were for $47.00 each, you sold $1,175.00 worth of product. By dividing the total sales by the total number of visitors to your sales page (900) you find that each visitor to the sales page was worth $1.30 to you.
If you were to advertise at a pay-per-click search engine, you'd know ahead of time that spending $1.50 per click to send folks directly to your sales page would mean you'd lose 20 cents for every visitor. If you paid 50 cents per click, you'd have a profit of 80 cents per visitor. Of course, that assumes your pay-per-click listing brought in the right kind of visitors. If the visitors were not targeted well, you could still lose money.
That's why you have also calculate your return on investment (ROI) when you run any advertising campaign. The ROI is simply calculating another conversion rate, only this time you are calculating how many sales you convert from among the total number of visitors that ad drew.
If the conversion rate holds up, you know you can keep that advertising campaign going because it's profitable. Just monitor it to ensure it remains profitable. If the conversion rate falls below your normal conversion rate, your options are to tweak your ads to try draw more targeted traffic, to try another advertising venue, or to give up that particular campaign.
As you can see, knowing how to calculate and use conversion rates can help you improve your bottom line, whether that bottom line is to earn a profit, gain subscribers for your newsletter, or any other number of goals. Once you understand this part of doing business, you're well on your way to become a better business person.