How to Calculate Conversion Rate [Calculator Included]

Conversion rate is the percentage of prospective customers who take a desired action in a campaign. Read this post to learn how to calculate conversion rate.


May 20, 2024

How to Calculate Conversion Rate

Want the secret to boosting sales and profit? It all starts with tracking your conversion rate. This critical metric reveals how many potential customers become paying customers. However, understanding and calculating these metrics can be tricky.

For example, your ad campaign brings 10,000 visitors to your website monthly. That sounds great, but if only 1 percent make a purchase, there's room for improvement.

Many of our brand audit clients grapple with similar questions:

What is a good conversion rate?

Which conversion types should I focus on?

How do I track conversions accurately, especially repeat customers?

In this post, I'll answer these questions and explore how to improve your conversion rates.

Table of Contents

    What is a good conversion rate to aim for in different industries?

    A good conversion rate to aim for varies by industry, but an accepted benchmark is around 2-5 percent. Various factors, such as the product or service, target audience, and the structure of your marketing strategy, can influence results. Here are a couple of benchmarks for popular industry segments:

    How to calculate conversion rate

    Conversion rate measures the number of users who have taken a specific action. We can calculate it as a percentage using a simple formula.

    Basic conversion rate formula

    Conversion rate = (number of conversions / total number of visitors) * 100%

    You can apply this formula to any marketing campaign or track the average conversion rate across an entire marketing strategy. However, this metric won’t help you hit sales and revenue goals until you know how to use different campaign conversion rate types.

    How to Calculate Conversion Rate
    How to Calculate Conversion Rate

    Defining conversions for strategic success

    The key to conversion rate tracking isn't just the calculation–it's strategically defining what counts as one. These definitions should directly align with your business objectives. Let's illustrate how a single marketing campaign can have multiple conversions:

    • Paid Advertising: Each free product trial signup = a conversion.
    • Website Sales: Each product purchase = a conversion.
    • Social Media Awareness: Each click on an embedded link = a conversion.

    While only website sales generate immediate revenue, all three campaigns contribute to your overall goals. For even deeper insights, track micro-conversions–smaller steps that lead toward your primary objectives. Click-through rate (how many people click on your ad and visit your site) is a key micro-conversion, as it increases the potential for sales.

    Also, set clear, revenue-driving goals across these levels:

    Campaign: Keyword conversions, blog engagement, etc.

    Channel/Page: Website visitors converted, social engagement, etc.

    Overall: Average rates based on total interactions or sales

    Here's a basic conversion rate calculator:

    Conversion Rate Calculator

    A common misconception is that a higher conversion rate automatically equals higher ROI. The relationship is more nuanced.

    Here's why: Conversion rate is just one factor in the ROI equation. Marketing costs also impact profitability. Spending more to improve conversion rates can diminish overall ROI if the cost of acquiring new customers outweighs the revenue they generate.

    Let's illustrate: Investing more in traffic campaigns might increase website conversions but also decrease email signups and product purchases, especially if the additional traffic is low-quality.

    Setting clear conversion rate goals fosters collaboration between marketing, sales, and product teams, aligning their efforts around a shared metric that drives business success. Before investing resources in optimization, analyze the potential impact on other revenue-generating metrics and your overall bottom line.

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    What conversion rate benchmarks should you use?

    This is another popular question brand audit clients ask. And, as you might expect, they don’t always like our response: it depends.

    Industry plays a significant role. Some industry sectors are more competitive than others—the more competitive the category, the lower the industry-wide conversion rate.

    There is also a direct correlation between conversion type and the prospect’s risk. Low-risk offers (i.e., free offers) convert at higher rates than those that require the customer to invest more.

    Of all the factors, target audience quality is key. Often, brands generate more engagement simply by retargeting a better audience.

    Sometimes, brands lack enough data to establish a conversion rate benchmark, so they are unsure what it should be. This might be the case for companies launching new advertising or email campaigns. In these situations, test each campaign with A/B testing.

    Get in touch with us if you have questions about A/B testing.

    For reference, here are the average conversion rates of some common marketing channels:

    Organic = 16 percent

    Paid ads = 2.5 percent

    Social media = 0.71 percent

    Data-driven decision-making: Focusing on the right metrics

    We have an overwhelming amount of data available at our fingertips. The challenge lies in separating the insightful metrics from the clutter. Here's how to ensure your data analysis fuels strategic optimization:

    • Prioritize conversion-focused data: Focus on data points directly linked to your defined conversions (free trial signups, purchases, etc.).
    • Go beyond vanity metrics: While social media likes might offer a general sense of engagement, metrics like comments, shares, and website traffic from social campaigns provide deeper insights into audience interest.
    • Context is key: Track conversion data over time to identify trends, reveal campaigns' true impact, and make informed adjustments to improve your bottom line.
    • Attribution modeling: Deciding how to assign credit for each conversion helps you understand the various touchpoints influencing a customer's decision. It provides a complete picture of the customer journey and how marketing efforts contribute to conversions.

    Data overload can complicate analysis and optimization. Aligning data with your conversion goals will help you to perform a reliable analysis.

    Conversion tracking data

    The conversion goal will determine the tracking data you need. Here are some of the most common:

    Google Ads

    Google Ads traffic data can help you track website and mobile app conversions. The platform also provides data for phone calls, which occur when a user clicks on the phone number listed on a webpage or ad.

    Google Analytics

    Google Analytics is a comprehensive resource of meaningful data for websites. The platform allows you to track customer behavior and events, such as:

    • Ad clicks
    • Number of unique site visitors from each traffic source
    • Call to action events
    • Content engagement
    • Website pages viewed (also used for lead generation landing pages)
    • E-commerce transactions

    You can use this information to improve marketing campaigns.

    Social media analytics

    Each social channel provides its unique data management platform. Facebook Business Manager keeps in-depth analytics on Facebook ads traffic and content. Pinterest, Instagram, Twitter, and LinkedIn also have analytics dashboards. Most are like Facebook’s dashboard, which displays user engagement and ad results.

    Again, the data you need depends on the marketing channel.

    Contact us if you have questions about the data you need and where to find it.

    Good Engagement rate Social Media
    Good Engagement rate Social Media

    Tracking repeat customers: Understanding the full journey

    Accurately tracking customer behavior is complex, especially when a single person converts multiple times. Consider this scenario:

    Jill sees your social media ad and clicks through to your landing page but takes no action. The next day, she returned via social media and signed up for your email list. How should this be counted?

    The answer depends on your strategic goals. You might consider these multiple conversions if you're focusing on initial touchpoint acquisition. However, if your goal is to track the entire conversion journey, Jill represents a single converted customer.

    Defining what constitutes a conversion in the context of repeat customers is critical for accurate data analysis and wise resource allocation. Tracking click-through rates and website and social conversion metrics provides a more holistic view.

    Conversion rate optimization (CRO)

    Conversion rate optimization (CRO) leverages factors that influence consumer behavior. For example, marketers use multivariant testing to optimize landing pages and improve the user experience to generate more engagement.

    Perceived value

    High perceived value is an essential factor in increasing sales. Consumers are more likely to buy a product when they believe it offers considerable benefits versus the price paid. To increase a product’s perceived value, marketers should emphasize its advantages and features.

    Providing superior customer service or resources on relative topics can enhance perceived value. By helping customers understand how something works and how to get the most out of it, they will feel more confident about buying it.

    Availability and delivery

    People want products and services as quickly as possible. Brands with no-hassle offers that are available on demand will convert more customers. So, many businesses offer same-day delivery, free shipping, or express shipping options. These can make all the difference in a consumer’s decision to buy.

    Having an effective delivery system makes it easier to convert customers. For example, offering a tracking number with shipments lets customers track their orders in real time, giving them peace of mind and building trust during the buying process. Having access to multiple delivery options also gives customers more control over their orders.

    Curbside pickup can help make buying from local businesses easier. This convenience increases customer satisfaction and encourages them to buy again. Similarly, providing subscribers with loyalty points or rewards for repeat purchases improves customer retention.

    Audience quality

    The quality of your target market is critical to your success. Brands should target audiences more likely to buy their products and services.

    You can use customer segmentation models to create buyer personas. Demographic data such as age, gender, location, and income level can help brands determine which markets are more likely to convert better than others.

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    Increase conversions with a brand audit

    The Brand Auditors uses innovative strategies to help you optimize conversion rates and increase ROI. We can help you with A/B testing, landing page optimization, and more.

    Our team of experts has a deep understanding of the latest trends and digital marketing best practices. We work with small businesses and large corporations to help them get better results from their marketing strategy.

    Click the button below to discover how a brand audit can help you elevate your marketing.

    Chris Fulmer PCM-Brand Auditors

    Chris Fulmer, PCM®

    Brand Strategist | Managing Director

    Chris has over 15 years of experience in brand development and marketing. He has designed strategies across various industries, such as technology, B2B services, and healthcare. His expertise includes brand positioning, competitive analysis, content marketing, and web development.

    Click to learn more about Chris

    Are you ready to find out how a brand audit can transform your business?

    Our brand audit process is a comprehensive analysis designed to help companies optimize performance.

    • Increase ROI on lead generation and sales conversions.
    • Reduce marketing expenses.
    • Strengthen brand positioning to become more competitive.

    We guarantee satisfaction or get your money back! Schedule a discovery call with a brand auditor to find out more.

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