“Conversion rate” is a term frequently used in internet marketing, which defines the effectiveness of an ad or offer using a percentage. Typically a conversion rate is calculated by using the total number of impressions (views of a page, not clicks on a link) divided by the clicks on a particular ad or a sign up, such as for a newsletter.
For example: 23 clicks / 1000 ad impressions = 2.3% conversion rate.
There are other ways to calculate a conversion rate, too.
High Conversion Rate
A high conversion rate is usually a good result for a website that earns passive income. It means more people are convinced by a website’s offer, service, products and people.
A typical conversion rate for Adwords advertising campaigns, such as those seen on a Google search results page, may have conversion rates as low as 0.01% and as high as 40%.
Low Conversion Rate
A low conversion rate is usually a sign that something isn’t working. Perhaps the offer fails to answer a pressing need of the visitor, perhaps they were referred wrongly. There are many elements that contribute to a low conversion rate. It may be the name of a product, the eye flow of the landing page, the copy, the design, the color, or some other factor.
For this reason, A/B splitting, a method for redesigning and re-evaluating the landing pages of conversion pages in a systemic and statistical fashion, is being utilized by most major online retailers and brands.
In A/B splitting, multiple designs of a landing page are created and then tested at set intervals(days, weeks, months) to determine the top performing designs, or at least to weed out the worst performing landing pages or elements.
The top performing elements – sometimes full redesigns – are then used in future A/B split tests until a higher conversion rate is achieved.
Micro A/B splitting tests involve tiny changes in copy, such as a word in a headline.
Without an outcome-directed and audience-centric approach, many A/B splits may not result in any actual increase of conversion rate. The perception of the testers may be that the changes to the design have resulted in higher conversion rates, but given a long enough testing period – the ‘better performing’ designs may actually plateau.
This effect has been called the “moving chairs around on the Titanic” – because when a split has been allowed to run a much longer duration, like 6 months or a year – the conversion rates may dip again, returning to the same level as before.
What causes this?
What Typically Lowers a Conversion Rate:
– Site speed
– Copy and Design
Slower websites (3+ second load times) have worse conversion rates than those that load in a shorter amount of time. Websites with poor color combinations or a misuse of color for a specific audience and need may result in worse conversion rates. The copy, such as the title or headline of a banner or page, is of vital importance to a higher conversion rate.
Lastly, design mistakes lead to lower conversion rates because they cause a unique visitor to “stumble” or become confused in the flow of the site. It’s true, even the most minor hiccup in a landing page can send conversion rates plummeting.
Not all conversion rates mean sales and prospects, they are simply a measure used to help online business owners and marketing teams to evaluate a business’ effectiveness at getting customer sign ups, purchases and more.