Why you need to care about your conversion rate

By Stellan Björnesjö

Why you need to care about your conversion rate

Have you ever wondered why measuring and optimising a conversion rate is important? If so, you're not alone. For many online marketers the concept of measuring and caring about conversion rate for any given campaign online is still somewhat abstract. Why you might wonder? At least part of the explanation, we argue, is due to the long history of habits, methods and processes within businesses. Very few companies in the world have ever measaured conversion with regards to relations built and maintained at fairs, meetings and other forms of traditional marketing. Thus, there is very little inherent focus on the subject built into organisations worldwide.

Another part of the explaination, in our opinion, is the short history of online (even though it's now starting to grew out of its adolescence). For a long period of time online was about investing "because we have to" and with a sense of urgency that someone else might have seen something that we might have missed, rather than investing for a measurable purpose and with a clear vision of what the return of investment should be. This approach works well when everybody else is still on the same page. However, when enough businesses have understood that optimising investments based on conversion and lead generation is the smart thing to do, and have implemented the tools to do just that, the rest of the competition needs to follow or face the very real threat of eventually watching creative destruction sweep in with brutal force. How come?

First we need to explain the concept of conversion rate. Wikipedia defines it as "the ratio of visitors who convert casual content views or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators." Huh? To put it another way; conversion rate = number of goal achievements per visits, i.e. the share of visits to your online presence that have successfully completed what you intended them to do. The most concrete example of a conversion is for .com’s and .xx’s that sell goods or services online and in which case each sale of such product or service constitutes a conversion. However, a successful conversion can also be when the visitor subscribes to the company's blog, newsletter or become a follower at an offsite place (aka "social media"). 

Ok, that’s crystal clear. So why is caring about conversion rate important then? It's down to pure mathematics. Take the paid search example. You invest X amount of money in paid search ads, for example with Google AdWords, and that ad is seen 1000 times. Let's assume 10% of these impressions lead to someone actually also clicking on the ad, which gives you 100 visits. Of those visits, 1% convert which gives you 1 successful order / subscription / follower etc. Without improving the ad itself, what if you improved the landing page of the campaign so that the conversion rate was 2%? That would naturally mean that you now get 2 orders / subscriptions / followers for the same investment, and your cost per conversion would be 50% less.

Or take it from another angle; if you're working with affiliates that earn commission on traffic that generate a sale / subscription / follower, which business would they rather work with? The one giving them a single fullfilment for each amount of money spent, or the one giving them double that? 

Caring about your conversion rate will thus give you advantages over the competition in more aspects than one. It should be an essential part of your online strategy and a natural part of your way of working, habits, processes and methods.
Are you willing to make the efforts needed? Get in touch with Zooma if you want to discuss how we can help you increase your conversion rate.

Stellan Björnesjö
Online Strategist at Zooma since 2012. 15+ years of experience as a manager, business developer and specialist within online and e-commerce.
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