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What is Conversion Rate Optimization and Why Should You Care?

What is Conversion Rate Optimization and Why Should You Care?

Conversion Rate Optimization is at the core of what we want to achieve here at Inbound Rocket. However conversion isn’t a word you hear every day in lots of media. Although looking at Google Trends for the last couple of years it is a term which is on the rise:

So we thought, let’s take a moment to explain what Conversion Rate Optimization is and why it’s so important for you and your business.

What is Conversion

Conversion is simply the process of moving from one state of being to another. You can have a conversion when you move from student to work or from amateur to professional for example. In the online marketing world, however, we’re talking about visitors moving towards subscribers or prospects and their relation to your company.

When someone visits your website for the first time, everyone starts as an anonymous visitor. While on your website the then go through a series of actions (these actions can be anything, from reading articles, clicking links, sharing content, watching videos, etc.) and hopefully in the end a conversion happens. That conversion can be different for all sorts of websites and it really depends on the goal you have set for that particular page or website. So this could mean that a conversion is:

  • when someone signs up for your mailing list
  • when someone clicks through to another page
  • when someone buys something from your website
  • when someone downloads an ebook

So what then is your conversion rate?

In an ideal world, off course all your visitors would convert to your set goal. This, however, is not always the case. Your conversion rate is simply put, a ratio of how often visitors convert to your set goal – expressed as a percentage. One page on your site might have a 4% conversion rate (4 out of 100 people reached the end goal of whatever you wanted them to do) and another page might have a 26% conversion rate (26 out of 100 people did what you wanted them to do). Off course, since every website is unique by itself, you can be the only one to judge if your conversion rate is “good enough” (although you can always use Google to spot certain trends in your demographic off course). In the end, though, there’s almost always room for improvement. And because there’s room for improvement it means you’re leaving money on the table.

Why should you care?

You are most likely paying to get traffic to your site (advertising money or just plain money spend on marketing). When you get a higher conversion rate you will end up with a better Return On Investment (ROI). Let’s say for example you improve your conversion rate by even 1%, this might result in thousands of dollars increase in revenue. It means more money in your pocket!
It is more cost-effective to convert a higher percentage of visitors you already have than to attract more visitors.

As explained earlier, as long as there is room for improvement, there is money being left on the table. It is not just nice graphs you are looking at, your conversion rate is a measure of how successful your business is. Whether you’re growing or shrinking or how healthy your company is. You should care about your conversion rates because when you improve it by even 1%, it might results in thousands of dollars increase in revenue without spending extra advertising dollars or any additional marketing. It means more money in your pocket!

  • Higher conversion rate = better ROI
  • More cost effective than finding more visitors
  • Defends against limited patience of visitors

How can you improve your conversion rate?

Optimization is all about getting more of the right kind of visitors to your website. It is important to keep focused on optimizing to find more customer. Who are looking for your product or service and will help grow your business. Conversion Rate Optimization (CRO).

So where do you start? You take an existing webpage with a goal. If you aren’t already doing it, start measuring the current conversion rate. Then start making changes to the page you think will increase that conversion rate. There are lots of different possibilities out there to start testing your theories against the current page using tracking software (for example Google Analytics, KISSMetrics or Mixpanel). If your changes convert better? Keep them! If they don’t – back to the drawing board and start again.

The possibilities to start testing changes on a particular page are only limited by your imagination. You can start testing and tweaking everything, from visuals, to copy, to fonts, to designs, to the layout of a page, the colors of your buttons, etc. etc. If you’ve got the time for it, you could literally start testing small changes on a single page forever to ever on keep increasing the conversion little by little.

It’s important to understand, however, that optimization is about getting more of the right kind of customers—not just blindly optimizing the conversion rate of a given page or campaign. It won’t do you any good if the people you’re acquiring are the wrong fit for your business. It’s important to keep the focus on optimizing to find more customers who will love your product and help you grow by spreading the word. Everything else is a waste of your time and resources.

What do you need to measure?

If you can optimize so much on your website, where do you start with measuring? What are the things you need to focus on first? Let’s start with an overview of the things you can measure to see your current rate of conversion. From there on you can start identifying your trouble spot and think of an action plan to start making changes.
First of you need to to know your current state of conversion so:

#1 Your Total Conversions
This is the number of people who finished whatever it is you defined as them finishing up to the goal line (remember this can be the number of email subscribers, the number of people who made a purchase, etc.)

#2 Your Conversion Rate
Simply put, take your total conversions and divide this by the number of visitors to your site. For example, a site with 10.000 visitors and 100 conversions has a conversion of 1%.

Now we’ve set our baseline. But how long are people spending on your site? Which pages are they visiting while they are on your site? These numbers can help you form some testable hypotheses. Looking at things like your Bounce and Exit Rates as well as your engagement metrics, is the first step in trying to make sense of it.

#3 Bounce Rate
Your Bounce Rate is the percentage of people who only view one page on your site and leave straight after. People come to your website and apparently aren’t finding what they’re looking for so they leave almost immediately. As you can understand this a high number here, is not a good thing.

#4 Exit Rate
While the Bounce Rate is the percentage of people leaving straight after visiting only one page, for every page there is also a specific Exit Rate. The Exit Rate is the percentage of people who leave your website, after visiting a page. Your Exit Rate lets you know the last page your visitors view before they move on. If this number is very high on a specific page, that specific page should ring some alarm bells.

#5 Average Time on Site
The following metric is an engagement metric. The Average Time on Site of your visitors gives you a general idea how long people are sticking around. This number will be lower if you have a higher bounce rate, because of course visitors aren’t staying around on you site long enough to do whatever it is you want them to do.

#6 Average Page Views
Average Page Views is another example of an engagement metric. It tells you how many pages on average a visitors views before leaving. More page views can give you the impression of better engagement, but it can also mean a lack of clarity. They visit more pages, because they are searching for something and might end up in not converting.

These are the metrics that matter the most, if you have these all set up then you can start figuring out which pages deserve your most attention!

Ready to Improve Conversion Rates?

Let us know what challenges you’re facing and where you’d like to be with your business goals and let’s see how we can move forward together.

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