Every company needs well-defined goals to avoid stagnation and thus boost the business. For the strategy to be efficient, there must be indicators that help managers understand the brand's scenario. This is when the conversion rate is welcome.
This is an essential metric for organizations that have a presence in the digital world. In general, it shows the percentage of customers who are progressing through the sales funnel .
Want to understand this concept better, learn how to calculate the conversion rate and discover tips to increase engagement? Continue reading the text and check it out!
Person in yellow blouse doing calculations on calculator holding papers in the other hand and writing in front
What is conversion rate?
Conversion rate is a very common metric in the digital world. It indicates the number of people who went through the stages of the sales funnel (top, middle and bottom). Therefore, it is used to calculate how many visitors, i.e. leads, became customers.
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The main objective of this architects email lists parameter is to analyze a company's return on investment in relation to the number of sales. However, it can also be used to measure the efficiency of digital marketing strategies.
In general, it is quite versatile and can be used by several companies regardless of the sector.
Why is it important to track conversion rate?
It is very important to understand and monitor the conversion rate because it will indicate the maturity and efficiency of a website or sales channel.
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This indicator is one of the main parameters for knowing how the company's revenue is doing. This is because it shows the strategies that are working and managing to guarantee a greater number of customers.
Furthermore, it is possible to identify those that did not work and, in this way, bring new insights.
How to calculate the conversion rate?
To calculate this rate, simply divide the number of conversions, that is, users who performed some action (clicked on a button, purchased, etc.) by the number of total visits or contacts.
Therefore, the formula for the account is as follows:
(Conversions in the period / total contacts) * 100 = conversion rate (%)
Want a practical example? Well, imagine that a website received 5,000 visits during the month and, of those, 1,500 made purchases, so:
(1,500 / 5,000) = 0.3 * 100 = 30%
Therefore, this company's conversion rate is 30%.
Easy, right? For the calculation to work, you must remember that the data analyzed must be taken from the same period.
What is a good conversion rate?
A good conversion rate will depend on the goals set by each company . Therefore, they are variable and each organization will need to understand which strategies have been defined to establish what will be a good result.
For those who are completely lost, one solution is to know your competitors and set goals according to your niche. However, it is important to emphasize that this metric needs to be constantly updated to ensure valuable and relevant insights.
Also, compare the results across all stages of the sales funnel. Your conversion rate from visitors to prospects may be 60%, but your conversion rate from leads to customers may be 3%.
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With this, it is possible to see that the strategies for the first stage were efficient, while those for the second and third were not so efficient. Therefore, it is recommended to change the planning focusing on this part that needs improvement.