At its core, the conversion rate measures the effectiveness of a strategy in turning potential customers into actual ones. Knowing how to calculate conversion rate properly helps businesses identify the successful (or unsuccessful) elements of their marketing efforts. It also facilitates targeted adjustments and efficient budget allocation.
Understanding and optimizing conversion rates can lead to sustained growth and success. It can translate into more sales and increased customer loyalty. That’s why tracking conversion rates is a priority for more than a third of marketing leaders.
Learn how to calculate the conversion rate with our step-by-step guide.
The conversion rate indicates the percentage of website visitors who take a desired action, such as making a purchase or requesting a demo. In simpler terms, it indicates how your marketing efforts turn users into customers or subscribers.
Calculating conversion rates helps you make more informed decisions about your marketing strategies. It provides actionable insights into which channels and campaigns are most effective.
Depending on your objectives and industry, you may track different types of conversions.
📈 Optimizing campaigns based on conversion rate data can maximize your return on investment (ROI). It can also help you achieve your growth objectives. More on this below.
To calculate the conversion rate, you can use the conversion equation or the conversion rate equation. This involves dividing the number of conversions by the total number of visitors. Then, multiply by 100 to express it as a percentage.
As previously mentioned, conversions can vary depending on your business goals and objectives. It’s extremely important to identify what counts as a conversion for your business.
🔄 If you’re an eCommerce store, a conversion might be a completed purchase. If you’re a B2B SaaS, a conversion might be a lead form submission or a request for more information.
The conversion rate formula is quite simple. Mathematically, it looks like this:
Conversion rate formulas may follow a similar structure, but their nuances vary by industry. Each industry adapts the basic conversion rate formula to its unique business processes and customer journey specifics.
⚖️ This customization allows for more accurate measurements of marketing effectiveness and better alignment with industry-specific goals and challenges.
Our conversion rate calculator is a user-friendly tool designed to simplify the process of calculating conversion rates.
With just a few clicks, you can determine your website’s or marketing campaigns’ conversion rate. Input the number of total and converted leads, and the calculator instantly generates the conversion rate percentage. It saves time and effort by automating manual calculations.
🧮 The conventional practice is to calculate conversion rates weekly or monthly. With fluctuations in traffic or business dynamics, you may find it beneficial to adjust this frequency accordingly.
Let’s examine the pros and cons of using automated tools and manual calculations to find conversion rates.
Here’s a step-by-step example of how to calculate the conversion rate for B2B.
Let’s say you’re running a B2B marketing campaign. Over the course of a month, your campaign generated 200 leads. Out of these leads, 20 converted into paying customers.
To calculate the conversion rate, apply the above-mentioned formula.
Conversion rate = (Number of conversions / Total number of leads) x 100 = (20 / 200) x 100%
Conversion rate = 10%
A good conversion rate is an indicator of the effectiveness of your marketing and sales efforts. What qualifies as a good conversion rate can vary depending on the:
Generally, a conversion rate above the industry average is considered good. However, specific benchmarks differ across sectors. For example, while a 2% conversion rate might be respectable in one industry, it could be below average in another. Typically, a good conversion rate aligns with your business’s goals and expectations.
Whether you’re in eCommerce, B2B, or SaaS, knowing where you stand can provide valuable insights to improve your efforts. Let’s explore the typical conversion rates in three different sectors.
Conversion rates for eCommerce platforms rely on brand loyalty and recognition. Across all eCommerce platforms, the typical conversion rate falls below 2%.
When an eCommerce website attracts substantial traffic from repeat customers loyal to the brand, the conversion rate tends to be high. Brands with a small customer base and a few product reviews are unlikely to achieve high conversion rates.
💰 If you’re selling electronics, you might aim for a higher conversion rate due to the higher average order value. At the same time, a niche boutique selling handmade jewelry might have a lower but still acceptable conversion rate.
B2B conversion rates typically lag behind those in business-to-consumer (B2C). That is due to longer sales cycles and complex decision-making.
If your B2B conversion rate is high, many leads are becoming your clients. But if it’s low, there may be some room for improvement. Through proactive efforts to reduce churn and prioritize customer satisfaction, your B2B company can improve its overall conversion rates in the long run.
Let’s explore the diverse landscape of B2B conversion rates with industry-specific benchmarks.
Sources: ruleranalytics.com; intellimize.com
SaaS conversion rate benchmarks differ based on factors like:
Businesses operating in the SaaS sector convert about 18% of their leads from free trials to direct sales — a significant benchmark for growth. There’s not a single benchmark for SaaS conversion rate, it rather depends on the channel and what kind of goal you’re measuring.
To increase conversions, SaaS companies focus on delivering exceptional customer experiences. They often offer free trials to attract users.
🏷️ Over the years, the industry has developed various SaaS pricing models to increase the product adoption rate.
To calculate the cost per conversion, you can use the following formula:
Here’s what each component means.
This formula divides the total cost of your marketing campaign by the number of conversions generated. For example, if your marketing campaign costs $1,000 and results in 100 conversions, the cost per conversion is $10.
To further refine your understanding of your marketing expenses, you may also want to calculate CPC (cost per click). This can help you assess the cost-effectiveness of your ad spend in driving traffic to your site.
💸 Understanding conversion costs is key for smart budgeting and ROI calculations. When you know how much it costs to get each conversion, you can see which marketing efforts are paying off the most. This helps you determine how to allocate your resources for the best results.
Conversion rate optimization (CRO) improves conversion rates by tweaking your website or marketing initiatives to encourage more visitors to take desired actions.
Consider the following strategies to improve your marketing conversion rates.
Analytics and data are crucial in CRO. Daniel Ivan, our performance marketing manager, explains how to carry out CRO like a pro:
“By thoroughly examining your website’s aesthetics, informational structure, navigational flow, and backend functionalities, you can pinpoint the hindrances and prospects for elevating your conversion metrics. The essence of CRO lies in the harmonious blend of empirical evidence and inventive ideation aimed at uncovering the preferences of your target demographic. By enhancing their online journey, you cater to their expectations and significantly amplify the overall conversion ratio.”
By analyzing user behavior, customer preferences, and interactions with your website or marketing materials, you can gain valuable insights to optimize conversion pathways. Tools like Google Analytics, Hotjar, or Optimizely can help you achieve just that.
The following examples showcase proven tactics for boosting conversion rates.
Image source: comodo.com
Comodo, a cybersecurity service provider, undertook a CRO initiative to boost the visitor-to-lead conversion rate of a key landing page. Through comprehensive UX research, they pinpointed critical user friction points. They leveraged insights from sales team interviews and customer satisfaction surveys to identify their most common customer pain points.
Following a radical redesign, an A/B test validated their approach, resulting in a 17.5% increase in conversion rates. This CRO initiative highlights how a user-centric design and personalized customer retention strategy can lead to higher conversion rates.
Image source: Grammarly app
Grammarly is a writing tool that offers real-time feedback to improve grammar, punctuation, and tone. The free version allows users to receive glimpses into premium features through modals. This tactic triggers the fear of missing out (FOMO), a powerful emotion that drives conversions.
Grammarly’s strategy demonstrates a successful CRO initiative, leveraging psychological triggers to increase conversion rates.
Images source: slack.com
Slack stands out with its impressive freemium conversion rate of over 30%. How did Slack achieve this? By providing users with a seamless onboarding experience and offering a freemium plan with key features. This allowed users to recognize the tool’s value while leaving room for additional features in paid plans.
Slack’s onboarding flow involves a smooth signup process, an insightful onboarding survey, and a brief product tour. Slack also incorporates elements of gamification and personalization throughout its onboarding journey. Adopting a similar approach can help you increase your web conversion rates.
You only have one chance to create a lasting first impression, which can determine whether you’ll win or lose a customer.
Analyze your current conversion rates, identify areas for improvement, and consider strategies like A/B testing and UX optimization. Track your progress, and watch your efforts pay off with better results and happier customers.
Iustina is a curious copywriter with an analytical mind and a demonstrated history in the advertising industry. She likes mixing words with data and is passionate about human behavior. When she's not at her work desk, you'll probably find her enjoying refreshing tea flavors, spilling stories on paper, or binge-watching true-crime documentaries.
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