Conversion rate: how to calculate and interpret it to win more leads

Here we go through what conversion rate is and how to use the metric to increase your sales.

• Conversion rate is not always the most important metric
• Conversion rate can be directly counterproductive if you misread it
• Raising your conversion rate is, at the same time, decisive for your digital success

Sunbird is a search specialist agency that builds the measurement and analytics behind a higher conversion rate. Here we share what we have learnt!

Conversion rate shows what % of your visitors complete a conversion (a desired goal).

It is an important KPI (key performance indicator), used to judge whether a website sells well or not.

Also known as: conversion ratio, CVR.

You define what a conversion is. As a rule it is when a visitor does something you want them to do on your website.

Conversions are usually split into macro conversions (strong signals) and micro conversions (weak signals).

• Purchase in an online shop
• Form submitted
• Trial account created
• Click on an email address
• Click on a phone number

When people talk about conversion rate, they usually mean how often macro conversions happen. Phone and email clicks are sometimes excluded, since they may just as easily be existing customers.

• Clicked through to social media
• Subscribed to the newsletter
• Visited several pages
• Visited the contact page
• Added a product to the basket

You work out a conversion rate by comparing the number of times the conversions you want to measure have happened with the total number of visitors. You can also use our tool above to calculate it quickly.

The conversion rate is stated as a percentage, so you need to multiply the figure from the equation above by 100.

You can calculate this conversion rate for several different conversions in the same report, or for each type of conversion separately.

Remember to use enough data. If you have few conversions, you may need to measure over a longer period. Otherwise the data is not significant, and therefore not reliable.

You can also measure the conversion rate for individual channels – Google Ads only, for example.

How deep you go depends on how many conversions you have. The purpose is to get reliable data you can act on.

If we are to give a concrete answer, a normal conversion rate for an online shop sits between 1-4%.

What a normal e-commerce conversion rate is in each individual case is hard to say. We have seen conversion rates of 1% that were considered very strong, and 3% that were low.

Generally, the conversion rate for an online shop falls as the price point rises.

We find it more interesting to measure ROAS – return on ad spend. In other words, what you get back for every pound you spend.

Doing this in Google Ads and other paid channels is usually straightforward. It gets harder once you have to factor in consultancy fees and staff costs.

Increasing the number of people who buy can, for instance, lower your average order value. Comparing and working towards a higher ROAS instead is our recommendation.

Working out your conversion rate for macro conversions is, on the other hand, more interesting.

A good conversion rate should sit between 2-5%.

But if you offer a free trial account, you should be higher. It can then reach up towards 15% or more. That depends entirely on how the offer is designed and on the level of competition.

The interesting part of measuring conversion rate is primarily not comparing yourself with others. It is more interesting to compare internally. For example:

• Comparing desktop and mobile
• Comparing different channels such as organic traffic, paid traffic and social media
• Seeing how it rises or falls over time
• Comparing different landing pages with each other
• It is essential for running A/B tests in your conversion rate optimisation

For the vast majority, conversion rate takes no account of lead quality or of what the visitor cost you.

Treating every visitor and every conversion as the same thing gives a false picture.

Say you have started running Display advertising, where the clicks cost little but the visitor is often not that interested. The conversion rate will probably drop – while the number of leads can go up.

If the cost per conversion is good, you should therefore keep the channel running even though the conversion rate falls.

So compare the right figures with each other. Acting on incorrect data can be directly damaging to your sales.

Tips for improving lead quality:

• Verify the volume, so that the number of leads in your tracking matches the actual number.
• If the leads coming in vary widely in quality, you can build some form of qualifier into your forms. For example whether the enquiry comes from a business or a private individual. In some cases you may not even want to count one or the other as a lead. That way, only good leads are counted towards your conversion rate.
• If you want to take quality into account and only qualify the ones that are genuine leads, you can work with offline conversion tracking. With that method, you (the sales team) qualify only the leads you consider to be real.

Most people reading about conversion rate naturally want to know what they can do to raise it.

Some of the methods we have seen lift a conversion rate:

• Be crystal clear about what you do and why someone should choose you
• Give clear incentives to act now
• Offer several different ways to convert
• Show previous work and references
• Show the advantages of working with you
• Review the mobile design

If you want to read more in depth, we recommend these posts:

• UX tips
• You have 8 seconds to capture interest
• How to double your website’s sales with conversion rate optimisation
• The psychology behind a higher completion rate

Comparing yourself with others is not the important part. Start from where you are and identify where you have room to improve. The purpose is that every update makes you a little better, and that you can evaluate different digital channels against each other.

Working on your conversion rate is, in our view, badly underrated. The costs are usually one-off, and the effect is positive across every channel. It can also lift both your SEO and your quality scores in Google Ads. We recommend an ongoing strategy where you improve it at regular intervals.

Good luck with raising your conversion rate!