We hear the term “conversion rate” tossed around a lot when talking about digital advertising. It’s ultimately how you determine the success of your marketing campaigns. The marketing professionals say, “The higher the conversion rate, the better.” But what does that even mean? And do you have a high conversion rate? Before you can calculate the conversion rate of your business, you first need to know what a conversion rate is.
What Is a Conversion Rate?
A conversion rate, put simply, is the percentage of your audience that completes a desired action out of your total audience. For example, if you want your audience to make a purchase on your website after they click your Facebook ad, the percentage of users who make purchases is your conversion rate. If you want users to complete a subscription signup, the percentage of users who sign up upon clicking your ad is your conversion rate.
You want a high conversion rate because it means people are buying what you’re selling. If your conversion rate is too low, however, it means your ads aren’t hitting their mark, and you may need to adjust your strategy. At this point, you’re probably wondering, “What’s considered a good conversion rate?”
What’s a Good Conversion Rate?
There are varying professional opinions about what is considered a “good” conversion rate. According to WordStream, your industry and business model ultimately determines whether your conversion rate is good or bad. If you know your conversion rate, WordStream has a benchmarking tool that lets you compare your rate to your competitors’ in your industry. WordStream says ideally, you want a conversion rate of 11.45 percent or higher. This places you higher than the average conversion rate.
Neil Patel, however, has a different take on what your conversion rate should be. He says in order to determine the best conversion rate for your business, you need a baseline. You do this by knowing what your current rate is. For example, if you currently have a two percent rate, you may not want to make 10 percent your goal by week’s end. Set a realistic goal for where you want your rate to be in the next 30 days, the next six months, and the next year. Whatever your current rate is, a good conversion rate, according to Patel, is anything above that.
But since we all feel more confident when we have specific numbers, Shlomo Trachtenberg gives us the average conversion rate through Big Commerce. He says it ranges between one and two percent. So if you want to set a baseline, aim for a two percent rate to start before shooting for the stars. Most online analytic tools provide your conversion rate, so you don’t need to do any hard math to calculate it.
Congratulations! You now have a better understanding of conversion rates. The next step is to pay close attention to your Facebook metrics and your audience’s behaviors on your website.
