What is a Conversion Rate?

Whether you market on the Internet or your market offline, one of the most important numbers you must constantly try to improve is your conversion rate.

Simply put, a conversion rate is the results of a particular campaign expressed as a percentage. And there may be multiple conversion rates in one sales process.

Let’s take the example of PPC (Pay Per Click) advertising on Google, where you want to drive sales to your business…

– If your PPC ad on Google is clicked 100 times from 2,000 views, your PPC conversion rate is 5%
– If, from those 100 visitors, you receive 20 phone call enquiries, your website conversion rate is 20%
– If, from those 20 phone call enquiries, you make 5 sales as a result, your sales conversion rate is 25%

So from this one campaign we’ve broken down each stage of the process and tabulated the conversion rate. By doing this we can test and track and continually improve each conversion rate over time.

By increasing any of these conversion rates you increase your sales, and profits, overall.

The reason a conversion rate is so important in search engine marketing is because of the cost of driving targeted internet traffic to a website.

Using paid advertising to drive traffic to your website can be very profitable… but it can also be very expensive, especially in highly competitive markets.

Often, the most successful company in a particular market online is the one which has the highest website conversion rate of visitors to enquiries (or sales), because it can afford to pay more for traffic, and still make a profit.

And for companies which rely on the Internet to make the final sale (different from service companies which generate leads from the Internet), the conversion rate will make the difference between success and failure.


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