At Three Girls Media, we’re big believers in using data, analytics and other forms of business intelligence (BI) to track our clients’ success. We offer our clients extensive analytics reporting for social media marketing (SMM) campaigns and other digital marketing services, like tracking clicks, likes, follows and more, in hopes of showing a positive return on investment (ROI) or return on ad spend (ROAS) and, in the end, develop a successful marketing strategy. Another metric often tracked to measure marketing success is conversion rates; that is, what percentage of engagements (e.g., clicks, likes or visits to web home pages) converts to sales or other business? Does your company track conversion rates? Should it? Let’s explore whether tracking conversion rates might be useful for you.
The first thing to understand is what a conversion rate is. As Max Freedman puts it in Business News Daily, “A conversion is a customer action aligned with the goals of your marketing or advertising campaigns.” A conversion rate measures the number of customer actions (i.e., “conversions”) divided by the total number of visitors to your site or clicks on your post. For example, if your site gets 100 new clicks this month and makes 20 new sales, your conversion rate is 20%. Simple enough, right? But why is that important?
How much growth does all that nurturing produce?
Obviously, you’re in business to do business; your ultimate goal is to turn a profit by providing goods and services to paying customers. As a result, anything that drives traffic your way and generates new customers is a good thing. You’ve likely either put a lot of work into your digital marketing campaign or spent some money on hiring an experienced marketing firm to do it on your behalf. Tracking your conversion rate tells you how and whether that level of investment is paying off.
If your website or social media posts aren’t producing an adequate ROI (or ROAS), it could be time to reassess your approach and rethink your marketing strategy. If they work in some areas but not others, that could be a sign it’s time to shift your focus and redouble your efforts where they work. Your business needs to invest its time and marketing dollars wisely. Improving your conversion rate is one way to ensure you’re spending your advertising budget the right way and to increase your ROI.
In addition to maximizing your ROI, this list from Business News Daily offers some other reasons many businesses conversion tracking useful:
Metrics are obviously important. Business planning centers around goals, as should your marketing strategy. Like other analytics, tracking conversion rates helps you measure your company’s performance against your goals. Not every tool is right for every job, however, and not every metric is as compelling for every industry. Different industries measure success in different ways. Likewise, buying decisions (and what “buying” even means) are different in different industries. You wouldn’t expect a giant aerospace manufacturer like Boeing to measure success using the same yardstick as a small software-as-a-service (SaaS) startup. What determines a “good” conversion rate varies by industry, as does its effectiveness as a performance metric.
If you work in e-commerce, tracking conversion rates may prove useful.
By studying conversion rates within your industry, you get an idea of what your target might be. For example, within e-commerce, this report from Monetate shows an industry-average conversion rate of 2.9%. If you’re analyzing BI for an e-commerce firm, that should help you determine a target; you’d like your conversion rate to be somewhere in the neighborhood of 3%. Within the professional or financial service industries, however, you’d want to aim much higher to keep up with your competition.
Unbounce recently published a comprehensive Conversion Rate Report available for download that parses its results by industry, making it very useful for understanding whether and to what extent conversion rates are a helpful analytic for your company.
If your conversion rate isn’t where you think it should be for your industry, there are some simple ways to improve it. In addition to adjusting how your advertising budget is allocated and adjusting the focus of your marketing campaign, Business 2 Community recommends taking these simple steps: