What is conversion rate and why is it important?

We’re into another new month – and we’re heading towards the end of Q1. How did that happen?

We got some great response to our last Bitesize & post we did around what churn is, so we thought we’d do something that we also get asked about, which is customer conversion rate. What is it and why is it important?

So, in our simple terms…

A customer conversion rate is the metric that measures the percentage of customers who make a purchase after enquiring about you. An example being someone who visits your website and then buys. This metric is important because it helps you understand how effectively you are attracting and converting prospects into customers.

A high conversion rate means you are providing a positive experience and everyone loves you and you’re doing a grand job. A low conversion rate means things aren’t quite as rosy as they could be.

Some simple maths…

Conversion rate (%) = number of purchases/ number of visitors * 100

So, if you had 100 customers visit your website and 5 of them made a purchase, your conversion rate would be 5%.

Where are the gaps?

As marketers we love stats. Because it give us something to work towards. What can we do to get the conversion rate up another 5%, 10%, 20%?

Here are some things to think about:

  • Can your website or store be optimised to give the best possible customer experience?
  • Have you stood in your customers’ shoes?
  • Do you ensure that your sales team know everything about your products and services can effectively communicate the value to customers?
  • Can you offer incentives, such as discounts or special promotions to encourage retention?
  • And more importantly what’s the impact of NOT improving your retention?

Try and take some time out to focus on understating your retention rate. Look at where your gaps are. And it’s even better if you can get someone outside of your business to look with you – a mentor, a supplier, or a valued customer.

A fresh pair of eyes makes all the difference.  And of course, we’re on hand to help too!