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Online Marketing Performance Indicators, Part 5: Conversion and Conversion Rate
28.05.18 | 0 Comments | Author: Eva Pach

Gradually we’re coming towards the end of our series of articles on “Online marketing performance indicators“. Today’s subject is conversion and its derivative, the conversion rate.

Conversion is, in general, the induced transformation of a potential buyer into a more promising potential buyer or an actual buyer. The conversion rate tells us which proportion of a targeted group or of the users that have performed an earlier activity have gone on to perform a more desirable activity, which is typically at least one step closer to a purchase or an actual purchase itself. What you define as your desired activity is up to you and can vary from campaign to campaign. Typical closer-to-purchase actions are, for example, requesting further information, subscribing to a product information newsletter or asking for a quotation. Such actions usually qualify users to become sales leads.

A conversion has taken place when, for instance, an e-mail recipient has performed your desired activity, which might have been simply to open the newsletter or, much closer to purchase, to send you a product enquiry as a result of receiving the newsletter.

conversion rate, clicks

What is a good conversion rate?

Like with other measures to which I have introduced you in previous articles of this series, it is hardly possible to state across all campaign types how high a conversion rate must be to be classed as “good”, given that the preconditions and the objectives of every campaign is different.

Comparative studies on the subject of conversion rates have mainly focused on online shops: most define the conversion rate as the number of purchases in relation to the number of visitors or to the page views of the shop. For such cases, average conversion rates of between 2% and 4% have been determined. Adobe’s 2014 Digital Marketing Optimization Survey yielded similar results: the average conversion rate among respondents was 2.6%, with the top fifth of all shops averaging 4.5%.

However, for e-mail marketing in the B2B sector, these values have only limited significance. Potential customers in an online shop might act similarly to ones on a downstream landing page of an e-mail shot, but even then only if the ultimate desired activity is a purchase.

This is a general limitation of the conversion rate as an indicator: if you take another look at the equation above, the conversion rate is the number of conversions as a percentage of the recorded number of clicks. In reality, however, clicks are not at the beginning but actually close to the end of the path your contacts must take on their way to the desired activity. How many potential customers your direct mail campaign reaches, how many recipients open their e-mails and how many are interested enough to click – all this lies before clicking and thus does not go into the conversion rate at all. Basically, your conversion rate does not reflect the overall impact of your direct mail campaign but only what happens after the call-to-action element has been clicked.

To assess your direct e-mail campaign as a whole, the response rate is a better measure:

conversion rate, response rate, clicks

Whether you’re looking at the conversion or the response rate: both are indicators of the desired objective of your direct mail campaign. This is why they are better suited than anything I have previously described to tell you to what extent you have actually achieved your objective. However, as you will have gathered by reading this blog entry, both have their drawbacks: Depending on your marketing objective and what you want to find out, very different input values go into the calculation of these measures. So if you are assessing which of two campaigns was the more successful, you should be careful not to compare apples and oranges.

How does your company assess the success of its campaigns? Are conversion and response rates what you primarily look at? Or do you focus more on open rates and click rate

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