The conversion rate is calculated by dividing the number of conversions by the total number of ads that resulted in a conversion.
First, you need to know what a conversion is.
Depending on your goal, it could be a person who signs up for your email list, someone who makes a purchase, or in the case of advertising, it could take simply a page view.
The conversion rate is a percentage.
In other words, your conversion rate tells you the percentage of people that came to your site and took the conversion goal action you’ve defined.
You can use this formula to calculate the conversion rate:
Conversions / Visits = Conversion Rate
Let’s say that 1200 people visited your squeeze page, and 300 of them joined your list.
300 divided by 1200 equals .25 or 25%.
Thus, 25% of people who come to your squeeze page sign up.
Why do you need to know your conversion rates?
Because it tells you what’s working, how well it’s working, and what needs improving.
It gives you a basis for testing A against B and seeing which one converts better. Because the better you convert, the less traffic you need to get the same results, and the better results you can get from the same traffic.
In online marketing, conversion rates are everything. Businesses live and die by the conversion rate because conversions result in sales, while a lack of conversions or not enough conversions to cover costs spells doom.
That’s why finding ways to improve their conversion rate is every marketer’s job.