- 20th Dec '22
- Sell SaaS
- 19 minutes read
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SHAREIs a 21% conversion rate good?
Conversion rates are an important metric for businesses. The goal is to convert as many people into customers as possible, and this requires understanding how to calculate them properly. If you want your business to grow, then knowing these numbers will help you understand which strategies work best and where the gaps lie. But what exactly does "good" mean when it comes to conversion rates? What makes a number “good”? And why do some companies have much better conversion rates than others?
We'll try to answer all those questions today by looking at different types of conversion rates, including average, peak, and bottom line rates, and we'll explore whether there's any way to improve upon them. We've also got some helpful tips that can help you get more out of each visitor who lands on your site -- even if they don't end up becoming paying customers.
What is a good conversion rate 2022?
Before we dive into specific metrics like conversions per visit (C/V), page views per session (PPS), and customer lifetime value (CLTV) -- all key factors in determining whether your company has a high enough conversion rate -- let's first take a look at what constitutes a "good conversion rate." This depends largely on the type of product you're selling. For instance, if you sell software products, then a conversion rate of 4 percent might be considered great because it means you just sold four new licenses every 100 visitors. But if you're selling shoes online, then a conversion rate of 1 percent could still be considered successful given the nature of footwear retailing.
The main thing here is that, while all industries have their own unique metrics, a good conversion rate should fall between 2 percent and 5 percent. Anything above that threshold would not only indicate success but also indicate something beyond the norm. As such, a C/V ratio of less than two is generally considered bad, whereas anything over five is excellent. However, it doesn't necessarily follow that a low C/V indicates a poor conversion rate. It simply means you need to optimize your entire funnel from landing pages through checkout.
What is a 5% conversion rate?
In order to figure out what percentage of visits actually result in purchases, we often use the term "conversion rate," which refers to the percentage of people who complete a transaction after visiting your site. In other words, a conversion rate is the amount of money that someone spends on a specific item divided by the total number of visits made to the site. While this may seem simple enough, it gets trickier when you start talking about multiple items purchased within one purchase event. So if I buy three pairs of shoes with my credit card and make one payment for $100, that's technically not one single sale since I bought three separate things. To account for that, we usually refer to a "single unit gross profit margin" instead of a standard conversion rate. Single unit gross profits measure the revenue generated from individual transactions rather than overall sales.
As far as actual percentages go, however, a 5 percent conversion rate is pretty darn good. That's roughly what Amazon achieves on its sites, according to Statista data. Similarly, eBay boasts a 7 percent conversion rate, although that includes both physical goods and services. Apple claims a 15 percent conversion rate, which isn't quite as impressive but still very solid nonetheless.
However, you shouldn't necessarily expect to achieve that exact same level of performance yourself without doing everything right. You won't see these kinds of figures unless you put in extra effort to maximize your site's ability to generate sales. That said, most small businesses tend to hover around the 2 percent mark, so if you're already hitting that target then congratulations!
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Is a 3% conversion rate good?
Now that we know what a good conversion rate looks like, we can move onto comparing our current efforts against that benchmark. How well do our actual numbers stack up next to our goals? Well, that depends entirely on the kind of business you run. Some websites are built specifically to cater to shoppers, while others exist to promote brand awareness. Either way, it's crucial to realize that conversion rates are affected by several variables, not just your site design. For example, you probably wouldn't expect to hit 20 percent conversion rates if you offered free shipping on every purchase.
To find out how well your site performs compared to similar companies, you can head over to Google Analytics and perform searches for terms related to your niche. Then you can compare your results to other comparable sites' stats to determine whether or not you're getting the job done. Alternatively, you can download a tool called SimilarWeb to check out competitors' traffic volumes and conversion rates. These tools aren't perfect, though, so always keep an eye on your own statistics so you don't miss anything.
Is a 10% conversion rate good?
If you think that 5 percent is good, then maybe 10 percent is too much? After all, if you were able to reach that point, it must surely mean that your site was performing exceptionally well. Unfortunately, no matter how hard you try, it's impossible to hit a perfect conversion rate across the board. Even top brands struggle to maintain a steady stream of repeat clients.
While you certainly don't have to aim for the sky, it's definitely worth trying to increase your conversion rate wherever possible. One strategy that works particularly well is cross-selling, whereby you offer additional options to prospective buyers once they've taken action. When you add up all of the potential profits associated with various offers, it becomes clear that having a strong conversion rate is essential for long-term growth.
For example, consider a shoe retailer that sells six styles of sneakers and uses coupons to incentivize sales. Each pair costs $50, but consumers can choose to pay either full price or half off depending on the coupon they receive. Assuming that 80 percent of users redeem the coupons, the retailer ends up making 40 cents on each pair of sneakers sold. Now imagine that the retailer doubles down and adds another discount option -- say, offering an extra 50 percent off if people spend $200 on the site before purchasing anything else. Those savings bring the net profitability per pair to just under eight dollars. By adding up all of the discounts available, the retailer increases his earnings by almost 70 percent. Of course, if he had lower conversion rates, that same tactic would fail miserably.
So yes, a good conversion rate is indeed 10 percent or greater, especially with the advent of omnichannel shopping. But again, you can never hope to attain perfection. Instead, focus on improving your site's usability and optimizing your user experience so that everyone feels comfortable buying whatever it is they came for. Doing so will ultimately lead to increased engagement and hopefully better retention, leading to improved conversion rates overall.
Conversion rates are important metrics for determining success and failure when it comes to online businesses. Conversion rates are used as benchmarks to measure how effective your landing page or ad campaign was at driving traffic to your site, which leads to revenue. The goal with any digital advertising strategy should be to optimize your campaigns so that you have an optimal mix between conversions (i.e., successful leads) and nonconversions (i.e., people who didn't take action).
When looking at conversion rates in general, we often consider them from an ROI perspective. That means that if one business has a 20% conversion rate while another only has a 4%, then the company with the lower conversion rate will generate more profit per dollar spent because they generated four times more leads than their competitor. However, this only applies if these companies were spending equal amounts of money on ads. If one company spends $1 million dollars on ads, but generates just five percent fewer leads compared to its rival, that company would still win out financially. It's not always about converting the most leads -- sometimes it's about generating enough leads overall.
In order to figure out the best way to calculate conversion rates, you'll need to understand some basics first. We've already covered some basic concepts like cost per click (CPC), cost per acquisition (CPA), average sale value (ASV), and lifetime customer value (LCV). All of those factors can help determine whether your ad campaign is working well. For example, if you're using CPC bidding strategies, you want to make sure that your costs aren't too high relative to your competitors' bids. You also want to make sure that your costs are low enough relative to the amount of clicks you get back. This allows you to make up for lost profits through increased margins.
The same goes for CPA models. Make sure that your costs don't exceed 1 cent for each lead acquired, otherwise you won't see much return. In addition, you want to make sure that your costs are high enough relative to the ASVs you receive from your customers. Then, again, you can increase your margins to make up for losses. One thing to keep in mind here is that there isn't necessarily a direct relationship between cost per lead and cost per acquisition. While both measures represent the total spend of your ad campaign, they may differ greatly depending on your audience and bid structure.
If you use something other than CPC or CPA as your model, such as LCV, it's going to depend heavily on the type of product or service being sold. For instance, if you sell books online, your target market probably doesn't care very much about shipping fees or taxes. So, instead of calculating the "cost" of products, you might look at the ASV or LCV. There are different ways to go about doing this, however, and you'll need to do due diligence before making decisions.
Another factor to consider when evaluating conversion rates is the time period over which data is collected. When working with long term statistics, you want to ensure that all variables remain constant across periods of time. Otherwise, you could end up comparing apples to oranges simply because things change. For example, let's say that your company sells books online. At one point in time, Amazon had a 70/30 split favoring itself versus publishers. Nowadays, the situation has changed significantly. Books published today are far less likely to appear on Amazon. Instead, many authors prefer to publish directly on Kindle Direct Publishing (KDP). Since KDP offers better terms to writers, it's now become the preferred option for new releases. As a result, book sales on Amazon have dropped dramatically. Therefore, you'd have to adjust your conversion rate calculations to account for these changes.
There are plenty of articles that explain exactly how to calculate conversion rates, including ones from HubSpot. What I'm trying to emphasize here is that you shouldn't blindly assume anything without researching everything yourself. Even though conversion rates seem pretty straightforward, the devil lies in the details.
Let's talk about some specific questions regarding conversion rates below. Keep in mind that everyone uses slightly different methods when calculating conversion rates, so no one answer applies universally. These answers apply primarily to B2B SaaS solutions, although similar principles apply to almost every other vertical.
Is a 30% conversion rate good?
It depends. On the surface, 30% seems impressive. But keep in mind that this number represents the net number of prospects who converted into paid subscribers rather than the gross number of visitors. It takes two steps to convert someone into a paying subscriber: (1) They visit your web page, read your content, and decide whether or not they want to signup, and (2) They actually pay for access after signing up. Therefore, if you have a lot of unqualified traffic coming into your site, chances are that even if a few qualified leads come along later, you'll never reach your full potential.
To avoid this pitfall, you want to focus on getting as close to 100% qualified leads as possible. To do this, you'll need to create an irresistible offer that converts a large portion of your traffic. By offering free trials, discounts, early bird specials, etc., you give users incentive to subscribe immediately. Once you establish trust with your audience, they'll feel comfortable sharing sensitive information like email addresses, credit card numbers, personal contact info, etc. With that information secured, you can begin nurturing relationships with your leads. Over time, you'll build up credibility within your community so that they feel confident revealing further private information. Eventually, you'll have 100% qualified leads.
Is a 12% conversion rate good?
This question makes less sense than the previous one since there really isn't anywhere near a "good" conversion rate right off the bat. Your goal should be to maximize your conversion rate, not set arbitrary thresholds based on the lowest conversion rate you think you can achieve. You should strive to improve upon your current performance. However, if you're seeing a consistently poor conversion rate, it might be worth considering why that is happening. Perhaps there's room for improvement somewhere else. Maybe your copywriting needs work. Or maybe you haven't been optimizing your landing pages properly. Whatever the case, improving your conversion rate should be your top priority.
Is a 5% conversion rate good?
Once again, the answer depends entirely on where your starting point is. In my opinion, a 5% conversion rate is absolutely terrible. If you're able to squeeze out a measly five percent from your entire user base, you're doing extremely poorly. Obviously, this number varies wildly based on many different variables. First and foremost, you must compare your results against others. Are you performing worse than comparable websites? Is your competition having better luck attracting traffic than you are? How does your overall site perform? Any of these factors could affect your bottom line, especially if your company relies solely on organic search engine optimization (SEO).
If you're unable to find comparable sites, you should ask yourself what kind of improvements you could make to boost your conversion rate. Could you add more compelling benefits to your product? Would reducing your prices hurt your brand image? Are you missing out on valuable opportunities by focusing exclusively on SEO? Do you need to rethink your messaging around your offerings? No matter what you choose to do, remember that your conversion rate is ultimately determined by the quality of your leads. Don't waste too much energy worrying about your conversion rate unless you know specifically what you need to do to improve it.
What percentage of conversion rate is good?
As mentioned previously, there isn't a universal definition of what constitutes a good conversion rate. Different industries tend to define conversion differently. Some industries require a high level of qualification among their leads while others allow anyone to join. Regardless of what industry you operate in, it's usually helpful to look at trends over longer periods of time. This gives you insight into what works and what doesn't, allowing you to tweak your approach accordingly.
For example, let's say that you run a travel agency. After years of operating under traditional brick-and-mortar locations, you recently launched a mobile app that enables travelers to browse vacation packages on demand. Although the launch went smoothly, you noticed that your conversion rate plummeted following the initial spike. Why did this happen? Was your landing page optimized correctly? Were your emails ineffective? Did you miss an opportunity to introduce your clients to additional services? These are all legitimate possibilities. And unfortunately, none of them will ever be known until you dig deeper.
Keep in mind that conversion rates fluctuate throughout the year based on seasonal fluctuations and various other reasons. Sometimes it's difficult to predict what will happen down the road, but it's definitely useful to monitor your stats over several months to identify patterns.
Hopefully, this article helped clarify some common misconceptions surrounding conversion rates. Before jumping straight into implementing a new tactic, it's imperative to fully grasp the fundamentals behind your efforts. Without knowing what you're doing, you'll inevitably fall victim to bad tactics.
When you're looking to optimize your conversions for an online business, it's important to know how much revenue each sale brings in and whether there are any areas that could be improved. A high conversion rate can mean more money coming into your pocket from every customer who makes use of your products or services. However, if you have too many customers leaving without making purchases, then you may not see as large of profits as you would like.
A conversion rate is defined as "the percentage of visitors (or leads) that convert to buyers" - this means that out of all the people who visit your site, only a portion will end up purchasing something. For example, let’s say that 100 people visited your page and 20 purchased within 24 hours. This would give you a conversion rate of 0.2 percent. The number of actual purchases made divided by the total amount of visits gives us our conversion rate. So with just one purchase out of 200 visitors, we've got a 5 percent conversion rate.
Keep reading to find out why having a low conversion rate isn't necessarily bad, but knowing exactly where you stand is key when optimizing your website.
What is considered a good conversion rate?
In order to really get a sense of how well you're doing at converting users into paying customers, it helps to have some idea about what constitutes a good conversion rate. In general, most businesses are aiming to achieve around 10 percent of their traffic converting into paying customers. If you look at successful companies such as Apple, Microsoft, and Google, they have achieved far above average conversion rates. These three companies saw nearly 30 percent of their traffic converting into paid accounts. While these numbers don't apply to everyone, understanding what a good conversion rate looks like can help you set realistic goals.
The best way to understand what kind of conversion rate you should aim for is to take a look at other websites similar to yours. You can do this using tools like Similarweb, Alexa, or Compete. Once you have access to data like this, you can analyze which sites are getting the highest percentages of traffic and sales.
If you're trying to figure out whether or not your current conversion rate is acceptable, make sure you compare apples to apples. Take a look at comparable sites in your niche instead of comparing yourself against big brands. Then, once you have an idea of what kinds of conversion rates are common in the market, you'll be able to decide if your efforts are going towards improving things or moving backwards.
What is a good form conversion rate?
Another thing to consider when talking about conversion rates is the form factor itself. Some forms are better than others. Many times, a simple contact form is ideal because it allows you to collect information quickly while keeping costs down. Other types of forms allow people to send payments directly through PayPal or Stripe, so you won't need to worry about credit card processing fees.
It’s also worth noting that certain industries tend to work harder than others to ensure that people fill out the necessary fields before completing the transaction. Retailers often offer discounts if shoppers provide accurate shipping addresses. Hotel chains often require guests to enter billing information prior to checking in.
These practices result in an increased likelihood of people filling out the required fields. Therefore, retailers and hoteliers tend to have higher conversion rates than other sectors.
How does this affect your own conversion rate? Well, you want to keep the cost of collecting payment low enough that people feel comfortable providing their personal details. But if you aren't offering any incentives, then you might lose potential customers because they weren't willing to put themselves out there.
So, what type of conversion rate do you think you should strive for in your own business? It depends on several factors including your product prices, the value proposition, and your target audience. If you sell luxury items, you probably shouldn't expect to compete with Amazon. Their price point is significantly lower than yours, and their conversion rates reflect this fact. On the other hand, if you focus on selling quality goods at reasonable prices, then you may be able to compete successfully with smaller competitors.
You should always try to improve your conversion rate, even if you're already operating at a respectable level. If you notice that your competition has been gaining ground over time, then you should ask yourself what actions you could take to bring your conversion rates back up to speed.
Is a 3.5% conversion rate good?
While it seems obvious that a low conversion rate indicates a problem, it doesn't automatically follow that a high conversion rate is great either. There are plenty of examples of websites with very high conversion rates that haven't sold anything since launching years ago.
This is largely due to the fact that no matter what the conversion rate is, you still have to worry about maintaining a steady stream of new customers. If you run a popular blog, for instance, then you may attract thousands upon thousands of readers every day. Even though your conversion rate is quite high, if those same people never come across another post, then nothing changes.
As long as you continue to maintain a consistent flow of new subscribers, then you'll eventually start seeing a positive return on investment. If you ever wish to quit blogging altogether, simply change the URL of your domain name and you can redirect all of your traffic elsewhere.
But suppose you're running a small startup with limited resources. Do you really want to spend $10 per month on AdWords to drive traffic to your store? Or perhaps you'd prefer to hire someone else to handle the task. Either option will likely increase your bottom line, but both options carry their own risks.
Conversion rate optimization is tricky business, especially if you don't have unlimited funds to play with. The truth is that it takes a lot of hard work to reach optimal levels, and sometimes it's easier to do less rather than go all out. Just remember that you can always revisit your strategy later on.
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