What is a sales conversion?
Conversion in sales is the percentage of people who made the target action (purchased, subscribed, left a request), of the total number of visitors. For example, 1000 visitors entered the store in a day, but only 100 of them made a purchase of goods. The conversion in this case will be equal to 10% (100 sales / 1000 visitors * 100).
This indicator is considered one of the most important in marketing, as it shows the effectiveness of actions. Measured in percentage.
Depending on what we analyze, the initial data for calculating the conversion changes. Let’s take a few examples to understand.
Analysis of store sales – the ratio of those who bought and all visitors.
Analysis of contextual advertising – the ratio of targeted actions made and transitions from advertising.
Analysis of e-mail distribution. Here are a few examples to show that you can count the conversion for anything:
- The ratio of the opened and total number of sent emails.
- The ratio of forward to the total number of sent emails.
- The ratio of those who followed the link and all those who opened it.
- The ratio of those who made the target action and all those who switched from the mailing list.
- The ratio of those who took the target action and the total number of emails sent.
How to calculate conversion?
The conversion is calculated according to one formula, regardless of the areas of activity of a particular organization.
Conversion = Number of sales / Total number of visitors * 100%
The calculation formula is easy and does not require any supernatural knowledge and a large amount of data.
Why do you need to count?
Conversion calculation is an action that is necessary to evaluate the effective functionality of an operating company. Many entrepreneurs cannot logically explain why the traffic of resources or the number of visitors to retail outlets show high numbers, at the level of several thousand visits per day, and only a few bring things to real purchases and orders.
Also, many managers of both marketing companies themselves and organizations that use their services cannot understand the low effectiveness of advertising actions when huge financial injections are made into advertising, and the return on this is at very low rates relative to expectations and invested money. .
For this, a competent and accurate calculation of indicators is needed, followed by a mandatory analysis. In this way, executives can get their minds on the ground and find solutions to the problems for the business that hinder the rise in profits, which is a prerequisite for the development and existence of the business.