What is conversion rate optimization (CRO)?

What is a conversion rate in marketing?

Conversion rates tell marketers what percentage of their audience has taken a specific action, like clicking on an ad or making an in-app purchase. Marketers can gain insights into campaign and channel performance by tracking conversions and calculating their conversion rate.

How to calculate conversion rate

CVR is calculated by dividing the number of people who convert by the total number of people who had the opportunity to convert. This number is turned into a percentage to give you a conversion rate.

For example, let’s say an advertiser runs a campaign with an audience of 25,000 people. Out of that group, 1,000 people click on the ad (ie. convert). To calculate this example, divide 1,000 by 25,000 to get 0.04. Multiply by 100 to get a 4% conversion rate.

Identify your goals and conversions: Outline the overall goals of your business—do you want to generate leads, boost retention, or increase sales? Next, set out the actions your users need to take to meet these goals—for example, in-app purchases, newsletter sign-ups, or app installs. Keep in mind that conversion opportunities are scattered from the top to the bottom of the marketing funnel.

Analyze data and gather insights: Find out how your users currently engage with these actions. Use a reliable and accurate analytics tool to track and measure user interactions, drop-offs, and successful conversions, highlighting the areas that work and those that don’t. Using industry benchmarks, set targets for where you want each conversion opportunity to get to.

Test and learn: Once you’ve identified what’s working and what isn’t, it’s time to experiment. Optimizing conversion rates could involve content edits; color and layout changes; rescheduling timed events, like emails or push notifications; adapting user journeys, and more. Keep in mind that copy edits are often much easier to sign off, implement, and scale than new images or animations, so factor in your resources, budget and timeframe when planning any improvements.

In the initial stages of conversion rate optimization, you’ll want to keep amends small. Little tweaks made frequently will give you a quicker and more reliable pool of data to base greater amends on, vs. completely overhauling an entire app store landing page or onboarding flow, which will leave you in the dark about the variables that led to an increase or decrease in conversions.

Another efficient way to optimize conversion rate is via A/B testing. This works by segmenting an audience into two or more groups, exposing each segment to a different version of the variable, and analyzing how the variable affects user behavior. When you know which version received the best results, you can roll it out fully, to a gradually bigger segment, or implement the same logic elsewhere.

Monitor, iterate, and repeat:  The length of your CRO test phase will vary depending on traffic volume, accuracy of analytics, conversion rate baseline, and the complexity of the changes you’ve made. Based on your results and how they relate to the targets you set at the start, you can begin applying the same strategy to similar variables, or rolling out wins on a bigger scale.

Great conversion rate optimization means regularly monitoring campaign performance and app activity—like installs, subscriptions, purchases, uninstalls etc. If numbers begin to plateau or fall, it’s time to repeat the process.