What is Conversion rate?

Conversion Rate (CVR) in in-app advertising represents the percentage of users who view an app-install ad, click on it, and complete a predetermined action. This metric helps app advertisers assess the effectiveness of their ads. The specific ‘conversion’ action depends on the pricing model: for cost per install campaigns, it’s app installs, whereas, for cost per engagement campaigns, it’s engagement events.

CVR is crucial in marketing for evaluating ad performance, as it indicates how well an ad converts users. It is primarily used in performance campaigns.

The Formula for Conversion rate

What is CVR in marketing?

CVR in digital marketing ranges from 0 to 100. A CVR of 100 signifies that the advertisement has achieved a 100% conversion rate, meaning all users who clicked on the ad completed the purchase. Conversely, a CVR of 0 indicates a failed campaign with no users converting. The success and revenue generated by a campaign are directly proportional to its CVR.

Understanding the conversion rate of an advertising campaign helps businesses identify how many users completed transactions. This insight is fundamental for refining strategies and driving business objectives. Recognizing the strengths and limitations of the CVR metric allows businesses to propose improvements and develop future campaigns for better results.

Which factors affect conversion rate?

Many store owners are curious about a universal standard for a good conversion rate. However, the reality is that achieving a high conversion rate depends on various elements beyond just website performance. To thoroughly assess conversion rate performance, consider the following factors:

Channel mix

Different traffic sources convert at different rates. For example, visitors from search engines searching for specific products usually convert better than those from social media.

Funnel mix

Sites focusing on the bottom of the funnel with tactics like email marketing and remarketing often see higher conversion rates than those running awareness ads for new audiences.

Product price

Higher-priced products generally have lower conversion rates due to the need for more consideration. However, they can offer a higher average order value.

Returning customer mix

Sites with repeat customers, such as those selling consumables, tend to have higher conversion rates.

How to Boost Your Conversion Rate?

A high conversion rate means your website communicates its value, offers a smooth shopping experience, and creates a sense of urgency. To optimize your conversion rate, focus on these three areas:

1. Communicate Your Value Proposition

Make sure customers understand your product’s benefits, whether they’re practical (e.g., solving a specific problem), economic (e.g., offering a better price), or emotional (e.g., making them feel good). Use compelling copy, images, and videos to convey this value.

2. Reduce Friction

Identify and eliminate obstacles in the shopping process, such as:

  • Complicated checkout procedures
  • Unclear product or shipping information
  • Difficulty in selecting the right product
  • Trust issues from bugs or poor design
  • Slow page load times

Monitor page-level conversion rates to pinpoint where friction occurs.

3. Increase Urgency

Encourage immediate purchases by:

  • Offering time-sensitive discounts.
  • Notifying customers about the low stock.
  • Highlighting seasonal or limited-time products.
  • Providing shipping deadlines

Avoid creating false urgency, which can erode trust and harm your conversion rate. Use urgency strategies ethically and strategically.

What is a good conversion rate?

Although conversion rates should always be considered in the context of the type of site or store, for e-commerce sites, 3% is generally considered a good conversion rate.

Every industry, whether it’s food and beverage or electronics, has its standard conversion rate benchmark (Learn more), for example:

  • Agency: 2.3%
  • Auto: 3.7%
  • B2B e-commerce: 1.8%
  • B2B services: 2.7%
  • B2B tech: 2.3%
  • B2C: 2.1%
  • Dental & cosmetic: 3.1%
  • Finance: 3.1%
  • Health care: 3.0%
  • Industrial: 4.0%
  • Legal: 3.4%
  • Professional services: 4.6%
  • Real estate: 2.4%
  • Travel: 2.4%