Many probably heard or met terms such as CTR (from the English âclick-through rateâ) or the Closing Rate on the Internet. All these concepts are united by one common term - sales conversion.
Conversion - what is it
In essence, conversion is the âtransformationâ of a potential buyer into a real one. Conversion helps to evaluate the effectiveness of the entire business, to understand how to increase the number of sales. How to calculate the conversion of sales in the store?
It is worth remembering that even with the same conversion rates, profits depend on the number of potential buyers. For example, with a 6% conversion rate and 100 potential customers, the profit margin is 6 rubles. But if the number of potential buyers has grown to 1000, the profit is already 60 rubles (with the same conversion of 6%).
How conversion is calculated
For the calculation, a special sales conversion formula was developed, which is very easy to remember. It looks as follows.
(Number of customers / Number of visitors) x 100% = Conversion
That is, this ratio of the number of customers to the number of ordinary visitors, multiplied by 100 percent.
To understand how high a businessâs performance is, conversion rates should be close to certain standards. Much depends on the specifics of the trade. For example, for clothing stores or other non-food items, conversion rates of 30% are very good. But for food outlets, the figure often reaches 75â80%. In trade with narrow specifics, where the assortment is not too wide, sales conversion is often at the level of 10-15%.
When measuring conversion, you should definitely consider traffic. If an inappropriate audience arrives on a website or a store, this significantly reduces conversion.
Shop conversion conversion example
Letâs take a closer look at what sales conversion is. Let's say we own a small shop selling luxury watches. In order to increase sales, we have developed an online store with an attractive design, user-friendly interface and unique descriptions of expensive brands. To place an order, you need to select the product you like, click the "Buy" button and provide data for delivery. There is a payment option directly on the site or in cash after arrival.
It turns out that the purpose of the site is to ensure that the user fills out the order form. After performing all the indicated actions, a manager contacts the buyer to confirm and discuss the details of the application.
Every day over 600 people visit our site. Of all these people, they click the Buy button and only 6 people go through all stages of placing an order. It turns out that 6 users who left their data - 1% of all visitors to the site. Consequently, the sales conversion of our web resource will be 1%. It is hard to say whether it is a lot or a little. It all depends on the chosen topic and the level of competition in it. What is the conversion in sales determined, now we learn how to increase the conversion.
Sales Conversion Increase
When managers face the issue of increasing conversion, the very first thought is to attract more visitors to the outlet or site. For example, to make attendance grow
from 600 people a day to 2000, or even more. The theory of large numbers, no doubt, works, but there is a more effective option.
It is necessary to gradually, day after day, analyze the work of the company, the needs of its customers and, based on this analysis, improve the service, improve and develop the site. Thus, we will receive more returns from existing customers. And the new ones just wonât want to leave us.
Only constant work on the project helps to increase profits. And in this work a significant role is played by the marketing strategy chosen by the company.
Marketing strategy
We figured out what sales conversion is. Now we will consider such a concept as a marketing strategy - a component of the organizationâs overall strategy. This is a certain set of company actions, taking into account the market situation, determining marketing channels to achieve a quality result
Of greatest importance for any marketing strategy is the plan for its implementation. In addition, it is necessary to regularly analyze the current needs of the market. This will help create products that are in demand by certain groups of consumers.
Planning a marketing strategy consists of three phases:
- Analysis of the situation, or conducting a full audit of the current situation of the company, its environment and the likely future.
- Study of goals and ways to achieve them.
- The choice of tools with which you can most effectively follow your chosen strategy.
In economics, there are special matrices for defining marketing strategies. They bring specificity to strategic decisions.
One of the most famous is the Matrix of the Boston Consulting Group. Its other name is âMarket Share - Market Growthâ. In the late 60s, this matrix was developed and put into practice by Boston Consulting Group. According to it, any company is described as a general set of strategically production units through portfolio analysis. This model allows you to structure all the problems in the strategy of the enterprise. It is characterized by comparative simplicity, but the main disadvantage is the lack of accurate estimates of products in the middle position, which are the majority in any company.
There is also a Competition Matrix invented by US scientist M. Porter. The essence of his concept is that in order to obtain high profit indicators, the company must have a strong position in relation to competitors in its field.
Of the diversity of marketing strategies, the following should be noted:
- Strategy for innovation, introduction of new products and technologies.
- Diversification, that is, the withdrawal of products that do not have a connection with the core business of the company.
- Internationalization - systematic access to foreign markets.
- Segmentation, or in other words, development of a strategy for individual consumer groups (segments).
There are other types of marketing strategies. Very often, enterprises mix elements of different strategies, implement their own unique concept.
Marketing Strategy (Example)
Let's say our luxury watch store doesnât bring enough profit. The number of visitors to our online store site is growing, but the share of conversion remains at the same level. Acting according to the plan, we analyze the current situation, identify our weaknesses. At this stage, you should definitely determine the portrait of the target consumer. Do not forget to study the proposals of competitors in our field.
The analysis revealed that the following factors have a negative effect:
- complex site functionality;
- insufficient technical description of the goods;
- the range is limited only to expensive watch models.
Based on the data from analytics counters, we notice that a large number of middle-class people come to the site, who do not reach our target consumer by income level.
Based on the collected data, we decide to follow an innovative strategy. We are expanding the assortment with new categories of goods that are not inferior in quality to our main products, but at a reduced price.
We are planning a series of measures to redesign the design and saturate the product cards with new useful information. We monitor the implementation of the strategy at all the main stages.
This may be a marketing strategy. The example shows the ability to think ahead in business and make big profits as a result.
Why you should contact the agency
Now it has become very popular to contact the Internet marketing agency. Such complex procedures as conversion calculation, market analysis, search for weaknesses, development of a marketing strategy and a plan for its implementation are decided by a specialist with special education. Such an employee should have a clear understanding of all terms and indicators. It is desirable that he had real experience working on projects in a similar business area.
If you canât find such an employee in the staff, the right decision would be to contact a marketing agency. Since most of the advertising has now migrated to the Internet, and no serious company can simply do without a corporate website, more and more agencies are appearing that specialize in Internet marketing.
As a rule, such organizations provide comprehensive services for the promotion of your brand. In addition to developing a marketing strategy, the agency will set up contextual and banner advertising for you, select web sites for placing a commercial offer. The Internet marketing agency is also engaged in search engine promotion, website creation and content.
The choice of a contractor company should be approached with all responsibility. Indeed, the success of your company and the fulfillment of its main functions - satisfying consumer demand and increasing profits will largely depend on it.
Now it became clear what a conversion in sales and a marketing strategy are.