Some numbers in your online business won’t make much impact on your revenue.
Other numbers – what I like to call ‘leverage points’ – can take you from being a 6-figure to a 7-figure business.
Conversion rates are a key leverage point.
In simple terms, conversion rates are a way to measure how many people take an action vs. see the offer.
For example, if 100 people visit a website and 10 of them buy a product, the conversion rate is 10%.
In your online business, there are 3 conversion rates I recommend tracking. I’ll share what they are and how they impact your revenue shortly.
But first, let’s hammer home how important they are…
What are the benefits of knowing your conversion rates?
Conversion rates measure effectiveness.
The effectiveness of your copywriting, messaging, website design, offer, ads – and every other component of your marketing funnel.
Ineffective marketing funnels = low conversion rates.
Effective marketing funnels = high conversion rates.
Boost your conversion rates, and you’ll start to see revenues & profits multiplying in new ways.
Before we get into the 3 conversion rates you should be measuring (and benchmarks to aim for) let’s dig into why measuring them can be a huge help…
Measuring conversion rates helps you to understand the story behind your numbers
One scenario might be that the number of people opting into your list or purchasing your product isn’t growing each month.
By looking at the conversion rates, we can start to understand:
Are we driving enough traffic? If the conversion rates are high, but your list isn’t growing, then we know we need to get more eyeballs on the offer
Is the offer the right one? If the conversion rates are low, you might want to focus on optimizing your offer vs. increasing traffic in the short term
Another example might be that you want to double down on paid marketing next year but you’re not sure which channel to choose.
By reviewing the conversion rates of each channel you can make the right decision about where to spend your cash.
This is all to say that…
Measuring conversion rates helps to inform your decision-making.
Which allows you to scale your revenue much easier.
Here are the 3 conversion rates most online businesses should be measuring to grow revenue…
Some of these may or may not be relevant depending on the specific products/services that you sell…
3 conversion rates online business owners should measure
1. Email list conversion rate
Growing your email list is one of the most important parts of marketing your online business.
The bigger your audience, the more you’ll be able to sell.
Measuring your email list conversion rate allows you to understand what percentage of visitors to your website or email sign-up page convert into leads.
Email list conversion rate = ( Number of leads generated / Total traffic ) * 100
E.g. If you drive 100 people and 30 become leads, your conversion rate is 30%.
40% is usually achievable, as long as your traffic is decent quality.
50% is great. Anything above that is rare, and excellent.
This is also the conversion rate that can boost your growth the most
For example, let’s say you’re driving 500 people a month to your page and it’s converting at 30%. That’s 150 new emails added to your list each month.
Not bad, but imagine if you could increase that conversion rate to 50%…
With a few tweaks, that’s an additional 100 new emails per month (1200 more per year).
Imagine how much more you could sell if your audience was that much bigger?
2. Lead to customer conversion rate
There’s no point in building an audience that won’t buy what you’re selling.
And to know how effective your offer is, you need to be measuring your lead-to-customer conversion rate.
This helps you to understand what % of your leads will go on to become paying customers.
Lead-to-customer conversion rate = ( Customers generated / Total leads ) * 100
E.g. If you have 1000 leads and 100 customers, your conversion rate is 10%
The benchmarks here vary based on a lot of factors, the biggest of which is the price point of what you’re selling…
For low-priced products (approx $99), aim for a 10% lead-to-customer conversion rate.
For higher-value products ($250+) a 1-3% lead-to-customer conversion rate is excellent..
3. Cart abandonment rate
When you’re selling products online, not everybody that adds something to their basket is going to check out.
Doubts creep in, they start questioning if it’s the right choice, and some will drop off and not continue.
Measuring this abandonment rate tells you how well your online checkouts are converting.
To measure it do ( Products sold / Products added to the cart ) * 100
E.g. 100 people add products to the basket, but only 50 buy, you have a cart abandonment rate of 50%.
Again, benchmarks can vary based on what you’re selling and at what price point. For ecommerce the average is 70% but for infoproducts I would imagine it’s much less.
You’re probably thinking by now… this all sounds great, but what can I do to increase my conversion rates?
I’ll share some proven tips & tricks shortly, but first, let’s jump into the numbers…
Want to discover the specific leverage points that will unlock growth in your business? In just 3 minutes you’ll understand the specific numbers you need to improve to scale your online business to 7 figures. Start the diagnostic.
Running the numbers – How can conversion rates impact your revenue and profit growth?
Don’t underestimate the impact that a few incremental changes across the board can have on your revenue and profit growth.
Here are a couple of quick examples:
- Current scenario:
- 1000 monthly traffic
- 300 leads generated (30% lead conversion)
- 6% buy your low-priced product @ $99 – $1782
- 0.5% buy your premium product @ $499 – $748.50
- Total monthly revenue – $2350.50
Let’s start to nudge these conversion rates up. Let’s start by increasing your lead conversion rate from 30% to 50%, which is often achievable:
- 1000 monthly traffic
- 500 leads generated (50% lead conversion)
- 6% buy your low-priced product @ $99 – $2970
- 0.5% buy your premium product @ $499 – $1247.50
- Total monthly revenue – $4217.50
You nearly doubled your monthly revenue with a few simple tweaks to a landing page.
Let’s keep going. This time, we’re going to increase our low-priced product conversion to 10%. Again, this is achievable with the right offer…
- 1000 monthly traffic
- 500 leads generated (50% lead conversion)
- 10% buy your low-priced product @ $99 – $4950
- 0.5% buy your premium product @ $499 – $1247.50
- Total monthly revenue – $6197.50
We’ve now nearly 3x your initial monthly revenue by focusing on improving 2 out of your 3 conversion rates.
See how much potential this can have for your business?
The difference between the first and last examples in terms of your annual revenue is:
- Scenario 1 – annual revenue = $28,206
- Scenario 3 – annual revenue = $74,370
Imagine if there were a few more zeros added to this…
That’s why leveraging your conversion rates can be the difference between making 6 and 7 figures a year in your online business.
Ok, here’s how to move the needle on your conversion rates.
4 tried and tested ways to improve your conversion rates
1. A/B testing your pages
A/B testing involves testing 2 different versions of something against each other.
On a landing page, this could mean testing:
Different headlines/copywriting
Different call-to-actions
Different colors of buttons
Different images
Different layouts/lengths
Lots of landing page builders have this functionality built in. Otherwise, you can use tools like Google Optimize or Optimizely.
Important: test one thing at a time. If you test more than 1 variable, you won’t know what drove the results. Once you’ve found something that works, save it, and then find another element to test.
2. Congruent messaging
Your messaging needs to be congruent throughout your entire marketing funnel.
What this means is that the messaging used on your ads & emails needs to match what you say on your landing page. If you say one thing and then your prospects see another, they’ll feel confused and be less likely to convert.
Try to enter the conversation already happening in their minds and fine-tune your messaging as tightly as possible. If you strip away any design, words are the most important parts of pages and often the parts that have the biggest impact.
3. Use customer reviews & testimonials
Including reviews for products with higher price points can increase conversion rates by up to 380%.
Yes, you read that right!
When people are taking any kind of action – joining your email list, or purchasing a product – they want to feel assured that they’re doing the right thing.
Customer reviews & testimonials is how you give them the assurance they need.
This can include:
- Logos/names of other well-known people you might have worked with
- Embedded reviews from Google
- Written or video testimonials
Feature this in as many places as possible – ideally above the fold on pages and near/around any call-to-actions and online checkouts.
4. Use genuine deadlines
Here’s a secret: most people procrastinate. Especially when spending money.
To beat their procrastination, give them a deadline.
Your deadline could be price based: respond by Tuesday to claim your 25% off.
It could relate to a genuine deadline: “In order to give all my clients the proper attention, I can’t accept any new tax clients during tax season after March 15.”
Whatever you do, don’t fake a deadline. Fake urgency is stupid and will backfire eventually.
Knowing your conversion rates is crucial
Not knowing your conversion rates is not knowing how well some of the most important leverage points in your business are performing.
Having an understanding of how you’re doing, and what you can do to continually test & improve, is what can drive significant revenue growth for your business.
Hope this helps.
Dan Steinhart, CPA
P.S. Conversion rates are one of a few key leverage points that can unlock revenue growth in your business.
Take this simple 3-minute diagnostic to identify the specific leverage points that will unlock growth in your business. Start here.