Conversion Rate (CVR)

What is a conversion rate (CVR)?

A Conversion rate is an important KPI in sales that helps to measure the effectiveness of your campaigns. It is a percentage that tells you from a certain base audience (example the users that land on your website) how many convert to your desired action (such as filling a form, buying a product, etc).

What is an example of a conversion rate (CVR)?

Let’s say you sell a product online, you have a website and you want people to book a demo for your product. So you define the action of booking a demo as your conversion event. Now let’s say you have 1000 people landing on your website every day and 50 of them book a demo. Your conversion rate will be your total conversions (i.e. the total amount of people that booked a demo) divided by your total audience, so here 50 / 1000 = 5%.

How do marketers use conversion rate (CVR)?

First, marketers use conversion rate to understand first if the conversion is clear and easy enough to perform. From the example above, if the button “book a demo” only works one time out of two, you will have a much lower conversion rate than what you expect and you can use it to identify that there is a problem. Once you've identified that there is in fact a problem, you can optimize and make changes according to your intuition and further improve the conversion rate for your website.

Secondly, marketers will use conversion rate to determine which campaigns and which audience is the most effective for your product. Let’s say you advertise your online product in 20 campaigns targeting 20 different profiles of customers, you can use the conversion rate to compare the campaigns between them and only keep the campaigns with the highest conversion rate. This will help you optimize for costs and increase the overall ROI for your business.

What is a good conversion rate (CVR) in mobile marketing?

In mobile marketing, it is the industry standard to consider conversion rate to be the ratio between the desired result of a campaign and the number of clicks on your campaign. So if you run a CPI (cost per install) campaign, your conversion rate will be the installs divided by all the clicks. If you run a CPA (cost per action) campaign, the conversion rate will be the total actions performed divided by the number of clicks.

How is conversion rate (CVR) calculated in Tenjin?

At Tenjin, we use the number of clicks in the conversion rate, instead of the number of impressions for a better breakdown of the performance of your campaigns as another KPI, since the CTR (Clickthrough Rate) already measures the impression to click ratio.