What is a conversion in sales? Definition, formula and calculation example. Marketing strategy

Many people, for sure, heard or met on the Internet the terms such as CTR (click-through rate) or Closing Rate. All these concepts are united by one common term - conversion in sales.

Conversion - what is it

In essence, conversion is the "transformation" of a potential buyer into a real one. Conversion helps to assess the effectiveness of the entire business, to understand, with the help of which you can 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 6% conversion 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 calculation, a special formula for the conversion of sales was developed, which is very easy to remember. It looks like this.

(Number of customers / Number of visitors) x 100% = Conversion

That is, this ratio of the number of buyers to the number of ordinary visitors, multiplied by 100 percent.

To understand how effective the business is, the 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 products, conversion rates of 30% are very good. But for the grocery points the figure often reaches 75-80%. In trade with a narrow specificity, where the range is not too wide, the conversion of sales is often at the level of 10-15%.

Measuring the conversion, you should definitely consider the traffic. If a non-target audience comes to the site or to the store, this significantly lowers the conversion.

Example of calculating the conversion in a store

We'll go into more detail about what a conversion is in sales. Suppose we own a small store 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 make an order, you need to select the product you like, click the "Buy" button and provide the data for delivery. There is a payment option directly on the site or in cash after the import.

It turns out, the purpose of the site is to get the user to fill out the order form. After completing all the indicated actions, the manager is contacted with the buyer to confirm and discuss the details of the application.

Every day more than 600 people come to our site. Of all these people, click the "Buy" button and pass all the stages of ordering only 6 people. It turns out that 6 users who left their data - 1% of all visitors to the site. Consequently, the conversion of sales of our web resource will be 1%. A lot or a little, it's hard to say. Everything depends on the chosen subject and the level of competition in it. What is the conversion in sales determined, now we learn how to increase the conversion.

Increase in sales conversion

When managers face the issue of increasing conversion, the very first thought is to attract more visitors to the outlet or the site. For example, to make attendance grow from 600 people a day to 2000, or even more. The theory of large numbers undoubtedly works, but there is a more effective option.

We need to gradually analyze day by day 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 get more return on existing customers. And the new ones just will not want to leave us.

Only constant work on the project contributes to increased profits. And in this work a significant role is played by the marketing strategy chosen by the firm.

Marketing strategy

We figured out what a conversion is in sales. Now consider the concept of marketing strategy - a component of the overall strategy of the organization. This is a specific set of actions of the company, taking into account the situation on the market, determining marketing channels to achieve a quality result

The most important for any marketing strategy is the plan for its implementation. In addition, it is necessary to regularly analyze current market needs. This will help create products that are in demand by certain groups of consumers.

Marketing strategy planning consists of three phases:

- Analysis of the situation, or conducting a full audit of the current situation of the company, its environment and likely future.

- Working out of the purposes and ways of their achievement.

- Selection of tools, with which you can most effectively follow the chosen strategy.

In the economy, to determine marketing strategies, there are special matrices. They make specific the strategic decisions.

One of the most famous is Matrix Boston Consulting Group. Another name for it is "Market share - market growth". In the late 60's, this matrix was developed and applied in practice by the firm "Boston Consulting Group". According to it, any firm is described as a common set of strategic production units through portfolio analysis. This model allows you to structure all the problems in an enterprise strategy. It is characterized by comparative simplicity, but the main disadvantage - the lack of accurate estimates of products in the middle position, which in any company the majority.

There is also a matrix of competition, invented by a US scientist M. Porter. The essence of his concept is that to obtain high profit indicators a firm must have a strong position in relation to competitors in its field.

Of all the variety of marketing strategies should be noted the following:

- Strategy of innovation, introduction of new products and technologies.

- Diversification, that is, the withdrawal of products that have no connection with the main business of the company.

- Internationalization - systematic entry into foreign markets.

- Segmentation, or in other words, the development of a strategy for individual consumer groups (segments).

There are other types of marketing strategies. Very often, businesses mix elements of different strategies, introduce their own unique concept.

Marketing strategy (example)

Let's say that our luxury watch shop brings in insufficient profit. The number of visitors to our website is growing, but the share of conversion remains at the same level. Acting according to the plan, we conduct an analysis of the current situation, identify our weaknesses. At this stage, it is necessary to 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 impact:

- Complex site functionality;

- insufficient technical description of the goods;

- The range is limited only by expensive models of watches.

Based on the data of the analyst counters, we notice that a large number of middle-class people come to the site, in terms of income, they do not reach our target consumer.

Based on the collected data, we decide to follow the innovation strategy. We expand the assortment with new categories of goods that are not inferior to our main products, but at a reduced price.

We are planning a series of measures to rework the design and saturate the cards with new useful information. We control the implementation of the strategy at all major stages.

Here such there can be a marketing strategy. The example shows the opportunity to think through the steps in the business in advance and extract greater profits as a result.

Why you should contact the agency

Now it's very popular to contact the Internet marketing agency. Such complicated procedures as calculation of conversion, market analysis, search for weaknesses, development of a marketing strategy and a plan for its implementation is decided by a specialist with a special education. Such an employee should have a clear understanding of all terms and indicators. It is desirable that he had a real experience of working on projects in a similar business area.

If you can not find such an employee in the staff, the correct decision will be to contact the marketing agency. Since most of the advertising has now migrated to the Internet, and without a corporate site, no serious company can not do without, more agencies are emerging, specializing in Internet marketing.

As a rule, such organizations provide complex services to promote 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, creation and filling of sites.

The choice of a contractor company should be approached with all responsibility. After all, it will largely depend on the success of your company and the fulfillment of its main functions - satisfying consumer demand and increasing profits.

Now it became clear what is the conversion in sales and marketing strategy.