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The Formula Every Business Needs to Care About: Conversion Rate (CVR)

Ad number one gets 100 sales. Ad number two gets 30 sales.

Which is the better ad? It’s not as obvious as you might think.

Most novice marketers tend to miss one of the most crucial metrics of a Facebook ad campaign: the all-powerful Conversion Rate.

But what exactly is the Facebook conversion rate? How do you calculate it, and how to ensure you achieve a good great conversion rate?

When you break it all down, it’s actually pretty simple. More “successful” ads are within arm’s reach — let’s dive right into how we can create them.

What is Facebook Conversion Rate?

Understanding the conversion rate from your Facebook ad will help you drastically increase your ROI on ad spend. 

The simplest definition is that your Facebook Conversion Rate (CVR) is a percentage value of how many people were ‘converted’, or took action, after seeing your ad.

So, let’s go back to the example we mentioned earlier – an ad that resulted in 100 sales could be performing worse than an ad that resulted in 30 sales.

If 10,000 people clicked on your first ad, but only 100 people purchased your product, your Facebook ad will have a conversion rate of 1%.

On the other hand, if only 100 people interacted with your second ad, yet 30 people purchased your product, your conversion rate from this Facebook ad would be 30%!

What is the formula?

Right about now, you’re probably wondering how to calculate the conversion rate on Facebook.

Got a pen?

👉👉 CVR = (Purchases/Link Clicks) x 100% 👈👈

teaching conversion rate

Why do we need to know the CVR?

Knowing how to read the Facebook purchase conversion rate is the best way to tell if your ad campaign, landing page, website, etc., have been optimised to give you the highest possible ROI.

It can help you determine if your ad builds trust, targets the right audience, if your sales funnel has been optimised, and possibly spot a bottleneck in your marketing strategy.

Despite the rise of TikTok, Facebook is still the biggest social media platform, with close to 2 billion daily active users. An intelligent marketer should know how to leverage Facebook’s high levels of consumer attention to their (or their client’s) benefit.

What does a LOW conversion rate indicate?

While comparing conversion rates is never a good idea, we know you’re dying to know what a low conversion rate is, so here are some examples of industries with low conversion rates: Industrial Services (0.71%), Technology (2.31%), and Travel & Hospitality (2.82%).

Here are some reasons why your Facebook marketing conversion rates might be lower than your industry average:

  • Lack of Trust: You might have a powerful hook to stop the reader from scrolling. But once they’re on the website, a lack of reviews and social proof causes cold feet.
  • Wrong Call To Action: Having a clear CTA may be the missing piece of information you need. It’s important for the CTA to be cohesive with the landing page.
  • Messaging Inconsistency: Your ad might not be living up to its promise. For example, an ad for a shoe takes a customer to a product page selling hoodies. Or, in line with the ‘Wrong CTA’ point, a “Join the Community” CTA lead might lead to an obvious sales page, without any sense of community at all.
  • Miscellaneous: Other things to consider are high shipping costs, products being out of stock, and a webpage that has not been optimised to convert viewers to buyers (overcomplicated and slow load times are two common traits of non-optimised webpages.

What does a HIGH conversion rate indicate?

As you can probably guess, a high CVR (a high Facebook ads purchase conversion rate) is what you need to strive for.

And a higher conversion rate can pave the way for wins like…

  • Lower customer acquisition cost: The less you have to spend on advertising to get a new customer or an existing customer to purchase an item, the greater your profit. 
  • Providing great value for customers: The data shows that you’ve reached the right audience, and your product is perceived as valuable and problem-solving.
  • Increase in average order value: Since a high number of visitors are already buying, there will be less resistance for upselling to take place at checkout.
  • Fun facts: Some examples of industries with conversion rates on the higher end are Real Estate (10.68%), Education (13.58%), and Healthcare (11.00%).

The checklist for how to increase and maximise your conversion rate

Now that we understand the importance of a good conversion rate, here are a few things we can do to knock it out of the park:

  1. Pushing the best-selling product/range
    It’s best-selling for a reason! If you’re an existing brand and have a product or range/collection that has the most sales, use that in your conversion campaigns.
    New brands may need to run engagement campaigns and use retargeting to convert those who engaged with the initial ad.
  2. Targetting the highest-converting age/gender bracket
    Rarely do products appeal to all demographics.
    Look at the data to determine which age/gender bracket the product does – and just as importantly – doesn’t appeal to. Keep this in mind when writing your copy, mentioning pain points, and crafting hooks in video ads.
  3. Leading with the strongest possible pain point/angle
    Your product doesn’t need to be a miracle worker, but it does need to address a strong pain experienced by the target audience.
    Put yourself in your viewer’s shoes, find that pain point, and position your product as the best solution.
  4. Afterpay frame
    If your product has a higher price point, look to frame it in smaller payments. For example, for the price of one cup of coffee a month, you can subscribe to our highly sought-after newsletter that gives you access to exclusive information you can’t find anywhere else on the market.
    This makes the price point more digestible to the audience. It’s proven to work, and is a no-brainer addition to high AOV products.
  5. Sense of urgency
    If left to their own devices, most people will kick the can down the road. We are inherently lazy. We need a reason to do something – anything.
    Couple a ‘deal of a lifetime’ with a countdown timer indicating that the deal will expire within a set time period, never to be seen again, and you will get some furious phone-tapping that will result in a revenue surge for you or your client.
    Why do you think Black Friday is so huge?
  6. BIG discounts of at least 20%
    How often have you looked at a discount and thought to yourself, “Is that it?”
    Everyone runs discounts. It’s competitive out there. So you need to make sure that your offer stands out – especially around the big shopping periods (Black Friday, EOFY, Christmas, etc.). Remember that we’re after a long-term customer, and getting them into the shopping ecosystem with a strong and clear offer can be the first cog in the machine that has them coming back again and again.

Our experience has shown that a discount of at least 20% is required to entice as many new and existing customers to purchase anything from you. Drawing in audiences and converting them is key to hitting target sales.

Want to improve your CTR? Chat with us today to get a FREE strategy session worth $1200, and find out how we can get results for your business.

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