Marketing Studies

Defining Online Conversion: Combining Action and Exposure Elements

Conversions aren't just about new sales or subscribers versus your website visitors.

First, let's review the conversion rate definition from Defining Online Conversion: What Is It?:

The conversion rate is a % of unique actions that result from unique exposures.

The conversion rate metric can be used to measure anything you want to track, analyze and optimize, and is by no means linked only to sales or subscribers and your website.

Here are just some quick examples of conversion rates not used as often as the standard sales/visitors CR:

• sales / e-mail clicks
• sales / e-mails delivered
• order finished / add to cart
• sales / ad impressions
• phone calls / website visits
• product recommendations / product views
• etc.

There are countless combinations available, depending on what specifically you want to measure and optimize.

Let's return to our conversion rate definition for a second:

The conversion rate is a % of unique actions that result from unique exposures.

As you can see from the definition, the conversion rate is a combination of actions and exposures, with a simple formula of:

conversion rate = actions / exposures

Consequently, conversion rate optimization begins first with defining what you want to measure and optimize, and then by defining the action and exposure elements that help you get to the numbers you need.

Let's presume you want to measure the overall effectiveness of your e-mail e-zine in driving sales.

1. The overall effectiveness of your e-mail e-zine can be measured as a conversion between the number of unique e-mail messages delivered [exposures] to your list and the number of unique sales generated [actions] from the e-mailing. [CR = unique sales / unique delivered e-mail messages]
   
   
2. However, this will only give you the overall effectiveness and a trend to watch over a longer period of time, telling you whether you are increasing or decreasing your overall effectiveness. It does not tell you what you need to optimize to increase your sales.
   To determine this, consider the steps needed to make the sale via the e-mail campaign.
   
   
3. It starts with getting the click from the e-mail message delivered to your website. Increasing the number of clicks requires increasing the attractiveness of the Calls-to-Action [CTAs] in the e-mail message.
   Hence you need to know how effective the CTAs are in driving recipients from the e-mail to the website, by measuring the conversion between the number of unique e-mail messages delivered [exposures] and unique clicks [actions] to your website [CR = unique clicks / unique delivered e-mail messages].
   This will of course only give you the basic information --- getting more will require measuring each individual CTA.
   
   
4. A click of course does not mean sales, so the next step is measuring the conversion from the e-mail clicks [exposures] to purchases [actions] --> [CR = unique purchases / unique e-mail clicks]. This will help you optimize the actual landing pages to which you lead the subscribers to your e-mail list, using your e-zine.
   
   
5. And finally, to fully optimize your process you may want to measure the conversion on the sales process level to help you optimize each step that leads to the purchase after the click, such as how good the product landing pages are in getting clickers to add the product to the shopping cart [CR = unique add to carts / unique e-mail clicks].

Much like everything else in series so far, this is just a simplistic demonstration, here primarily for the purpose of helping you see how to combine action and exposure elements.

In the case of e-zine optimization for sales, you would also need to measure relevant clicks (since only relevant clicks will increase your sales), different CTAs, open rates and so on.

The point is, combine different actions and exposures to come up with conversion rate formulas that will impact your bottom line.