What Is A Good Google Adwords Conversion Rate?
Good Adwords Conversion Rate = 4%
Great Adwords Conversion Rate = 10%
Successful Business’ Conversion Rate ≥ 15%
A great conversion rate means at least 1 in every 10 clicks is turning into a lead or sale. That is a sweet spot for your business and AdWords can be that effective acquiring new customers.
(The above AdWords snapshot is tracking ecommerce purchases as the conversion rate)
First, let’s start by defining what you are tracking as a conversion? At PPC Rainmakers Agency, we only track 3 customer actions as a conversion:
- ecommerce purchase
- completing a web form (email, registration, sign-up)
- a new customer phone call
Yes, there are other goals that can be tracked as conversions but we only want to track and know what is directly driving business sales. If it is an action that drives revenue, track it as a conversion. If it doesn’t directly lead to a sale, then track is as an event.
Set the goal for a conversion rate of 20% for PPC!
(The above AdWords snapshot is tracking B2B Leads as the conversion rate)
According to Larry Kim at WordStream ” the top 10% of AdWords advertisers have account conversion rates of 11.45%.”
To achieve double digit conversion rates, you must complete enough a/b tests, testing keywords, ads and landing pages. If you are really good at a/b testing, you can also a/b test your people, process and product.
With Adwords analytics and sales data, you can combine both qualitative and quantitative KPI’s and optimize to what drives the most ROI. The highest conversion rate we have achieved for an Ecommerce store is 63% and for lead generation we have seen as high as 50%, meaning every other click turns into a lead. If your conversion rate is averaging below 3%, you are probably in the startup phase of your business or have not become digitally evolved. Start a/b testing keywords and ads to improve the conversion rate. Then start testing landing pages.
The crucial factor in measuring conversion is if it repeating over and over and maintains or is increasing over time. Conversion rate measured in a day or week can be extremely high just because it is a small sample size. But when the conversion rate is measured in 30 days or 180 days and you are in the double digits, you have achieved something few Adwords advertisers have achieved. Sustaining the conversion rate over years of business is the mission and is difficult as Google is constantly changing the AdWords platform.
(The above AdWords snapshot is tracking B2C Leads as the conversion rate)
There are also micro-conversions, or goals that lead up to a valuable customer action. Such as sharing a post socially or clicking “Like” on Facebook. But those actions do not also directly lead to a sale so we track those as KPI’s (Key Performance Indicators). We recommend tracking conversions as only the goals that directly result in business revenue.
The most important action you can take to optimize the conversion rate is to reconcile the total number of conversions in Adwords against actual conversions tracked within the business. Next, reconcile the conversions that turn into sales. Then reconcile the conversions against customers that generate the most profit.
Optimizing Conversion Rate vs Optimizing Cost Per Acquisition
Just because your conversion rate is higher in one campaign compared to another does not mean the higher conversion rate is more profitable! The cost of the click and the amount of the sales transaction and the cost of the goods/services must be factored into CPA to determine which conversion drive the most profits. Optimizing for the incorrect metric can actually hurt your business.
Conversion Optimization Strategy
One of the most important things to consider when optimizing for conversions is that it does not mean you are optimizing and making the business more profitable. Optimizing for conversions means that you are trying to get conversions to repeat over and over. Your expectation should be that everyday, you get at least 1 conversion from AdWords. Everyday!
Once you have a repeating source of conversions, you can then begin the process of optimizing the conversion rate. Which is measured over time, Current & Historical. Conversion rates change over time as new competitors get better and more effective and as you make changes to your campaigns, website and sales process. The most effective way to optimize conversion is through a/b testing the keywords, ads, landing pages and the 3 P’s (People, Process, Product).
Optimizing for ROI when optimizing for Return on Investment, you are comparing how effective your marketing dollars are being utilized to create Revenue for the company. Revenue does not equal Profit. Without revenue, we can not make a profit but not all revenue is good for a business. So after you have established conversions and a predictable Cost Per Acquisition, you can accurately measure the ROI of the Adwords campaign.
Optimizing for Profit – you should be optimizing for profit, but first you have to optimize for Conversion Rate and next Return on Investment. When you have this data, you can then start optimizing Adwords for profitability. If you can optimize for profit, you then want to find the optimizations that Maximize Profit within your keywords and landing pages.
It is nearly impossible to optimize for Profit within the Google Adwords dashboard and that should not be the expectation. There are very few exceptions to this rule.
To optimize for profit, you must include data from within sales, business operations and accounting. When you have done this and all data is synced together, you have created a Close Loop Marketing System. Optimizing for profit requires a Sales CRM, Project/Time Management tracking and an accounting system that has been setup to import cost data and compare to the revenue. As you can tell, Adwords does not collect on or report on sales, time or accounting. Therefore, without that data, the Adwords Consultant can not measure where the profit is earned or lost.
The goal of every company using Adwords is to Close the Loop. After you have closed the loop, you should then ask yourself this one question:
“How do I spend unlimited money on Adwords and still achieve X profit margin?”
If you can raise your conversion rate to be able to answer the above question, then you have maximized your conversion rate. That is until Google push’s the next update…