Marketing Definitions: Conversions

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Welcome to the latest edition of our new weekly blog series, Marketing Definitions. Each week, we will identify an oft-used term or phrase in the marketing community and break down its use and meaning for the broader population.

Last week’s term that we defined was Search Engine Optimization.

Today’s Term = Conversions

Conversions are a common term used by marketers that may just sound like jargon to anyone outside the field. But it’s really a very simple term, used as a catch-all for an almost endless number of actions.

A conversion, at its most basic, is a completed action.

Conversions can be submitted forms, new leads, product purchases, email list signups, etc. They are events that we measure as a metric for success.

For example, if you are building a landing page on your website and its aim is to get people to sign up for your newsletter list, then a successful “conversion” will take place when someone enters their email and hits submit. In this case, we will use the term “conversions” to refer to the number of people who complete that action.

From there, we get to conversion rate. That is simply the percentage of people who visit the page and then convert. Or, conversions divided by visitors.

Since conversions is a catch-all term that can be used to refer to a large number of different events, context is important. When you hear people talking about conversions and conversion rate, they’re talking about a specific action people are taking, which they are measuring as a key indicator for success.

That does it for today’s definition. Have a term you’d like defined in a future post? Email us or post it in the comments below.

Marketing Definitions: ROI

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Welcome to the first edition of our new weekly blog series, Marketing Definitions. Each week, we will identify an oft-used term or phrase in the marketing community and break down its use and meaning for the broader population.

Today’s Term = ROI

ROI stands for Return on Investment. It is used by marketers to refer to the revenue or profit generated from some predefined marketing campaign. It is a measurement of effectiveness, accounting for the costs and results of some process.

The most common way of calculating return on investment is the following equation:

ROI = (gain from investment – cost of investment) / cost of investment

In plain for most marketing campaigns, that means the revenue generated by the campaign, minus the cost of the campaign, divided by the cost of the campaign. If a campaign produced $10,000 in revenue, and cost $1,000 to produce and run, then the ROI would be 900% (we report ROI most often as a percentage).

The higher the ROI, the more effective a campaign.

But not all uses of ROI will refer directly to revenue and cost in such deliberate ways. For example, costs could include the time it takes to do something, the other activities you have to give up in order to do this particular activity, or the risks associated with it. Gains could include future savings of money or time, growth in loyalty or retention, greater brand awareness or social media followings.

But almost all gains and costs can, and should for the purpose of measurement, be assigned dollar figures.

That does it for today’s definition. Have a term you’d like defined in a future post? Email us or post it in the comments below.