A conversion rate is the percentage of people who see your advertisement and take your desired action.

For example this could be the number of people who click through to your website and then sign up for your newsletter or the number of people who want to learn more about your webinar.

What is your business lead conversion rate?

This is the percentage of leads that you receive and successfully convert into paying customers i.e. how many people actually end up buying from you.  This is down to your sales process and ability to convince an individual that they wish to buy your service.

Facebook ads can complement your sales process and help improve your conversion rate by convincing an audience that you can add value and solve a problem for them if they buy from you.

How to use conversion rates to calculate your Facebook ad targets and budget

How many leads do you need per month from your ad campaign?

  1. Calculate your target income or revenue for a month
  2. Decide on a monthly budget that works for your business e.g. £600
  3. Work out how many new customers are needed to hit your income goal.  This is your target number of sales/customers.  You will need to know the average income you get from each customer first.
  4. Work out or estimate your conversion rate (the % of your leads that go on to become paying customers).  Be realistic, converting leads that come from recommendations and referrals is much easier than getting people who’ve never heard of you to buy. 
  5. Establish how many leads you’ll need to hit your customer or sales target, bearing in mind your conversion rate. 

Examples:

If you convert 1 in 4 of your leads (25%), you’ll need 4 leads for each customer you want to buy from you per month.  If the number of leads you need to hit your revenue target is 100, you’ll need 400 leads each month (4 x 100) to allow for those you won’t be able to convince to buy from you.

If you have a target of 50 email subscribers and you know that 1 in 20 that see your sign up page enter their details then you’ll need 20 times your sign-up target to hit your goal.  In this case your target number of leads would be 1000 (50 x 20).

Calculating your ad budget

Once you have your monthly leads target (number of people in your audience that you need to take a specified action in order to achieve your income goals) you can add in your costs and establish the metrics to monitor in your Facebook ads campaign. 

Check out this blog for guidance on setting your monthly ad budget.

For more advice on getting results from your Facebook ads, sign up for our newsletter.