Conversion Rate Measure
A Conversion Rate Measure is a performance metric that quantifies the percentage of users who take a desired action out of the total number of visitors.
- Context:
- It can (typically) be calculated by dividing the number of conversions by the number of total visitors, clicks, or ad interactions that can be tracked to a conversion within the same time period.
- It can (often) involve defining what constitutes a conversion, which can vary significantly across different types of businesses and objectives. Conversions may include actions such as making a purchase, completing a form, or downloading a resource.
- It can (often) require careful consideration of the conversion objective, as different goals (e.g., downloading a white paper vs. making a purchase) will have different expected conversion rates.
- It can (typically) be influenced by factors such as the quality and relevance of traffic, the user experience on the website, and the alignment of the website content with user intent.
- It can (often) serve as a critical indicator of the effectiveness of marketing strategies, web design, and user experience efforts.
- It can (typically) be optimized by analyzing and improving various stages of the conversion funnel, understanding visitor behavior, and making data-driven adjustments to reduce friction and enhance the user journey.
- Example(s):
- A website that receives 100,000 visitors and achieves 2,000 sales has a conversion rate of 2%.
- An e-commerce site that uses a PPC campaign with an average CPC of $0.50 and spends $50,000 to generate 100,000 visits. If it achieves a conversion rate of 2%, it could profit $50,000, illustrating the direct impact of conversion rate on profitability.
- E-commerce conversion rate,
- Email subscription rate,
- ...
- Counter-Example(s):
- Bounce Rate, which measures the percentage of visitors who navigate away from the site after viewing only one page, while related, is not a conversion rate measure.
- Monthly Active Users.
- Clickthrough Rate.
- Gross Merchandise Volume.
- A Website Traffic Measure that only tracks the number of visitors without considering their actions does not qualify as a conversion rate measure.
- See: Conversion Event, ARPU, Affiliate Marketing, Electronic Commerce, Conversion Rate Optimization, Performance Metric, User Experience (UX), Marketing Strategy, Conversion Funnel, Pay-Per-Click (PPC) Campaign, Customer Acquisition Cost.
References
2024a
- (ChatGPT-OpenAI, 2024) ⇒ Prompt: Summarize the concept Conversion Rate Measure in 1- 2 paragraphs. ChatGPT (model:gpt-4-turbo-preview). Retrieved: 2024-02-25.
- QUOTE: The concept of Conversion Rate Measure is pivotal in assessing the efficacy of various actions or strategies in marketing, sales, websites, and other domains. It is essentially the ratio or percentage that indicates how many of the targeted actions—be it making a purchase, filling out a form, subscribing to a newsletter, or any desired outcome—have been achieved compared to the total number of visitors or opportunities. For example, in an e-commerce context, if out of 100 visitors to a website, 2 make a purchase, the conversion rate would be 2%.
This metric is crucial for businesses and marketers as it provides insights into the performance of their campaigns, usability of their websites, and effectiveness of their sales strategies, among other things. By analyzing conversion rates, businesses can identify areas of improvement, optimize user experience, tailor their marketing efforts more effectively, and ultimately, enhance the efficiency of their operations towards achieving specific goals. Continuous monitoring and optimization efforts aimed at improving the conversion rate are fundamental in driving success in digital marketing and sales strategies.
- QUOTE: The concept of Conversion Rate Measure is pivotal in assessing the efficacy of various actions or strategies in marketing, sales, websites, and other domains. It is essentially the ratio or percentage that indicates how many of the targeted actions—be it making a purchase, filling out a form, subscribing to a newsletter, or any desired outcome—have been achieved compared to the total number of visitors or opportunities. For example, in an e-commerce context, if out of 100 visitors to a website, 2 make a purchase, the conversion rate would be 2%.
2024b
- (Johnson, 2024) ⇒ Ben Johnson, (2023). How To Calculate Conversion Rate: The Conversion Rate Formula. In: UseProof Blog.
- QUOTE: So, how exactly do you calculate conversion rate?
Here are 3 conversion rate formulas to use:
- Conversion Rate = Total number of conversions / Total number of sessions * 100
- Conversion Rate = Total number of conversions / Total number of unique visitors * 100
- Conversion Rate = Total number of conversions / Total number of leads * 100
- QUOTE: So, how exactly do you calculate conversion rate?
- Note: All 3 of these formulas are valid. The best way to calculate conversion rate depends on what exactly you’re defining as your conversion event and how you plan on measuring traffic. The numerator will measure your conversions (as defined by your conversion rate goal) and the denominator will be what you define as your total pool of traffic (generally session count, unique visitors, or leads).
2023
- (A.S., 2023) ⇒ Salma A.S. (2023). "What is conversion rate? Definition and how to calculate". In: LogRocket Blog.
- QUOTE: Conversion rate refers to the percentage of website visitors or potential customers who take a desired action (account creations, downloads, or purchases etc.). Thus, conversion rate is a crucial metric that measures the effectiveness of the website in converting its visitors into customers.
To calculate conversion rate, divide the number of conversions by the total number of visitors, and then multiply the result by 100 to get a rate.
- QUOTE: Conversion rate refers to the percentage of website visitors or potential customers who take a desired action (account creations, downloads, or purchases etc.). Thus, conversion rate is a crucial metric that measures the effectiveness of the website in converting its visitors into customers.
2022
- (Morris, 2022) ⇒ Corey Morris, (2022). "What Is Conversion Rate & How Do You Calculate It". In: Search Engine Journal.
2017
- Daniel Tunkelang. (2017). “Evaluating Search: Measuring Searcher Behavior."
- QUOTE: … We can think of the act of performing a search as a single unit of investment. It’s a coarse unit, but nonetheless a useful one that allows us to derive two ROI measures: the click-through rate (CTR) as the fraction of searches resulting in a click, and the conversion rate as the fraction of searches resulting in a conversion. …
2016
- (Wikipedia, 2016) ⇒ https://en.wikipedia.org/wiki/Conversion_marketing#Conversion_rate Retrieved:2016-6-14.
- The conversion rate is the proportion of visitors to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators. :[math]\displaystyle{ \mathrm{Conversion\ rate} = \frac{\mathrm{Number\ of\ Goal \ Achievements}}{\mathrm{Visitors}} }[/math] Successful conversions are defined differently by individual marketers, advertisers, and content creators. To online retailers, for example, a successful conversion may be defined as the sale of a product to a consumer whose interest in the item was initially sparked by clicking a banner advertisement. To content creators, a successful conversion may refer to a membership registration, newsletter subscription, software download, or other activity.
For websites that seek to generate offline responses, for example telephone calls or foot traffic to a store, measuring conversion rates can be difficult because a phone call or personal visit is not automatically traced to its source, such as the Yellow Pages, website, or referral. Possible solutions include asking each caller or shopper how they heard about the business and using a toll-free number on the website that forwards to the existing line. For websites where the response occurs on the site itself, a conversion funnel can be set up in a site's analytics package to track user behavior.
- The conversion rate is the proportion of visitors to a website who take action to go beyond a casual content view or website visit, as a result of subtle or direct requests from marketers, advertisers, and content creators. :[math]\displaystyle{ \mathrm{Conversion\ rate} = \frac{\mathrm{Number\ of\ Goal \ Achievements}}{\mathrm{Visitors}} }[/math] Successful conversions are defined differently by individual marketers, advertisers, and content creators. To online retailers, for example, a successful conversion may be defined as the sale of a product to a consumer whose interest in the item was initially sparked by clicking a banner advertisement. To content creators, a successful conversion may refer to a membership registration, newsletter subscription, software download, or other activity.
2013
- (Nielsen, 2013) ⇒ Jakob Nielsen (2013). "Conversion Rate". In: Nielsen Norman Group.
- QUOTE: The conversion rate is the percentage of users who take a desired action. The archetypical example of conversion rate is the percentage of website visitors who buy something on the site.
Example: An ecommerce site is visited by 100,000 people during the month of April. During that month, 2,000 users purchased something from the site. Thus, the site's conversion rate is 2,000/100,000 = 2%.
- QUOTE: The conversion rate is the percentage of users who take a desired action. The archetypical example of conversion rate is the percentage of website visitors who buy something on the site.