Conversion rate – definition and meaning

The conversion rate in e-commerce refers to the percentage of visitors who do what the website desires. Examples include filling in a form, voting in a petition, and responding to a survey or questionnaire. The website may also want the visitor to subscribe to a newsletter, buy a product, or download software.

In other words, conversion rate refers to visitors who do what we hope they will do.

It forms part of ‘conversion marketing.’ Conversion marketing is the act of converting website visitors into paying customers. It is the act of getting them to do what we want.

Conversion rate – banner ads

We may also use the term to measure the proportion of web page visitors who click on banner ads. Banner ads are adverts that appear on a web page.

Some web pages have banner ads on them. Every time a visitor clicks on an ad, the website gets money. The term ‘ad clicks’ refers to how many times people clicked on the banner ads.

We divide the total number of visitors by the number of ad clicks. For example, if a web page received 1,000 visitors and 50 ad clicks, the conversion rate is 5%. See the calculation below:

50 ÷ 1,000 x 100 = 5% Conversion Rate

Conversion rate - image with example
If one in every twenty online visitors buys something, the conversion rate is 5%. Conversion may refer to what proportion of visitors complete a form or add their signature to a petition. It might also refer the percentage who telephoned for more information, subscribed, or became members.

According to WordStream:

“Conversion rate is defined as the number of visitors to a website that completes a desired goal (a conversion) out of the total number of visitors. A high conversion rate is indicative of successful marketing and web design.”

Several factors determine whether conversion rates are high or low, including:

The appeal of the offer

An offer’s attractiveness depends on how effective the value proposition is. It also depends on how well you have presented it.

In most cases, impulse items have greater conversion rates than larger products. In other words, a higher percentage of visitors will buy a bar of chocolate than a car. Impulse buying is spur of the moment purchasing, i.e., the consumer had not planned to buy.

The website’s ease of use

The website must be easy to navigate and have clear explanations and instructions. Above all, the pages should load rapidly.

Conversion Rate Optimization
It is not enough just to attract visitors. The online business also needs to find a way to sustain visitors’ time on the website. You must subsequently move them down the sales funnel.

Visitors’ interest levels

The Internet marketing professional aims to match the right visitor, at the right time, and at the right place. This is crucial if you want to achieve optimum conversion rates.

The competition

If your offer is unique, your conversion rate will be greater than a website that has to compete with several others.

Generating offline responses

For websites that aim to generate offline responses, measuring conversion rates is not so easy. Examples of offline responses are telephone calls or human visits to a physical store.

Measuring responses is difficult because we cannot automatically trace a personal visit or phone call to its source. The source may have been a referral, the telephone directory (Yellow Pages), or a website.

Companies can overcome this problem by asking people how they heard about the business. The seller may also offer a toll-free number that people can only get from the website.

Where the response occurs within the website itself, the website’s analytics package can include a conversion funnel. The conversion funnel tracks visitor behavior.

Conversion Rate Optimization (CRO) is a system in Internet marketing. It increases the percentage of visitors who take a desired action.

The terms Conversion optimization or conversion optimization have the same meaning as CRO.

Conversion rate for currencies

We also use the term conversion rate when talking about currencies. It tells us how many units of one currency we can buy with another currency.

For example, a conversion of pounds sterling to US dollars of 1.32 means that £1 can convert to $1.32.

A high conversion rate means that we can ‘buy’ many units of the other currency.

We can also use ‘conversion rate’ when talking about sales people. For example, a door-to-door sales woman may average one sale for every 100 houses she visits. Therefore, she has a conversion rate of 1%.

Video – website conversion rate

In this video, co-founder of Omega Vortex – Jeremy Privett – gives a high-level overview of what a site’s conversion rate is. He also explains what it is important to track.