What is a Conversion Rate?
Conversion rate is a metric that indicates the percentage rate of successful actions out of the total number of people available to complete the action. Successful actions, or conversions, can be anything from making a purchase, signing up for a newsletter, or downloading a guide. For example, you could measure conversion rates for email subscribers in which case each sign-up would count as a conversion. Or, you can measure conversion rates for eCommerce sales in which each completed order would count as a conversion.
The metric is a key performance indicator (KPI) for businesses across industries. Conversion rates directly reflect how well a business reaches its goals. Higher conversion rates typically indicate greater success, as it means more people are completing actions that align with the business objectives.
How to Calculate Conversion Rate
Conversion rates can be calculated using a basic formula. You simply take the total number of users who completed the conversion action and divide it by the total audience size. You then multiply the result by 100 to arrive at the conversion rate percentage. Below is an example of the formula.
Conversion Rate (%) = (Number of Conversions / Total Audience) * 100
The total audience depends on the type of conversion that you are measuring. For example, if you are calculating the sales conversion rate for a website, the audience will include the total number of site visitors for the given period. Here is an example of how this looks for an eCommerce sales conversion rate.
Ecommerce conversion rate = 2% or (100 eCommerce orders / 5,000 website visitors) *100
Measuring Conversion Rates
Conversion rates are typically measured using an online analytics platform such as Google Analytics. You can also use advanced analytics tools such as Hotjar or Heap to monitor the conversion path in detail.
For eCommerce, your eCommerce platform typically calculates the conversion rate for the website and depending on the platform, specific products. For example, with Shopify merchants can see conversion rates for orders, add to carts, and initiate checkouts.
Additionally, eCommerce applications can include analytics with conversion rate insights. For example, with Rep AI, you can see conversion rates based on AI conversations. This includes detailed conversion metrics for the types of conversations and subjects resulting in customer orders.
Conversion Rate Best Practices
Conversion rates can have a significant impact on a business’s profitability. While a good conversion rate benchmark varies based on industry, product type, and other factors, there are some standard best practices you can use to optimize your conversion rates:
- Streamline the checkout process
- Use high-quality product images and videos
- Optimize your shopping experience for mobile devices
- Showcase customer reviews and testimonials in prominent locations
- Use clear call-to-actions
