How to Define and Measure Conversion Rate

Conversion rate is one of the most important key performance indicators (KPIs) used by both marketing professionals and ecommerce managers. 

Monitoring your conversion rate is crucial for decision-making, especially if your business sells products online. This metric also helps determine the success of marketing campaigns and how you allocate your marketing budget. That's why it's so important to define your conversion properly based on your business goals and closely monitor how it changes over time.

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How to define conversions

Different actions can be tracked as conversions depending on the specific characteristics of your business and website. For example, for ecommerce businesses, a conversion could be a completed purchase. The conversion will also have an associated monetary value, which is the purchase amount.

Some businesses sell highly customized services that require initial meetings with company representatives. 

In this case, submitting a website form to request a meeting with a sales representative could count as a conversion. 

For other businesses, content downloads could be tracked as conversions—for example, when users download valuable content such as ebooks or white papers after providing their contact information. 

If your business is a publisher or blog, newsletter subscriptions could count as conversions. The key is to find an action on your website that aligns with your business goals and helps you measure progress toward those goals.

Conversions vs. microconversions

Another aspect to consider is microconversions, which are smaller, intermediate actions a visitor can take on a website or app. These actions may not necessarily lead to the completion of a primary conversion—the main goal, such as making a purchase—but they can indicate user engagement and show whether users are progressing through the purchase funnel. 

Tracking microconversions is valuable because it can help your business observe user behavior, identify areas for improvement, and optimize the user journey. By optimizing to increase the number of microconversions, you can improve the overall user experience on your website or app and guide more visitors toward completing the primary conversion.

How to calculate conversion rate

Conversion rate is a value that shows the percentage of website or app visitors who make a purchase or take a desired action on that website or app. 

The mathematical formula for calculating conversion rate is to divide the number of conversions during a given period by the number of unique visitors during that same period, then multiply by 100 to get a percentage.

Conversion rate formula:

Conversion rate = (Number of conversions / Number of unique visitors) × 100

In this scenario, a visitor is a user who viewed the website, and conversions are completed relevant actions. For example, if an ecommerce website received 100 visitors in September and recorded 30 purchases, its conversion rate would be 30%.

If you have a high number of returning visitors who make multiple purchases on your website, you can also calculate the conversion rate based on visits/sessions instead of visitors. In this case, divide the number of conversions by the number of website visits/sessions during each period, then multiply the result by 100.

Measuring and monitoring conversion rate at multiple levels

It's essential to monitor your conversion rate at multiple levels to make sure your website and marketing campaigns are optimized.

Consider the following areas when monitoring your conversion rate:

Marketing campaign conversion rate 

Measuring conversion rates at the marketing campaign level lets you evaluate the overall performance of your marketing initiatives, whether they include email marketing, social media advertising, pay-per-click (PPC) campaigns, or other advertising efforts.

You can measure a campaign's conversion rate by dividing the number of conversions from that campaign by the number of website visitors who came from the same campaign, then multiplying the result by 100. Alternatively, you can calculate it by dividing the number of conversions by the number of visitors who viewed an ad from a specific campaign.

It's important to distinguish between awareness campaigns, which may aim to generate impressions or drive more traffic to your website, and conversion campaigns, which target prospects who are likely to progress through the purchase funnel. 

Although awareness campaigns can also generate conversions, that isn't their end goal, so their performance shouldn't be evaluated primarily based on this metric.

Landing page conversion rate 

Landing pages play a critical role in converting users into leads or customers. Measuring the conversion rate at this level can help you determine how effective your page design and content are.

You can measure the conversion rate by dividing the number of conversions completed by visitors to that landing page by the total number of visitors to the landing page, then multiplying the result by 100.

Product-level conversion rate 

Understanding how well each product converts can help you make informed decisions about pricing, promotions, and product placement. Conversion rates can vary by product, so it's important to understand the trends across your portfolio. 

You can measure the product-level conversion rate by dividing the number of conversions for a specific product by the number of visitors to the product page, then multiplying the result by 100.

Shopping cart conversion rate 

Paying attention to this level of conversion tracking lets you create a more efficient and profitable online shopping experience for your customers. You can measure the shopping cart conversion rate by dividing the number of conversions by the number of visitors who accessed the shopping cart, then multiplying the result by 100.

You can explore optimization opportunities such as simplifying checkout forms, making sure prices and promotions are clearly displayed, using a local payment method, including shipping in the price, or adding security badges to build trust. Then, you can test how those changes affect the shopping cart conversion rate.

Country-level conversion rate 

Monitoring this metric by country gives you insight into how your website or marketing efforts perform across different geographic regions and can help you develop localization and marketing strategies. You can optimize and display different visuals and messaging on your website based on each visitor's country, then see whether the conversion rate improves.

For ecommerce businesses, you can optimize your shopping cart by country. For example, shoppers in some countries prefer a shorter checkout flow, while others prefer one that includes reviewing order details before completing payment.

You can measure the country-level conversion rate by dividing the number of conversions by the number of website visitors from a specific country, then multiplying the result by 100.

Conversion rate chart

To monitor your conversion rate easily, it's best to have metric charts ready. This gives you a visual representation that's easy to interpret.

One of the most commonly used and easiest-to-understand charts is a funnel chart, which shows a visitor's progress from the moment they enter the website or app until they convert.

For an ecommerce website, this could mean displaying a chart that shows:

• how many visitors the website received;






• followed by how many visitors accessed the product pages;






• then how many visitors added products to the shopping cart;






• followed by those who opened the shopping cart, started the checkout process, and reached the order review page;






• and finally, how many completed a purchase.

For ecommerce businesses, it's essential to look at the conversion rate in relation to the revenue generated. Each purchase has a value that can be recorded in tracking tools. This means every conversion defined as a purchase has a monetary value. Adding the value of each conversion gives you total revenue.

Sometimes, you may notice that even though your conversion rate increased, revenue didn't grow at the same pace. A deeper analysis might reveal that you're simply getting more purchases of lower-priced products, which could lead you to explore ways to increase your average order value.

Now that you know how to calculate conversion rate, measuring it across multiple levels of your website and marketing campaigns will be essential for making data-driven decisions. Continuously monitoring your conversion rate is a fundamental digital marketing and website optimization practice that can lead to improved ROI and overall business growth.