Conversion rate is the percentage of users who take a desired action on a website, such as making a purchase, signing up for a newsletter, or filling out a contact form, relative to the total number of visitors.
What does Conversion rate mean?
The conversion rate is a key performance indicator in digital marketing and e-commerce that measures the effectiveness of a website or campaign in turning visitors into active users or customers. It is calculated by dividing the number of desired actions taken on a site—be it purchases, sign-ups, downloads, or any other targeted activity—by the total number of visitors, then multiplying the result by 100 to get a percentage.
This metric provides insights into how well a site or campaign persuades its audience to complete the goals set by the business, serving as a crucial measure of success. High conversion rates indicate that a website is well-designed, with compelling content and a smooth user experience that aligns with users’ needs and expectations, while low conversion rates may suggest areas for improvement.
Examples of conversion rate
An e-commerce website selling handmade jewellery has a monthly traffic of 10,000 visitors. In one month, 200 of these visitors make a purchase. To calculate the conversion rate, divide the number of purchases (200) by the total number of visitors (10,000), then multiply by 100. The conversion rate for this online store is 2%, indicating that 2% of all visitors to the site made a purchase.
A software company offers a free trial of their project management tool with the option to subscribe to a premium version. In a given month, the website receives 5,000 visitors, and 250 sign up for the free trial. Of those, 50 users upgrade to the premium version. The conversion rate for free trial sign-ups is (250 / 5,000) * 100 = 5%, and the conversion rate for upgrading to premium is (50 / 250) * 100 = 20%. This shows that 5% of all site visitors sign up for the free trial, and 20% of those trial users convert to paying subscribers.