Conversion Rate Optimization
What is Conversion Rate?
Conversion Rate is a share of the visitors of the website that have reached a defined conversion goal. The goal does not necessarily have to be a transaction, but can also be defined as, eg. downloading the offer, subscribing to the newsletter or submitting a contact form.
How is Conversion Rate calculated?
In principle Conversion Rate can be calculated by dividing a number of conversions by a number of visits in the same time period:
Conversions/Visits x 100 = Conversion Rate in %
Another possible option is base the Conversion Rate on Unique Visitors to exclude returning visits. The modified formula would therefore look as following:
Conversions/Unique Visitors x 100 = Conversion Rate in %
The decision on which of the above calculations to use has to be made individually by every organisation and will depend on the length of the customer decision journey. For websites where every visit can end with a conversion and therefore have a short customer decision journey it is recommend to use a Visits-based formula. With longer customer decision journeys, where usually more steps are required to achieve the conversion it makes sense to use the Unique Visitors-based one.
Why is Conversion Rate important for my company?
Conversion Rate is the main KPI for any shop optimization, having a great influence on the website’s performance. Even though the amount of traffic from different efforts, such as SEO or SEA and display campaigns can be growing, in case of a low Conversion Rate the number of new customers can be unaffected.
What are the types of Conversion Rates?
In general we can differentiate between Micro- and Macro-Conversion Rates. Micro-Conversion Rate usually covers user interactions that are secondary conversion goals. Therefore it is does not necessary have to be related to any direct goal, such as a transaction confirmation page view. Instead, Micro-Conversion Rate can include such interactions as viewing a video or adding a comment, that can indirectly affect the overall page performance. On the other hand, Macro-Conversion Rates are connected directly to the main page goals, such as transactions, lead generations, etc.
How high the Conversion Rate usually is?
Conversion Rates vary from business to business and can not be really compared, even between direct competitors. Therefore it is not possible to clearly state how high in general the Conversion Rate usually is. Different publications find that for the e-commerce sector an average Conversion Rate is between 1 and 3%. According to our experience, very successful e-commerce stores can reach up to 10-30%. Besides the site performance there are of course other very important factors that have to be considered: prices, competition, products selection, how well is the brand known, etc.
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