Why and How to Calculate Your Conversion Rate

Conversion Rate Calculation
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Why Calculating Conversions Is Essential to a Marketing Team 

When looking at managing the return on investment (ROI) or performance of a website, setting up conversion goals is one of the simplest and best ways to measure results. Simple conversion goals can be set up using a tool such as Google Analytics. A "conversion" can be measured each time a website visitor takes an action on your website.  

The purpose of setting up a conversion is to track unique events or thresholds that set a benchmark for your website's performance. Ideally, these conversions should be a measure of how well your bottom line is performing.  
 
For example, if a website had 100 conversions in March, the webmaster or marketing person would expect to have greater than 100 conversions in April. If at any time they see conversions begin to drop, it is a trigger to show that something may be wrong with the website's message, navigability, user experience or external influencers such as a dip in marketing or drop in search engine rankings
 
A "conversion" can be identified by a number of different things based on what is important to each marketing team or webmaster, depending on the specific goals of the website. A conversion can include events, such as a visitor filling out a lead capture form, a purchase, or a metric such as when a visitor's time on site reaches a certain number of minutes or a visitor views a certain number of pages.

  
 
For example, a website that sells women's clothing would likely measure its main conversion points as sales, or the number of times a person checked out. By setting a conversion goal to count each time a person reaches the URL for the checkout page, marketers can track their overall volume of sales month over month or year over year to ensure steady growth.

This also gives marketers the opportunity to look back at the batch of conversions and follow the funnel in reverse. Marketers can see how people who converted reached the final URL that showed they made a sale. This gives them the ability to determine which avenues of marketing are driving the most conversions, or sales, and allows them to put more funds behind what is working and taper off campaigns that are not working. A tag can also be added to the conversion pixel to track the amount of each sale. One conversion, or sale, can be measured at $30 or $3,000, for example. By tagging conversions to show the actual amount, it gives marketers more information on which visitors are making high-volume purchases and what their site behavior and referral source was prior to making a large purchase.  

If a website isn't focused on sales -- for example, the website of a popular blogger or news site -- conversions are still essential to benchmark results. For example, a blogger or news site can set conversions to know how many people viewed over four pages of their website or spent more than five minutes on the site, a sign of engagement that they can share with potential advertisers.  
 
Overall, a conversion can be set to measure almost any marketing goal or objective.

It is up to the marketer to ensure conversion goals are a holistic part of a digital marketing plan. 

How to Calculate Your Conversion Rate

Your website conversion rate is the number of visitors that come to your site that actually buy something. It's the process of converting a visitor into a buyer. In order to calculate your conversion rate, you will need to implement website tracking, so that it collect the data that you will need.

Difficulty: Average

Time Required: 15 Minutes

Here's How:

  1. Determine whether you will need to calculate for lead conversion or product sales.
  2. Gather data from your website analytics program.
  3. Follow the following formulas to determine your website conversion. The formula you select will depend on whether you are measuring conversion on leads or sales collected via your website.
     
    • Lead Generation

      Number of Leads Collected / Total Traffic to Site x 100 = Conversion Rate

    • Sales

      Number of Sales / Number of Visitors x 100 = Conversion Rate