Digital Marketing

What Is Conversion Rate & How Do You Calculate It?

Conversion rate is one of the most popular metrics used by marketers, salespeople, and business professionals.

It is discussed a lot and comes to the surface as an important metric or key performance indicator (KPI) for most companies.

However, it can also be misused, misunderstood, or incorrectly positioned to be used as a master metric.

It is important to periodically review conversions, conversion rates, and metric usage.

It is even more important for any new initiative to have the metric defined and well understood before it is developed as a key KPI.

In this guide, I’ll dive deeper into what a conversion rate is, how it’s calculated, why it’s important, and ways to improve it.

What is the conversion rate?

The Google He offers one of the most succinct definitions of conversion rate:

“Conversion rates are calculated simply by taking the number of conversions and dividing that by the number of total ad interactions that can be tracked to a conversion over the same time period.”

Now, let’s get into what all this means.


Unlike some business and marketing metrics, understanding conversion rates requires some self-introduction.

It starts with defining what conversion is — which can mean different things to different types of brands and organizations.

You can have more than one type of conversion. As a goal, you can keep it in mind in the marketing funnel or customer journey. Or it could be a stable financial metric that your business depends on.

The first step is to clearly define what conversion is for you.

One of the most popular definitions I see has to do with becoming a lead person in a company that focuses on driving leads through their website.

The other applies to e-commerce businesses, where the conversion is the completed sale transaction.

Other common definitions include certain engagement metrics for companies that rely on advertising revenue generated from page views.

Secondary types of conversions go into events, engagements, and other things like email sign-ups that help power conversion funnels, customer journeys, and overall sales.

conversion rate

The conversion rate is %.

In high-level terms, it tells you the percentage of how many people came to your site and took the conversion goal action you specified.

Some sources provide benchmarks for specific industries or regions to help you understand a good conversion rate and provide some objectivity.

I’m not telling you to copy your competitors, but I believe if you want to evaluate your conversion rate, you need internal and external research to validate where you are and where you want to be.

Match this with your personal research, target audiences, marketing funnels, and customer journeys.

You probably know what you want your visitors and audience to do.

How many of them do you want to do that? What is the world size of your target audience? What is realistic in terms of the total number of visitors you think you can get?

Find answers to these questions while setting conversion goals and conversion rate goals.

How do you calculate conversion rate?

Conversion rate formula

The conversion rate calculation formula is straightforward:

Conversions / Visits * = Conversion Rate

* I have to include an asterisk, although some definitions may not be straightforward.

You can also name these “clicks” or “sessions” or look at them in more detail.

My definition here can be adapted based on the language and definitions used by your analytics platform and your other KPIs.

Example in calculating the conversion rate for my site (a marketing agency providing services to clients) with inputs and calculation:

  • Site visits in August 2022: 1122.
  • Contact form submissions in August 2022 (my conversions): 61.
  • 61 conversions / 1,122 visits = 5.4% conversion rate.

get it right

Again, conversions are custom-determined by you.

It can be a common conversion target like a lead form submission, something minor, or something a little more mysterious.

This part can be somewhat customized or variable for you as well.

You can think of them as website clicks from a particular ad channel or campaign.

You can get pretty granular with segmenting your data, source and channel filtering, and even with the definitions themselves.

This becomes particularly variable or custom if you follow certain procedures that lead to your conversion goal and how precise you want to be with it.

Make sure you define what you count as conversion and what you count as total audience (clicks, visits, or some other ‘total’ metric) in a meaningful way.

Why do I need the ability to calculate conversion rate?

First, where do you measure and track your conversion rate? You can use Google Analytics, other analytics suites, or whatever data you have to calculate manually.

Google Analytics

If you rely on Google Analytics (GA), you’ll need to make sure your “goals” are set up correctly and tested. Conversions are reported based on the goals you configure.

Out of the box, Google has no context of what the conversion is for you nor the ability to calculate a conversion rate from it.

If you’re on GA, dive into Conversion Goal configuration and testing to make sure things are in place before you trust the metrics you see (if you inherit setup) or move forward with any measurement and optimization plan.

And speaking of mapping – tracking and measuring is crucial.

You want to ensure that your technology stack and tools can help you properly track traffic, conversions, and overall conversion rate in line with your definitions and goals.

Getting this right is crucial, whether it is through Google Analytics or third party reporting tools.

Segmentation and filtering

Additionally, you can then break down the levels you want with examples, including:

  • By conversion type (if you have more than one).
  • All traffic on the site.
  • By source or channel.
  • By pages/actions/events in the session.
  • Through the campaign or initiative.

There are many segments and ways to filter and segment conversions and conversion rate reports.

You want to be able to calculate your conversion rate and get into detail with your traffic segments and your audience to help understand what areas you can improve on.

What is a good conversion rate?

Calculating conversion rates and owning the data is one thing; Using it to make improvements is where the real work begins.

Improve conversion rates

You can look for improvement in two broad areas, and I highly recommend evaluating both.

One is the sources of traffic and the influences that drive visitors to your site.

This includes advertisements, referrals, and any outreach activities and campaigns that generate traffic.

The other area consists of what influences the traffic that actually gets to the site – things like UX/UI evaluation, message review, calls to action, and the ways users navigate through and interact with the site.

Optimization in this area is often called conversion rate optimization, or CRO.

Optimizing traffic sources

In the case of the traffic you’re sending to the site, you can look at the targeting, ad creative and keywords you’re basically ranking for – the ways in which targeting ads and creatives provide a first impression or drive traffic directly to the site.

There are a variety of optimization and optimization techniques to convert your focus into quality traffic and aim to increase your conversion rate by getting more qualified visitors from the external sources you influence.

Beware, however, that you need to get a good idea of ​​your customer journey and not eliminate traffic that is focused on awareness or at the top of the funnel (ie, traffic associated with thought leadership).

Increasing your conversion rate is important, but make sure you segment well enough to not inadvertently stop targeting top of the funnel, awareness visitors, and sources.

Conversion rate optimization

Now, looking inward at the traffic you already have.

This is where most people start digging into CRO tactics. Web analytics can help you see where people are exiting, jumping on, and stopping by in your conversion actions.

On top of that, great maps and CRO tools will give you insight into UX and UI issues and how people really interact with your site versus the way you intended your design.

By focusing on your CRO and developing a strategy, you can evaluate everything from site speed to content, messaging, and user interface.

I strongly encourage you to do so.


Conversion rate continues to be a valuable marketing metric.

It is important to understand them, define them for your organization, measure them and improve them.

Whether you have a small business or enterprise website, you probably care about certain conversion goals.

In short – for conversions and conversion rate – understand, define, measure and improve.

Yes, we all want more traffic. And a stable conversion rate might be fine if you add more traffic.

However, wouldn’t you like more traffic And Higher conversion rate?

It’s possible to have both, and it’s crucial to understanding which levers to pull to make an impact on him.

More resources:

  • 6 Tips to Optimize Your Conversion Rate (CRO) for Low Traffic Websites
  • How do you calculate the total addressable market (TAM) for SEO?
  • Content Marketing KPIs: Your Guide to Choosing the Right Content KPIs

Featured image: eamesBot/Shutterstock

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