Career Development

# Conversion Rates 101: How To Calculate, Track and Optimize Conversion Rates

March 31, 2021

The success of an online business is measured by many factors. A high conversion rate is one factor that contributes to a thriving business. It tells you that your marketing strategy and web design are working together in a positive way. In this article, we discuss how to calculate, track and optimize conversion rates to generate leads and earn revenue.

## What is a conversion rate?

A company's conversion rate helps determine the success behind its sales and marketing efforts. This important metric in online marketing provides numerical insight behind the frequency of website visitors and other actions in the form of a percentage. Business owners may have many types of conversion goals they'd like to accomplish.

## Types of conversions

These common types of conversions are easy to measure once you've got the data in front of you. Once you've compiled the data, you'll be ready to calculate the conversion rate. Some types of conversions include:

• Online shopping
• Information requests
• Account creation
• Site engagement

## Types of conversion rates

Once you've received traffic to your site, you can separate metrics according to the types of conversion rates you want to know about. Here are two of the most common conversion rates:

• New visitor conversion rate
• Return visitor conversion rate

By isolating the metrics of your site traffic, you'll get a detailed look at how well your marketing strategy is functioning.

### New visitor conversion rate

This conversion rate is calculated by looking only at the new visitors or visitors who are interacting with your site for the first time. Ease of navigation, content clarity and the site's overall value influence this rate.

### Return visitor conversion rate

When someone returns to a website, they may be returning to complete a transaction or learn more about your company. Return visitors are often ready to convert because these site users have already found you once. If the timing of offers is right, they'll likely purchase the item they saw the first time around.

## How to calculate a conversion rate

Calculating the conversion rate is a fairly simple process that follows a basic formula. Here are some simple steps you can take to calculate conversion in relation to purchases on an e-commerce site:

### Step-by-step explanation of conversion rate calculation

1. Use this formula as a reference point: Conversion rate = conversions / total visitors x 100
2. Divide the total number of conversions by the total number of visitors to your site.
3. Multiply this number by 100.
4. The number you get is your conversion rate.
5. Round up if needed, then add the percentage sign.

### Step-by-step example of the conversion calculation:

2. Divide 181 by 12,355 to get 0.01464994.
3. Multiply 0.01464994 by 100 to get 1.46499393.
4. Round up if necessary. In this case, your number stays at 1.46.
5. Your final conversion rate is 1.46%.

Conversion rates can be calculated manually or through the help of an online analytics tool. Here are some additional examples of how the variables of a conversion rate formula can differ depending on how a business measures success:

• Conversion rate = total number of conversions / total number of sessions x 100
• Conversion rate = total number of conversions / total number of unique visitors x 100
• Conversion rate = total number of conversions / total number of leads x 100

Determining which formula is best for you depends on your end goal. Suppose you own an online site that sells personalized socks. Your main goal is to ensure that people find your site and purchase your socks. You've created a sales funnel that will lead them to the virtual shopping cart for the final purchase.

### Example of calculating a conversion rate

If you had 55,000 unique visitors to your site last month and ended up selling personalized socks to 800 people, you'd have a conversion rate of 1.45%. The equation breaks down like this:

55,000 / 800 x 100 = 1.45%

How do you know if your conversion rate is considered a good one by industry standards? Most lead generation pages do not surpass a 12% conversion rate, so if you're at or above that, your business is doing well.

## How to track a conversion rate

Calculating a conversion rate is not always about the final purchase. You might be looking to track the number of people who signed up for your newsletter or the number of leads generated from a free eBook your team created. Most companies follow a weekly or monthly tracking regimen to stay focused on their conversion goals. Increasing the conversion rates is a top priority in digital marketing because more money for the business contributes to a company's overall success.

Here are some ways you can implement tracking methods:

• Web analytics service
• Session recordings and replay tools
• Heatmaps
• Satisfaction surveys

Tracking conversions helps you stay in-the-know when implementing marketing strategies, which also helps you gain a competitive edge over others in the business who may not be paying attention to the metrics. Consider hiring an experienced web developer to help you with the analytics if you're unsure of how to properly track the metrics in an online platform.

### Web analytics service

Several online platforms offer free tools to businesses that help track their conversions, rather than through a manual, time-consuming process. They track and report website traffic in one easy-to-find place.

### Session recordings and replay tools

Some marketers have found valuable information regarding the user experience by implementing session recording and replay tools on their sites. By watching the site user's behavior connected to the page, they can determine areas of improvement and may even discover the source of a high bounce rate.

### Heatmaps

Heatmap tools show the areas of a screen that visitors interact with most. The colored heatmaps on a screen represent the areas of a site that are being clicked by the user in varying degrees. Darker areas represent heavy use while lighter areas show the opposite. Areas that lack heatmaps represent areas of a screen that may be skimmed over or ignored.

### Satisfaction surveys

Asking your customers or site users direct questions is a great way to measure customer satisfaction. Decide what you want to know most when writing the survey and ask questions about user experience. You'll receive unique responses that would not be possible through the use of an analytics tool, like suggested improvements to the site and things that make customers happy. Conversions happen when people are happy about their experience.

## How to optimize a conversion rate

There are several ways that a business can optimize its website to generate more conversions. Conversion rate optimization focuses on strategies that enhance a site's conversion rate using the site traffic that already exists. To receive more conversions, you'll want to do a few things to test your website:

• Conduct an A/B test
• Establish trust

Before you spend money on paid advertising, it's important to know which website page you want to target for conversions. Many businesses use their homepage as the main landing page for their ads, though others focus on special pages created for current sales that show all on-sale items.

### Conduct an A/B test

When your website is already generating lots of traffic, A/B testing is a quick and easy way to do CRO. Create two types of landing pages that you'll refer to as option A and option B. Send half of your traffic to the A page and the other half to the B page. Online CRO software makes this process incredibly easy.

Once you've decided which elements of your site make the biggest impact, try experimenting with a variety of CRO tests. It's important to only change one element with each test so you know that you can directly associate success to that change. Some examples of elements you can change involve wording of the headline, the layout and description of your offer, and the choice of words used in your call-to-action like "buy now," "shop today," or "act fast." You can even A/B test by switching out your picture or video assets for a better understanding of what's visually appealing to your audience.

### Establish trust

There are a few simple things you can do to promote a trustworthy website. Make sure you place the "About us" or contact information in a visible place. Designate someone who can respond to questions online in a timely manner or implement a call center if your business receives a large number of inquiries. Provide customer reviews, client stories, or case studies on your site so people have the information they need to complete conversions with confidence.

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