How to Calculate Conversion Rate

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The conversion rate is an important metric that indicates the number of users who have been converted into customers. For example, they could have purchased a product you advertised, joined a mailing list, or downloaded your company's mobile app. Learn more about conversion rates and how to improve yours.


Conversion Rate Definition

Conversion rates compare the number of visitors to a website or ad to the number of people who take the desired action. Assume one hundred people visit your homepage, but only five of them buy a product from it. This indicates that your conversion rate is 5%.

Conversions occur when potential customers become paying customers for many businesses. In other cases, they may occur when a person follows a social media page, subscribes to an email list, or downloads a white paper. To improve conversion rate optimization, businesses and entrepreneurs employ strategies ranging from search engine optimization (SEO) to social media marketing (CRO).


Why Are Conversion Rates Important?

Conversion rates indicate that your marketing strategies are effective. They're one of the key performance indicators (KPIs) you can use to determine whether your ad and outreach budgets are providing a good return on investment (ROI). A low conversion rate, for example, indicates that you are spending more on a pay-per-click (PPC) strategy than competitors with a higher conversion rate. If you can bring in more customers for less money, your company's profitability will rise.


What Is a Good Conversion Rate?

A high conversion rate indicates that you used your lead generation to acquire as many new customers as possible. The average conversion rate may differ between industries. E-commerce conversion rates, for example, are frequently lower than those of B2B businesses. To determine what constitutes a good conversion rate, research the industry average and strive to outperform it.


How to Calculate Conversion Rate

Although calculating a conversion rate may appear difficult, it is actually quite simple. To calculate your own, simply follow these simple steps:

Decide on your two metrics. Define the audience you'll be studying as well as the desired action you hope they'll take to define your variables. Assume you want to get 1,000 people to sign up for a streaming service. The first metric is the amount of website traffic generated by this campaign in general, while the second is the number of people who subscribe.

Collect your data. Now that you've determined the types of conversions you want to track, set aside some time to let your campaign take effect. Tracking website conversion rates can take weeks, months, or even years, depending on the effectiveness of your marketing campaigns. During this time, you can still experiment with A/B testing and other strategies.

Divide conversions by interactions. The conversion rate formula template remains largely unchanged regardless of which metrics are used. Assume that 500 of the people targeted by your ad campaign visit your website. These are your encounters. Now imagine that fifty of those 500 people become subscribers. These are the conversions you've made. Divide fifty by 500 to get 0.1, or a ten percent conversion rate.


How to Improve Conversion Rate

A high conversion rate will benefit your company's bottom line. Keep the following tips in mind as you strive to meet your conversion goal and increase the profitability of your company:

Change your CTA. Discuss with your marketing and sales teams how to create the most effective call to action. A clear and compelling CTA has the best chance of converting a large number of people. Create a sense of urgency and need in your customers, as well as a strong belief in your company's ability to fulfill this desire.

Clarify your value propositions. To increase your conversion rate, make sure your users understand what you're offering in the first place. Marketing campaigns can be sunk by imprecise value propositions. Define exactly what you want to pitch to your potential customers and plan your strategy around stating it in clear and appealing terms. Include testimonials from customers attesting to your success in delivering on these value propositions.

Conduct market research. Discuss with customers what is and isn't working with your conversion messaging. Inquire about what makes users tick, and tailor your marketing to their suggestions. This can help improve your click-through rate and increase conversions. Finally, digital marketing is an interactive process between businesses and end users.

Offer more incentives. In order to increase your overall conversion rate, you may need to provide incentives to customers. Give each of your site's unique visitors a compelling reason to complete a conversion for your company. For example, if you want more people to sign up for your newsletter, you could offer them a discount code to your online store in exchange.

Overhaul your branding. If you haven't seen any improvement in your conversion tracking over a long period of time, it might be time for a complete brand overhaul. Examine your sales funnel for any impediments. Contact your target market to see how you can rebrand in a more appealing manner.

Try A/B testing. Conversion optimization is heavily reliant on trial and error, and A/B testing will assist you in doing so in an efficient and effective manner. In this type of testing, you develop two distinct marketing strategies and track their performance at the same time. After the campaigns have concluded, assess which had the most success. Determine why one was more effective than the other and double down on the strategy in the future.

Tweak your UX. It's possible that your user experience (or UX) is making it difficult for potential customers to convert. Perhaps your checkout screen lacks an intuitive design pattern, or your landing page is difficult to navigate. You have the potential to increase conversions if you improve your user experience.

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