What is conversion rate? Formulas and optimization.

Conversion rates are an important metric for marketing departments to gauge how compelling a product or solution is for customers. Conversion rates vary depending on numerous factors, including the industry, type of business, key business objectives, brand, customer segment, conversion goal, time of year, product releases, marketing efforts, and more.

Key takeaways:

• A website or app conversion rate shows how effective a brand is at using its online platform to transform traffic into revenue.
• A funnel conversion rate shows how successfully your online platform moves visitors through your conversion funnel.
• It is important to ask clear business questions about your conversion rate to produce the most relevant results with your conversion rate calculations.

This post will discuss:

• What is a conversion?
• Conversion rate formulas and examples
• Measuring traffic and conversions
• Conversion rate optimization and best practices
• Optimize your conversion rate

In digital marketing, a conversion occurs when a user completes a desired action or goal on a website, online app, or other digital platforms. This can be any event (known as a conversion event), such as a purchase or form submission, or a metric such as the number of return visits within a given time. There are many types of desired actions that a user can take, but some are more significant than others. In the context of digital marketing and engagement, a desired action is one that is valuable or represents success to an online business.

Examples include completing a purchase, creating a new user account, watching a video, or signing up for a subscription. These actions indicate that a website or app user is interested in, engaging with, or acquiring your enterprise’s products or services.

Conversion rate measures how often visitors complete a desired action, such as making a purchase, submitting a form, or creating an account. Common ways to improve conversion rate include A/B testing, personalization, content marketing, and landing page optimization.

At a basic level, conversion rate is the percentage of visitors or visits that result in a conversion. The formula you use depends on the question you want to answer.

Common conversion rate formulas

The first two formulas compare conversions with total traffic. The last two measure the share of traffic that converted. Choose the formula that best answers your business question.

Segment-specific conversion rates

You can apply the same visitor conversion rate formula to any audience segment by limiting both the numerator and denominator to that segment. For example:

New visitor conversion rate = (Unique new visitors who converted / Unique new visitors) × 100

You can use the same approach for returning visitors, desktop and mobile users, or any other segment you want to analyze. The right formula depends on how you define your audience and conversion event.

Conversion rate example

Suppose you're running an A/B test on the tools category page for a retail hardware store.

1. Experience A (control): Standard page, no offer.
2. Experience B (test): Same page with a discount on tool purchases.

Here’s how you would go about measuring only visitors who saw each version and only tool purchases made by those visitors:

1. Experience A: 255 purchases / 2,525 visitors = 10.09%
2. Experience B: 382 purchases / 2,540 visitors = 15.04%

Experience B lifted the visitor conversion rate by 49%. In this example, both visitor and conversion counts are limited to the tools category page. Including visitors who did not see the test, or purchases outside the page, would distort the result. Your audience and conversion definition matter as much as the formula.

Funnel conversion rate

Funnel conversion rate measures how effectively visitors move through a multi-step process, such as checkout, from entry to completion. It can help you track completion trends over time and identify where drop-off occurs.

The starting point of the funnel depends on your business definition. Some organizations define the start of the funnel at checkout, while others mark the start earlier, such as at the cart or product detail page.

To calculate funnel conversion rate, you need:

• Funnel start visitors or visits: Unique visitors or visits that entered the first step.
• Funnel conversion visitors or visits: Unique visitors or visits that completed the final step.

Funnel visitor conversion rate = (Visitors who complete the funnel / Visitors who enter the funnel) × 100

Funnel visit conversion rate = (Visits that complete the funnel / Visits that enter the funnel) × 100

You can also calculate the inverse: funnel abandonment rate.

Funnel visitor abandonment rate = 1 − (Visitors who complete the funnel / Visitors who enter the funnel), × 100

Funnel visit abandonment rate = 1 − (Visits that complete the funnel / Visits that enter the funnel), × 100

How you determine the value of the equation denominator depends on how you measure traffic on your digital platform based on your enterprise type, goals, and KPIs.

The two main methods for measuring traffic are by visits and visitors. If there's an opportunity for a visitor to convert during each visit, as on an ecommerce site, count visits. If your goal is an action that typically happens once, like creating a new account, count unique visitors instead.

Visitor counts are also useful when repeat conversions are possible. A cruise travel site is a good example: Visitors often research over several visits before booking their travel.

It can be useful to track both — one rate using visits as the denominator, one using visitors — for a more complete picture of how your traffic converts. This is the method Adobe for Business recommends.

Conversion rate optimization is the practice of increasing the percentage of visitors who complete a desired action on your website or mobile app, such as making a purchase, filling out a form, or signing up for a service.

Organizations typically improve conversion rates by testing changes to pages, content, or app experiences and measuring the impact. A/B testing helps compare individual variations, while multivariate analysis can reveal how multiple changes work together and influence results.

To improve conversion rates, start by establishing a baseline. From there, test thoroughly and measure consistently so you can understand what is driving improvement.

Best practices for measuring conversion rate include:

• Measuring conversion rate over consistent time intervals, such as weekly or monthly.
• Counting traffic and conversions the same way in every reporting period.
• Monitoring changes closely and identifying what may be influencing them, such as seasonality, promotions, or shifts in campaign activity.

For example, a business may see a sharp increase in conversion rate over the past 30 days. But a deeper look could reveal that higher discounting drove more orders while lowering overall revenue. That is why conversion rate should be evaluated alongside the business context behind the change.

Conversion rates vary depending on numerous factors, including the industry, type of enterprise, key business objectives, brand, customer segment, conversion goal, time of year, product releases, marketing efforts, and more. For instance, conversion rates for B2B enterprises often spike in the first quarter of the fiscal year. And they often differ between new and returning visitors.

This is where Adobe Customer Journey Analytics comes in. Customer Journey Analytics helps you build high-value audience segments using customer data to ensure your enterprise targets the relevant individuals. Customer Journey Analytics helps you understand customer needs by creating a profile of an individual’s engagement over time.

Ready to deliver customer needs and convert customers at the right time? Try Customer Journey Analytics today or watch an overview video.