A: A conversion rate tells you how well you are converting traffic into revenue on your website, app, or digital platform. It is a critical marketing metric. In its simplest form, a conversion rate tells you how well you’re converting traffic into revenue from your website, app or other digital platform. It is the percentage of conversions per visit or visitor, depending on how you count your traffic. Here are the most common formulas:
- Conversion Rate (Visits): the percentage of conversions per visit
- Conversion Rate (Visits) = (Total number of conversions / Total number of visits) * 100
- Conversion Rate (Visitors): the percentage of conversions per visitor
- Conversion Rate (Visitors) = (Total number of conversions / Total number of unique visitors) * 100
The choice of which conversion rate formula to use depends on the question that you want to answer about your traffic and its conversion behavior. While the above formulas calculate the percentage of conversions per visit or visitor, the following formulas calculate (a) the percentage of visits during which conversions occurred and (b) the percentage of visitors who converted. These calculations are often more useful because visits or visitors can be targeted.
- Visit Conversion Rate: percentage of visits during which a conversion occurred
- Visit Conversion Rate = (Total number of visits during which a conversion occurred / Total number of visits) * 100
- Visitor Conversion Rate: percentage of visitors who converted
- Visitor Conversion Rate = (Total number of unique visitors who converted / Total number of unique visitors) * 100
The choice of formula also depends on which set of visitors or visits you want to understand. The following equations provide a useful breakdown when you want to understand the conversion behavior of new vs. returning visitors.
- New Visitor Conversion Rate: percentage of new visitors who converted
- New Conversion Rate = (Total number of unique new visitors who converted / Total number of unique new visitors) * 100
- Returning Visitor Conversion Rate: percentage of returning visitors who converted
- Returning Conversion Rate = (Total number of unique returning visitors who converted / Total number of unique returning visitors) * 100
Another example shows the percentage of desktop versus mobile visitors who converted.
- Desktop Visitor Conversion Rate: percentage of desktop visitors who converted
- Desktop Visitor Conversion Rate = (Total number of unique desktop prospect visitors who converted / Total number of unique desktop visitors) * 100
- Mobile Visitor Conversion Rate: percentage of mobile visitors who converted
- Mobile Visitor Conversion Rate = (Total number of unique mobile prospect visitors who converted / Total number of unique mobile visitors) * 100
The choice of how to define the visitors, visits, and conversions used in your conversion rate calculation requires you to be clear about the business question you want to answer. For example, suppose that we run an a/b test on the Tools product category page on a website for a retail hardware store. The test version (Experience B) of the Tools product category page shows a special discount offer for tool purchases. The control version (Experience A) is the default Tools category page, which does not show the special discount offer.
Our goal is to determine whether a higher percentage of visitors converted by purchasing tools after viewing Experience B with the special discount offer compared to those who saw Experience A, the default Tools product category page without the special discount offer.
First, we want to determine the number of visitors who saw the Tools product category page in each test experience:
Unique visitors who saw the “Experience A” Tools product category page = 2525
Unique visitors who saw the “Experience B Tools product category page = 2540
If, instead, we had used a count of all of the visitors to the site and not just those who saw the Tools product category page, our visitor number would not be relevant or accurate because it would include people who did not see or respond to the test experiences. This would artificially inflate the visitor count (the equation denominator) and result in a conversion rate that was lower than it should be for the test audiences. It is important to properly constrain the count to the relevant data set in order to more precisely answer the right business question.
Likewise, we want to constrain the conversion count to tool purchases and not all purchases because we are only showing a special discount offer for tool purchases. If we expanded the set of conversions to include all purchases, we would artificially inflate the conversion count and the result would be inaccurate and irrelevant.
- Conversions: Tool purchases by unique visitors who saw the Tools product category page (Experience A) = 255
- Conversions: Tool purchases by unique visitors who saw the Tools product category page (Experience B) = 382
- Visitor Conversion Rate (Experience A) = (Total tool purchases by unique visitors who saw the default Tools product category page / Total unique visitors who saw the default Tools product category page) * 100 = 10.09%
- Visitor Conversion Rate (Experience B) = (Total tool purchases by unique visitors who saw the test Tools product category page / Total unique visitors who saw the test Tools product category page) * 100 = 15.04%
Using the appropriate definitions for visitors and conversions, the test resulted in a higher conversion rate when the special tools discount offer was seen in Experience B, with a lift of 49 percent.