Conversion Rate

Posted in Marketing and Strategy Terms, Total Reads: 445
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Definition: Conversion Rate

Conversion Rate is a mathematical equation used by online advertisers and marketers to calculate the number of visitors converted to paying customers or users.


It can be calculated as follows-

(Number of Orders ÷ Number of Visits)*100 = Conversion Rate


This concept is often used by E-Commerce websites. For Example- On a E-Commerce website, 100000 visitors visit during the present month and 3000 purchased items from the website. In this case conversion rate will be

(3000/100000)*100= 3% conversion rate


In simple terms percentage of people who take the wanted action. Online stores use conversion rate to calculate their marketing effectiveness. They take help of marketing professionals to increase their conversion rate. Infact best of the online stores have high conversion rate and they continuously change their marketing and advertising strategies to increase it. This can be done by providing discounts and rebates, changing advertising methods or interface of the website. Conversion rates are important to measure the marketing effectiveness as well as the impact of user designed interface on the website visitors. Marketers keep track of conversion rate to check need of redesigning marketing strategies.

 

Conversion Rate is often used by E-Commerce stores but this can be used for various needs where there is need to check performance of the design. This can be used as a performance indicator. Purposes can be-

• Purchasing from online store

• Become registered user

• Subscribe the service

• Upgrading from one level to the other- calculate those users only who are using low level service

• Downloading trial software

• Spending good amount of time on the website or returning to website more than once in a certain period

• Reading articles on the website etc

 

Conversion Rate depends on various factors like Brand Reputation, Prices, Discounts and sales, Sales complexity and level of commitment. Measurement period should be taken wisely as it can provide huge gap in figures.


For Example- On a single day of sale, people visit website 5 times more than regular days. So in general measurement period is kept short like a month.

 

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