How to Calculate Conversion Rates

calculate conversion rateConversion optimization is all about increasing the percentage of visitors that “convert” into buyers. When you look at your conversion rate on a monthly basis and carefully test key elements to make your site more persuasive, you will be amazed by how much more ROI you can achieve from the same amount of traffic.

If you have one hundred site visitors and one sale you have a 1% conversion rate. This is a simple formula:

Total Conversions ÷ Total Views ×100 = Conversion Rate

Here are some examples of how you could compute conversion rates for different scenarios and transaction types:

Landing Page Conversion Rate

Number of Lead Forms Filled Out ÷ Traffic on Landing Page × 100 = Conversion Rate

Website Lead Conversion Rate

Number of Lead Forms Filled Out ÷ Total Traffic on Home Page × 100 = Conversion Rate

Shopping Cart Sales Conversion Rate

Number of Sales ÷ Number of Visitors × 100 = Conversion Rate

Conversion Optimization Benefits

If you optimize your conversion rates, here are the potential benefits you can realize:

  • Increase sales
  • Decrease customer acquisition costs
  • Decrease click costs
  • Decrease bounce rates
  • Recover lost leads and/or reduce shopping cart abandonment (when people click away from your site without purchasing the items they’ve placed in the online shopping cart)
  • Cross-merchandising to increase average order size and units per sale
  • Segment and optimize conversion funnels by campaign type, demographic, traffic, and purchasing habits
  • Increase repeat purchases, visitor frequency, and customer loyalty

Scientific Intuition (My term for combining art and science)

Listening to your gut is not always the best idea, but it is actually a good place to start. There is nothing worse than launching a new website that you love and your customers hate, so you can’t stop there. In order to make the most money online, you need to leverage scientific testing tools like Visual Website Optimizer in combination with the creative process, to find the best solutions for high ROI. You need to fuse the power of the creative team with the rational energy of scientists.

Google has discontinued Google Website Optimizer for multivariate testing, so I recommend using the more feature-rich and very popular Visual Website Optimizer, especially if you want to engage in multivariate testing.

As you complete tests that prove statistically which creative elements (such as headlines, offers, etc.) get more leads/sales, put new tests in place right away for continuous improvement. There should be no damage to creative egos because in the end, the test that won should stay as the “live” creative, not the things the boss or the art director likes.

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