Website Conversion Rate: Definition and How to Calculate it?

Did you know that more than 1 in 3 marketing leaders prioritize tracking conversion rates as one of their top KPIs (Key Performance Indicator)? Understanding and optimizing conversion rates can lead to continuous growth and success, which in turn translates into increased sales and stronger user loyalty.

That said, knowing how to calculate website conversion rates correctly helps companies identify what's working well or not in their marketing efforts. This understanding allows them to make adjustments as required and allocate their marketing budget more effectively.

This guide will help you understand the concept of conversion rates and provide a step-by-step method for calculating them. We will also learn why calculating and improving conversion rates is crucial.

What is a Conversion Rate?

The website conversion rate indicates the percentage of visitors who perform a desired action on your site, such as signing up for trials or downloading an ebook. In simple terms, it shows how well your marketing efforts are turning visitors into users.

Incorporate Nudge's user research and insights to collect actionable feedback from users to gain insights into their behaviors, needs, and preferences.

Are you wondering what the goal can be? Well, some common conversion goals include signing up for a newsletter, making a purchase or creating an account.

“If you can’t measure it, you can’t improve it.” - Peter Drucker aptly pointed out that without the ability to measure something and set clear goals for what you want to achieve, it is difficult to improve upon it.

A higher conversion rate directly corresponds to greater success in achieving your company’s goals, such as increasing sales or sign-ups. Tracking the conversion rate is equally essential for making informed decisions.

Pretty simple so far, isn’t it? Let’s keep going and understand how to calculate the conversion rate for your website.

Calculating Conversion Rate

Now that we have a basic understanding of conversion rates and have defined some common goals, read on to know how to calculate this crucial metric for your website.

To calculate the website conversion rate, you have to divide the number of conversions by the total number of visitors, then multiply by 100 to express it as a percentage.

Please note: Conversions can vary based on your specific company’s goals and objectives. It is essential to define clearly what actions count as conversions for your company.

Mathematically, the conversion rate formula is as follows: Number of conversions/ Total number of visitors * 100.

Number of conversions: This is the total number of desired actions/ goals achieved by visitors on your website or through your marketing campaigns.
Total number of visitors: This refers to the total number of people visiting your website, landing page, or interacting with your marketing content within a specific period.

Let’s consider the following example to understand better how to calculate the website conversion rate. Assume that you run an online fitness program and have launched a new promotional campaign offering a free trial to your subscriber list of 15,000 people. Out of those, 1,500 individuals signed up for the free trial after clicking on your campaign link.

To find the conversion rate, divide the number of sign-ups (1,500) by the total number of email recipients (15,000)*100. The result is 10%.

Please note: The conversion rate formulas follow a common structure but may vary in detail across industries. Each industry customizes the formula to improve the accuracy of measuring marketing efforts and better align with industry-specific goals.

What is a Good Conversion Rate?

According to Unbounce, achieving a 12% conversion rate on lead generation landing pages is really good. It means you would be performing better than about 90% of your competitors. That said, a good conversion rate can vary based on industry, target audience, and the specific type of conversion goal.

Here are estimated average website conversion rate benchmarks for various industry types:

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Regardless of your industry, knowing where you stand can give you helpful insights to improve your efforts.

Here's an interesting global insight: In the first quarter of 2024, e-commerce sites specializing in general apparel achieved the highest online conversion rates, reaching 2%.

Additional Tip: It is essential to understand that conversion rates can vary significantly depending on the type of conversion being measured. For instance, the conversion rate for downloading a free ebook is likely to be higher than for making a paid purchase.

How to Find Conversion Cost

A good conversion rate indicates a strong return on investment (ROI). To calculate the cost per conversion, use the formula: Total campaign costs/ Number of conversions.

Total campaign cost refers to the overall expenditure on marketing activities, including advertising and campaigns.
Number of conversions is the total count of desired actions completed by users.

For instance, if your marketing campaign costs INR 50,000 and leads to 5000 conversions, the cost per conversion would be INR 50.

Factors Influencing Website Conversion Rates

“Conversion Rate Optimization (CRO) is the art and science of getting people to act once they arrive on your website.” - Tim Ash, CEO of SiteTuners.

That said, several factors influence website conversion rates. Here are the 4 key factors:

UI/UX Design: A visually appealing and easy-to-navigate website can greatly impact conversion rates. Based on input data such as strategic marketing goals and buyer persona profiles, designers should begin developing UI/UX designs.

Nudge helps you effectively guide users through your product by using intuitive navigation and providing clear and actionable instructions. This approach helps users to grasp the platform's features quickly, thus improving their overall experience.

Walkthroughs by Nudge

Quality Content: It is rightly said, “Content isn’t king; it’s the kingdom.” Relevant and engaging content builds trust and persuades visitors to take action, like making a purchase or signing up for the course, for example.

For instance, the popular online marketplace Etsy enhances user experience with easy navigation and a wide variety of engaging content, thereby encouraging visitors to take action, such as making a purchase.

Etsy’s homepage

Through Nudge, you can keep users engaged by creating memorable experiences that encourage them to return. This can be achieved using challenges, stories, casual games, streaks, polls, and quizzes.

Nudge’s interactive platform challenges

Page Loading Time: A good page load time ranges from 0 to 4 seconds. Load times exceeding 4 seconds raise the likelihood of visitors leaving your site. Fast-loading websites are essential these days because users expect quick access to content and have little patience for slow-loading sites.
Effective Calls-to-Action (CTAs): Did you know that customized CTAs are known to convert 42% more visitors? Clear and compelling prompts guide users towards actions you want them to take, such as buying a product or subscribing to a course.

Strategies for Improving Conversion Rates Through Conversion Rate Optimization (CRO)

“A website without conversion rate optimization is like a car with no wheels - it will take you nowhere.” - JeremyAbel

If you want to improve your conversion rate, you must try conversion rate optimization (CRO). Essentially, this involves analyzing why your site isn't converting and, accordingly, finding solutions to improve performance.

Here are some strategies to optimize the conversion rates:

A/B Testing: This involves comparing two versions of your web pages with different segments of your audience to determine which version performs better. For instance, you can see where you're losing users: Are they abandoning their shopping carts or not reaching them in the first place?

User Experience: A well-organized layout helps users to find what they’re looking for and complete desired actions. Use intuitive menu structures, search features, and onboarding tours to decrease bounce rates.

Incorporating Nudge's onboarding feature can make sign-up straightforward and guide new users through the process using native onboarding tours, walkthroughs, and checklists.

Social Proof: Did you know that over 99.9% of customers read reviews when they shop online, with 96% specifically seeking out negative reviews? Hence, you must integrate customer testimonials, reviews, and endorsements to build user loyalty for your company.

Codeacademy, an online coding learning platform, uses the power of video to narrate stories of individuals who completely transformed their careers by acquiring new skills. Each page documents numerous success stories. When you click on a story, you can see a detailed interview with the student talking about their journey into coding and its impact.

Codeacademy’s learner stories

Smooth Checkout Process: A smooth checkout process is essential for converting visitors into users. Nike, a well-known global brand in sports and athletic wear, ensures this with a checkout page that has a simple, stylish design and clear information. As a leader in online shopping, Nike knows how crucial it is to give customers a hassle-free checkout experience.

Also Read: Website Conversion Rate Optimization: Techniques and Tips to Get Started

Conclusion

Understanding how to calculate and improve website conversion rates across various industries is essential for your company’s success. By analyzing conversion rates, businesses can identify effective marketing strategies and optimize user experiences, which can ultimately increase sales and customer engagement. This data-driven approach also guides strategic decision-making to enhance the overall performance and profitability of your company.

Consider exploring advanced tools such as Nudge, which provides personalized user engagement solutions to enhance conversions. Schedule a demo today to discover how Nudge can benefit your company.