Conversion rate is the ratio between the total number of visits and the visits which resulted in a conversion to at least one of your goals.
That’s the definition Google Analytics, the most common web analytics tool, uses. Other tools may of course have different ways to measure the conversion rate.
It seems pretty straightforward, right? Still, there are some details that may be worth thinking about:
Conversion rate measures both new and returning visitors
The default setting in Google Analytics is the measurement of the conversion rate for overall traffic: new and returning visitors.
This is quite relevant to e-retailers. Just because the customer has acted once, it does not mean that one should stop trying to get the visitor to purchase more products.
Instead, let’s say you are a software company that sells software subscriptions. Then it may be that your goal is to transform the visitor only once: Getting them to start a subscription.
Say you also have login to your service on the same site. It is often the case that those who are users of the service comes back often, perhaps several times that day.
If your web analytics tool does only measure total number of visits, but not UNIQUE visits, you realize that the conversion rate will decline over time, as you get more return visitors who use your service/software.
In this situation it is better to measure the conversion rate as the proportion of new visitors, which resulted in a conversion.
Conversion rates for newly established sites
A phenomenon we have seen many times is that you start a site with some beta customers, test campaigns and more. How do you make small improvements and polish to their conversion rates? Maybe you use the conversion ratio of shrimp to present its business case.
Then the day of the big launch comes. Here we go, keep your fingers crossed!
Conversion rate drops like a stone and everyone scratching their heads and wonder how it could be like this!
What you have to realize is the fact that users in the first phase have a different “user intent” than the visitors who come after. The first customers are the ones who really made an effort to locate the specific offer. Or maybe it’s partners, friends etc, who all want to try and help.
So: Never take conversion rate for granted. It can fluctuate greatly, depending on how traffic is developed, which deals with competitors and the like.
This is another reason why you should not test different page options one after another but instead at the same time in a real-ranking, so called A/B-test.