Conversion rate

Besides the obvious, revenue and profit, there are two parameters that almost all webshop owners look at:

• Number of visitors
• Conversion rate

Because these two things together represent the opportunity to increase revenue.

That's why many webshop owners are interested in tracking and improving their conversion rate. Here you can read about what the conversion rate is, how to calculate the conversion rate and also some tips to improve it.

Conversion rate is an expression of the percentage of visitors to your online store who take a certain action.

For example, you really want them to buy something. But you also want them to sign up for your newsletter. You can have a conversion rate for both.

Let's assume that 100 visitors come to your webshop. Those 3 buy something and 11 of them sign up for your newsletter. In that case, you would have a conversion rate for purchases of 3% and for newsletter sign-ups of 11%.

When you explain conversion rate like that, people are pretty much on board with what the conversion rate is.

It's not only webshops that can measure their conversion rate. A blog, for example, can too. A conversion can be a comment on a blog post or a subscription to the newsletter. For webshops, a newsletter sign-up is typically called a micro-conversion.

In Google Analytics, you have the option to set up e-commerce tracking. This will show you your conversion rate in Google Analytics. You should do this if you have an online store.

How to calculate your conversion rate

You calculate your conversion rate by taking the number of sales divided by the number of visitors. You then multiply that number by 100 to make it a percentage. Let's take an example: If you have 930 visitors and 31 sales on a day, your conversion rate on that day is 31/930 * 100.

This gives you a conversion rate of 3.33%.

Conversion rate cannot stand alone

If you have a sky-high conversion rate, you can celebrate. But there's usually a reason for it that's not so great. It could be that you've dumped your prices so that you don't earn anything on them. Then you will often have a high conversion rate. It could also be that you are very difficult to find in search engines. So the users who find you already know your shop or have found you on page 5 of Google (and therefore really want to shop with you). So a really high conversion rate could mean that your visitor numbers are way too low. Similarly, remember that if you spend a lot of money on marketing or press coverage, your conversion rate will also drop drastically. But there are plenty of benefits to press coverage, so don't go to bed crying because one day you have a very low conversion rate and high visitor numbers.

What can you use the conversion rate for?

You should especially look at your conversion rate in relation to where you get your visitors from. For example, visitors from search engines typically have a significantly higher conversion rate than visitors from social media. This is not always the case. But it's important for you to know how well your visitors convert based on the source. If visitors from Facebook convert at 0.5% and visitors from Google at 2%, then you can pay significantly more for visitors from Google than those from Facebook. Also, keep in mind that this may be a distorted truth. You may be advertising to the whole world on Facebook and your webshop is in Danish. In that case, visitors from the Netherlands won't convert very well. So you may just need to "tweak" your traffic source (and not necessarily kill it off as a marketing channel).

What can affect your conversion rate?

Many things... Something as simple as how fast your website loads (i.e. is displayed). Amazon has measured that when their site loads 100 milliseconds faster, their revenue increases by around 1%. You will hardly notice any difference at 100 milliseconds, but at 1 second you probably will. Increasing the loading speed of your online store will also give you better search engine rankings and a better quality score in Google Ads, so it helps in several areas.

But you can do other things to improve your conversion - for example, displaying good reviews of your products or your webshop, etc. The discipline of improving your conversion rate is called "conversion optimization".

Remember - if you double your conversion rate, you have also doubled your revenue. With the same amount of visitors, of course.

We know online marketing in Shoporama

We've been working with online marketing ourselves for decades. As the only shop system in the country, we have spoken multiple times at conferences such as Marketingcamp, SEOday, Shopcamp, Digital Marketing, E-commerce Manager, Ecommerce Day, Web Analytics Wednesday and many more.