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How to Calculate Conversion Rate, and Ways eCommerce Businesses can Improve theirs

This blog will explain how to calculate conversion rate, and provide helpful ways eCommerce businesses can improve theirs.

Conversion rate is one of the most important metrics that both eCommerce and retail businesses calculate to determine a number of things. But with so many numbers and different statistics to be analysed as a business owner, it’s easy for your head to become a bit lost with these subjects, thinking ‘what’s the difference between conversion rate and click-through rate?’, and how do I calculate conversion rates in a quick and beneficial way?’.

Well, we have all the answers to these questions and any others you may have about conversion rate, so worry no more. This blog will provide you with an in-depth but understandable overview of what conversion rate is and why it’s important, how to calculate conversion rate. Once you have that sorted, we’ll look at ways in which you can improve your business's conversion rate.

What is conversion rate?

Let’s tackle the first question, what is conversion rate?

Conversion rate is the number of visitors to your website or store, divided by the number of those that complete your desired goals. For example, if you have 100 visitors in one day on your website and make 50 sales, that would generate a 50% conversion rate.

Conversion doesn’t have to be subjected to sales, however - it could be for numerous actions. For example, If someone clicks through to your website and signs up for a newsletter, or if someone visits your desktop website then clicks to download your app - these are all factors of conversion.

What may be considered a ‘good’ conversion rate can vary widely, depending on your industry and business model. eCommerce businesses tend to generate higher conversion rates with an average of 7.2%, in comparison to the travel and hospitality industry who has an average conversion rate of 2.7%.

So, the first step to achieving a successful conversion rate is to have thought out goals that you can measure. Define how many sales you want to make each month, how many people you want to download your app etc, and you can begin to calculate your conversion rates.

Why is conversion rate so important?

Now that you know what conversion rate is, it’s time to figure out why it’s so important for businesses, and why you need to start calculating your conversions today.

Conversion rates are a highly effective way to compare and contrast the success and performance of different campaigns and strategies you put in place to help push your business. For example, if you created a marketing campaign to increase the number of app downloads, then it is important to track this with conversion rates. Understanding the percentage of visitors that are completing the goals that drive your business, allows you to identify what’s going well, and what areas of your site need improving.

Being aware of your conversion rate is especially important when strategising campaigns and other marketing techniques. The marketing team needs to be fully aware of what and who they need to focus on to increase your conversion rate - ultimately increasing your conversion rate should be at the forefront of your marketing plans.

As well as understanding the type of marketing that works best for you, such as influencer marketing, advertising, or email marketing, it's just as important to know which channels have the best effect on your conversions.

For example, if you carried out a campaign to increase your conversion rate, and noticed that you were having the most website traffic from social media rather than a search engine - then you know what to focus on. By utilising the popularity you have on social media, you can continue to improve your conversions by following your successes. This information also tells you that focus on SEO is needed, to ensure you can also accumulate website traffic through a search engine. By doing this, you’re ultimately increasing your conversion from multiple channels.

If you use an app for your eCommerce business, analysing conversion rates can also help you identify technical issues. For example, if a customer tries to go on your app and it's not easy to navigate, or there's a technical error, they may come off the app without being converted. These types of issues can cause a major effect on your conversion rate and the quicker these are solved, the quicker you can create more conversions.

What you can gain out of monitoring conversion rates:

  • Gauge marketing spend
  • Create beneficial marketing campaigns
  • Determine your profitability
  • Allocate resources more efficiently
“Conversion rate is one of the most important marketing metrics. It’s a metric that lead generation marketers—from practitioners all the way up to CMOs—are measured on.”
Johnny Cheng, Platform Product Marketing Manager at Marketo

How to monitor conversion rates

Due to the importance of conversions, your marketing and sales teams must be able to monitor and analyse it in the best way possible. There are several ways you can monitor your conversions, both manually and through helpful resources, to ensure that you’re getting the most out of your efforts.

When it comes to conversion, there are a number of stages that a potential customer will go through before they are converted. By being aware of all of these stages and putting in place ways you can monitor the progress of each stage will inevitably help you increase your conversion rate.

Stages of conversion

  1. Attract
  2. Interact
  3. Engage
  4. Convert

Once you know the journey of your lead, its important to monitor each stage to see how far each lead gets in their journey, where they decide to leave and what it is that they are drawn to.

But, how do you monitor this?

Well, later in the blog we will look into manual monitoring processes such as CRO planners, and SMART goals. However, there are also some great online resources that can analyse conversion for you.

If you're using google ads as one of your marketing tools, Google Ads also offers a great free conversion tracker to help you analyse how effective your Ads are. Every time someone completes one of your business goals through Google Ads, the tracker will automatically document this for you - keeping an online diary so you don't have to.

For organic conversion, Google Analytics is one of the main conversion tracking resources many eCommerce websites will use, as it is the ‘holy grail’ for monitoring website traffic. However, it doesn't offer an in-depth look into the customers' journey through your website.

If you’re looking for a more in-depth tracking tool, Ruler analytics is a great resource that tracks each anonymous visitor over multiple sessions, traffic sources and keywords. Once a visitor is converted, Ruler Analytics matches their details to their marketing touchpoints and stores all of this data so you know what people are interacting with most. Using a tool like this could help take your conversion to the next level.

Other resources you can use to track you conversions:

  • Adinton
  • Adjust
  • Adober analytics
  • Clickmeter
  • Funnel.io
  • Heap
  • Kissmetrics
  • Webtrends

How to calculate conversion rates

So, you now have all the information on what conversion rates are and why they’re so important for your business. It is now time to put them to use and start calculating your conversion rates.

It is so important that you put time and effort into really knowing how to calculate conversion rates, as it's such a vital tool. Calculating conversion wrong could end up in overspending on unnecessary marketing and advertising, and you cant truly identify what's working and what's not. So if you're a marketer or you're looking to hire a marketing agency ensure that they have the needed training on conversion calculation and that they know how to work with the results.

So, how exactly do you calculate conversion rates?

Conversion Rate = Total number of conversions / Total number of unique visitors * 100

Note: The conversion can be completely unique to your goal e.g. sale, download, subscription etc.

Let’s give you an example:

You own an eCommerce website that sells clothing, and you’ve set a goal to generate more sales in February. Therefore, your conversion is when a visitor to the website purchases an item. To identify how successful this goal is by the end of the month you must divide the number of sales generated, by the number of visitors who entered your website, multiplied by 100 to create the percentage.

So let’s say your website made 3,000 sales in February and had an overall number of 200,000 visitors. What’s the conversion rate?

3,000 / 200,000 X 100

= 1.5%

If those were the figures you produced, you can then create a plan of how to increase this in the next month, and what you need to do to get there.

Conversion rate works alongside many other metrics that are important for monitoring success, such as click-through rate (CTR) and bounce back rate. As said previously, if you have noticed fewer sales are being generated through your brand’s app, and there is a high bounce rate, then you know there are things to be fixed within the app. Whether it be a visual/technical issue or the case that more marketing needs to go into it.

Once you have figured out your conversion rate, you can look into every aspect of your business in comparison to the goals you have set yourself, and create a well thought out plan to try and increase or stay on track with your conversions, as much as possible.

Ways eCommerce businesses can improve their conversion rate

One of the main goals for any business is to increase ROI, and what better way to do that than to increase conversion rates?

This section of the blog will look at ways in which you can utilise your information to improve your conversion rate and continue your businesses growth.

Conversion rate optimisation

Throughout the blog so far, we have discussed the process of identifying conversion goals, calculating their conversion rates, and optimising your site or app to improve conversion rates This process is called conversion rate optimisation (CRO). Similar to search engine optimisation, it is a process that each marketing and sales team will go through to identify ways to increase conversion rate and to do so in the most efficient and effective ways possible.

Once you have identified your existing conversion rate, CRO will be carried out by coming up with a number of hypotheses as to why your visitors aren’t being converted. These hypotheses will help put together strategies on how to improve conversions.

When you have come up with new ideas and designs on how you could increase conversions, many businesses will use the process of A/B testing.

What is A/B testing?

A/B testing is a method of comparing two versions of a webpage or app against each other to determine which performs better. A/B testing is essentially an experiment where two or more variants of a page are shown to users at random, and statistical analysis is used to determine which variation performs better for the desired goal. By using this testing method, you are essentially discovering which idea your audience responds more positively to, and which is likely to help improve your conversion.

Let's take a look at an example:

Your eCommerce clothing business has seen low conversion rates for a few months running, and you’ve noticed that your bounce rate is higher than normal. Upon analysing your website, reading reviews and discussing with your sales and marketing team - you become aware that when coming onto your website it isn't easy to navigate. When clicking on clothing it doesn't allow customers to see prices until clicking on the item - which is a major turn off to customers who want a website that's quick and easy to use.

What do they do to solve this?

Using A/B testing they create two new versions of the website that now include what their customers wanted, allowing people to test out both sites and decide on which one to use based on its success.

By changing this slight detail, it can help your conversion rate massively. Providing people with an accessible, well-functioning website that offers them great products and services, will provide great improvements in your conversion rate. Optimizely is a great website to use for A/B training and more information on how it can help increase conversions.

1. Create a CRO planner

As obvious as this may seem, it's so important to stay on top of your conversion rates to start seeing results. A CRO planner could simply consist of a chart containing your conversion rates each week - but this is a resource that every marketer needs. By staying on top of your conversion rates it's easier to notice changes and patterns that can you help you identify what's working and what's not.

What you should include in your CRO planner:

  • Weekly/Monthly goals
  • Calendar
  • Weekly conversion rates
  • Patterns in conversion e.g. if you convert more on certain days etc.

Being aware of your conversions is the first step to improving them.

2. Increase trust

When it comes to conversions, one of the main factors of completing a sale, or achieving another conversion is that the customer has trust in you as a business. One of the best, and easiest ways to create trust between the brand and consumer is to introduce reviews, and testimonials - with 92% of consumers hesitating to make a purchase if there are no customer reviews, and 97% say admitting that customer reviews factor into their buying decision.

If you've received any awards, adding these to your website and app can show credibility instantly, making people trust your business more. Also, adding testimonials to your website that are visible for customers to see will help increase credibility. Although having reviews on your own website is beneficial, gaining reviews on trust pilot and google reviews will also increase peoples trust in you, and make you more likely to create conversions. For example, when customers are comparison shopping online, if they see a good review of your website on one that's not your own, it could be the deciding factor in their decision. If it isn't apparent that people have used your products and services, and liked them, then your conversion rates could suffer.

Your reputation online is massively important, and another way to increase this is through a consistent online presence. Online presence through social media makes a massive impact on your conversion rate without a doubt. Having a platform where customers can see your brand on a more relatable level leads them to make purchases through your website, meaning social media can act as a strong CTA.

3. Track interaction

This may be harder than other ways of analysing your conversion rates, but it comes hand in hand with CRO. Using resources such as Hubspot's website grader, you can analyse what you're doing well on your website and diagnose what areas of your site you need to improve. It will be almost impossible to improve your conversion rate if you can’t understand how users are interacting with your website. So, with these analysis tools, they can offer you screen recordings of your website that show a user’s journey around the site, identifying what they click on, what they skip over and where it is that they click out of the site.

By tracking these things, you can begin to put together patterns and identify what needs to be changed or removed to help increase conversions.

4. Add live Chat

Another great way to stop people from clicking out of your website, and help them go through with the transaction, or subscription is to add a live chat bar to your website. This way if a customer has any queries about a part of the website or product they have an expert on hand to help them out. These types of chat bars work especially well when it comes to websites that offer services or expensive items, as people often need reassurance before going through with something. With live chat, your customer service or sales employees can alleviate concerns of prospects who are on the fence. A study showed that 62% of online customers would buy more products if live chat and support were available

5. Conduct regular buyer personas

If you’re not familiar with the term ‘buyer persona’ it is a:

“semi-fictional representation of your ideal customer. It’s based on market research, actual data about your existing customers, and a few (educated) assumptions. It helps you to understand and relate to an audience that you want to market your products and services to"

By having a good understanding of who your audience is and what they want from you as a business you can target them in more appropriate ways. For example, creating a relatable tone of voice and addressing their needs in your product or service. Ultimately your website and what it offers should be the answer to your audience's questions - if this is the case then your conversion rate should maintain at a high level. It is important that you keep up to date with how your audience is changing and how your competitors are also trying to target their needs to ensure you stay relevant.


So, you should now be an expert on all things conversion, from what it is, why it's important, how to calculate it, and ways in which your eCommerce business can improve on it. Analysing conversion rate is such an important part of creating a successful eCommerce business, and hopefully, you now have all the tools on how to succeed.

To summarise:

  • Conversion rate is one of the most important metrics that both eCommerce and retail businesses calculate to determine a number of things
  • The first step to achieving a successful conversion rate is to have thought out goals that you can measure. E.g. define how many sales you want to make each month, how many people you want to download your app etc
  • Being aware of your conversion rate is especially important when strategising campaigns and other marketing techniques.
  • Conversion Rate = Total number of conversions / Total number of unique visitors * 100
  • Ways to increase conversion; CRO, A/B testing, CRO planners, increasing trust, tracking interaction, live chats and regular buyer personas.

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