Marketing 101: What is ‘Conversion Rate’ and How Do You Calculate It?

As defined by Google…

“Conversion rates are calculated by simply taking the number of conversions and dividing that by the number of total ad interactions that can be tracked to a conversion during the same time period.”

First, you need to know what a conversion is.

Depending on your goal, it could be a person who signs up for your email list, someone who makes a purchase or in the case of advertising it could simply be a page view.

Conversion rate is a percentage.

In other words, your conversion rate tells you the percentage of people that came to your site and took the conversion goal action you’ve defined.

To calculate conversion rate, use this formula:

Conversions / Visits = Conversion Rate

Let’s say that 1200 people visited your squeeze page and 300 of them joined your list.

300 divided by 1200 equals .25 or 25%.

Thus, 25% of people who come to your squeeze page actually sign up.

Why do you need to know your conversion rates?

Because it tells you what’s working, how well it’s working and what needs improving.

It gives you a basis to test A against B and see which one converts better. Because the better you are at converting, the less traffic you need to get the same results, and the better results you can get from the same traffic.

In online marketing, conversion rates are everything. Businesses live and die by the conversion rate because conversions result in sales, while a lack of conversions or not enough conversions to cover costs spells doom.

That’s why finding ways to improve their conversion rate is every marketer’s job.