There are a lot of performance indicators to look at when assessing the performance of your eCommerce business. Of course, when it comes down to it, increasing revenue is the end goal. Still, there are many things you can look at to ensure you are getting the most revenue out of everything you are investing in the growth of your business.

Conversion rate is one of the most critical indicators of performance. Most e-commerce stores put a lot of time, money, and effort into getting potential customers to visit their websites, open their e-mails, and respond to various calls to action. Conversion rate looks at that response and helps us see if we can take steps to get more potential customers to respond to the call to action placed before them.

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How To Calculate Conversion Rate

Before we get into the specific data and formulas you need to calculate conversion rate, let's define the term itself. We will start by looking at conversion. A conversion is what happens when a customer responds to a call to action. So often, we jump to the most obvious idea of conversion, a sale. However, conversions can take us throughout the entire sales funnel.

A conversion can be as simple as providing an e-mail address when asked, signing up for a newsletter, requesting more information about a product, or of course, making a purchase. The conversion rate is then the calculation of the number of conversions compared to the total number of people who found themselves in front of a specific call to action.

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The Different Types of Conversion Rates

When considering how to calculate conversion rate, it is critical to understand that there are different types of conversions. The type of business you run, your marketing strategy, and your goals will determine how you think about it. The most important thing is that you realize that not all conversions are created equal. Two ways to look at different types of conversion is through the lens of macro conversions vs. micro-conversions and new customer conversions vs. return customer conversions.

Macro conversions refer to the primary goals of your business. The most common macro conversion would be a completed purchase. However, companies with a more complex sales funnel may consider requesting a quote or setting up a sales call as a macro-conversion. Micro-conversions then represent all the smaller steps that can help a customer make the more significant move. These could include clicking on a specific link in an e-mail, adding a product to the cart, signing up for an e-mail list, downloading a resource, or creating a customer account.

You might not think much about the difference in conversion rates between new website visitors and return visitors. Still, you are likely to have different goals for each category, and it makes it essential to measure these differently whenever possible. The goals for new visitors may be related more to micro-conversions. Can you convince this customer to sign up for your mailing list or download a resource? Of course, there is no harm if they follow through to a macro-conversion, but you may learn more by how they respond to smaller prompts.

Returning visitors are a different story. If they are returning and have not previously made a purchase, the goal may be that they check out. For returning customers, it may be that they make another purchase based on specific recommendations.

How To Calculate Conversion Rate for Website

The math behind calculating conversion rate is pretty simple. However, it does require using the correct data. The formula you will need to use is the number of times a conversion is completed, divided by the number of people who had the opportunity to complete it, times 100. For a moment, let's assume that you want the conversion rate of a goal that could be completed by anyone who visited your website.

Conversion Rate = conversions / total visitors x 100

Let's look at an example. For simplicity, let's say your eCommerce website sells headphones. Let's also say that you want to know the conversion rate based on the number of your website visitors that intend to buy a pair of headphones. So, your conversions are equal to the total number of customers who order headphones over a set period. The total number of visitors would be every person who visited your site during that same period. For example, you received 200 orders in 30 days, and during those 30 days - 10,000 people visited your store.

Divide 200 by 10,000 = 0.02 x 100 = 2. Add the percent sign and you will see that your conversion rate is 2%.

That is a straightforward conversion rate calculation. It does provide a sense of the overall effectiveness of your website. Still, you may get more helpful information if you narrow your target. For instance, you might want to know your conversion rate for first-time website visitors. To get this, you would need to see the number of first-time website visitors and the number of those first-timers who ordered headphones during a specific period. For example, maybe you have 4,000 new visitors over 30 days, and 50 of them ordered headphones.

Divide 50 by 4,000 = 0.0125 x 100 = 1.25. Add the percent sign, and you will see that your conversion rate is 2%.

Using this logic, you can determine conversion rates based on any conversion and any sample of your visitors.

How To Calculate Conversion Rate Email Marketing

So far, the discussion has primarily related to the conversion rates of visitors to your website. However, the conversion rate is just as important when it comes to e-mail marketing. With around 300 billion e-mails sent, e-mail marketing remains one of the most effective tools in a marketer's toolbox. Still, it is impossible to understand the value and effectiveness of your e-mail marketing campaigns without understanding the conversion rate. To calculate the conversion rate for e-mail marketing, you need to start by understanding the goals of the e-mail. That comes down to the simple question of, "what do you want people to do when they open your e-mail?" If they do that, it counts as a conversion.

It's an excellent time to remember the concept of micro conversions and macro conversions. In many cases, e-mail marketing conversion rates will be based on micro conversions. Sure, you may want to know the total number of people who opened your e-mail who eventually made a purchase. That may be your macro conversion. However, especially with e-mail marketing, it may be worth drilling deeper down into micro conversions. Let's say, for example, the call to action in your e-mail marketing campaign is as simple as clicking on a link to your website. In that case, your conversion rate would be based on clicks.

No matter the conversion rate you wish to measure, the formula remains the same. As an example, you might send out 5,000 e-mails to customers are your mailing list announcing the arrival of a new product. Out of those 5000, 250 clicked through and ordered the product. To calculate this macro conversion:

Divide 25 by 5000 = 0.05 x 100 = 5. Add the percent sign, and you will see that your conversion rate is 2%.

Improve Your Conversion Rate with Personizely

Once you know how to calculate conversion, you will likely look for ways to improve it. Improving conversion rates can give you the most significant ROI of any time, money, and effort you put into your e-commerce business. Even a slight increase in your conversion rate percentage can lead to a massive improvement in sales, revenues, and profit. In addition, once you increase the conversion rate, all of your other investments will begin to pay off at a higher level. For instance, if you invest in paid advertising, that advertising will return better when a higher percentage of those who visit your site via an ad actually convert to paying customers.

There are many ways to increase conversion rates, but two of the most powerful methods are website personalization and the use of widgets to get the attention of potential customers at precisely the right moment. Personizely is designed to increase conversion rates using these two methods. With Personizely's powerful personalization tools, you can use advanced targeting to deliver the right content to the right people. Multiple variations make it possible to customize the content each visitor sees based on the advanced targeting data points you set up. For example, you can personalize content based on referral links, location, device, purchase history, and a host of other information. In addition, widgets can deliver pop-ups or embedded content that will catch a customer before they leave the site. You can use them to help your almost-customers become loyal or first-time customers. It is also the most effective way to reduce cart abandonment and grow the email list that will be the base-point for your future campaigns.

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When you are ready to see those conversion rate percentages go up, take advantage of Personizely's free, no-obligation trial. See how easy it is to use the inline editor and drag and drop builder to add personalized, optimized, targeted content to your website.