How to Calculate Conversion Rate in 2 Easy Steps + Formula

How to calculate conversion rate: Ultimate guide and formula

Are you curious to know whether your website is performing the way you wish? You’ve heard about how important the conversion rate metric is, but the question ‘how to calculate conversion rate’ sounds like Greek to you?! Then you’re in the right place!

After all, what is the use of visitor tracking and click tracking if your visitors won’t buy any service from you? Conversion rate optimization is the ultimate goal of every businessman. That’s why you should know how to calculate conversion rate manually or with a CRO tool.

In this article, we will discuss the meaning of conversion rate, how to calculate it, and, most importantly, how you can improve your conversion rate. However, if you’re looking for a tool to do the job for you automatically and give you the results, try WatchThemLive’s goal tracking feature for free!

Now, let’s get down to business!

What Is Conversion Rate

When we say it’s essential to know how to calculate conversion rate, it’s because the conversion rate shows you the percentage of website visitors or landing page viewers who respond to your CTA.

It might differ depending on the type of business and goal you have in mind, but some instances of conversion are:

  • Making a purchase,
  • Signing up for your newsletter,
  • Filling some form,
  • Creating an account,
  • Downloading some content,
  • Upgrading the service.
How to calculate conversion rate for different industries in online shops worldwide
The Online Shopping Conversion Rate Worldwide in 2022: Source

What Are Conversion Rate Types

You might be thinking that simply knowing the number of visitors who convert gives you the number you’re looking for. However, conversion rate calculation is a lot more than that! There are many instances and types of conversion rates that you need to have the numbers for to have an accurate insight into your business’ progress. 

So, let’s take a look at the types of conversions: 

1. Calculate Conversion Rate: Macro Conversions

To make the concept simple, think of it as the goals you set for yourself in your personal life. When defining goals, we normally take baby steps to achieve that ultimate goal. When calculating conversion rate, macro conversions are those ultimate end, namely, a completed purchase, revenue, etc.

That is, macro conversions are typically identified as website goals that directly showcase a website’s success. Thus, the economic performance of a website can be measured using this goal statement and a tracking system. 

2. Calculate Conversion Rate:  Micro Conversions

Any other conversion or the baby steps we talked about to reach the main selling goal can be categorized into micro-conversions. Basically, this type of conversion is a measurable action that significantly leads a potential customer toward becoming a paying customer. 

Examples of micro-conversions can include a variety of actions, such as when a user reads your blog, watches your video,  comments on your post, or signs up for your monthly emails. Although this type of conversion doesn’t directly get you dollars, knowing how to calculate conversion rate at this stage helps you realize whether the visitors are at the right stage of your conversion funnel.

Why Is Your Conversion Rate Important & Why Should You Calculate It

It goes without saying that one of the most important KPIs (key performance indicators) of any website is its conversion rate. So, here, we will elaborate on the significance of this metric to help you understand why you should learn how to calculate conversion rate. 

Ready? Let’s jump in.

#1. Conversion Rate Calculation Reveals the Efficiency of Your Marketing Efforts

You can use conversion rates to assess the effectiveness of your business efforts. In addition, you can evaluate the effectiveness of your site or app and discover areas of improvement by learning what percentage of your users complete the goals that drive your business.

Closing more sales with the same amount of traffic will improve your conversion rate. Imagine you spend $1,000 per month on advertising to get 500 visitors to your site. If you are planning to double your conversion rate through ads, the costs will double too. So, instead of spending more on ads, you can either reduce your ad budget and spend more on other strategies or invest the extra cash into new ad initiatives.

#2. Conversion Rate Calculation Saves Your Time and Money

As mentioned earlier, the conversion rate measures the efficiency of your marketing efforts. Part of marketing is doing one’s best to make the users willing to take the next step in their customer journey with you. Therefore, knowing how to calculate conversion rate helps you measure how successful you’ve been in encouraging the visitors to progress in your funnel. 

The more frequently they move along in your conversion funnel, the higher ROI you have. This means more money in your bank account and more time at hand! 

Moreover, regularly calculating the conversion rate of your website helps you diagnose the bugs your marketing plan has to fix and prevent wasting time on unfruitful strategies. 

#3. Conversion Rate Calculation Helps Prevent Cart Abandonment 

Are you confused as to why your customers don’t finish the whole process of their checkout? Do you wish you could come up with a solution for it? Well, don’t worry! 

By knowing how to calculate conversion rate, you can find and address the pain points that are causing your potential customers to abandon their shopping cart. Then, you can set up a strategy for conversion rate optimization and increase the chances of their finishing the checkout process. 

How To Calculate Conversion Rate

Simply put, conversion rate is calculated by dividing the number of conversions you get in a given time frame by the total number of people who have visited your site or landing page and multiplying it by 100.

conversion rate formula
Conversion Rate Formula

This is the overall conversion rate, but the beauty is that you can calculate it in any specific area and find the answer to the following questions:

  • Overall conversion rate: How well does your website convert traffic from any source?
  • Marketing channel conversion rate: Is Google Ads or Facebook Ads traffic more likely to convert?
  • Page-level conversion rate: Which of these pages is better at converting traffic?
  • Campaign conversion rate: Did my targeting changes improve anything?
  • Individual ad conversion rate: Do I need to change my ad copy? Does this ad drive more qualified traffic?
  • Keyword conversion rate: Which keywords deserve more budget?

We can make this list longer and longer for any specific area of business and its impact on conversion rate, but it’s enough to get the point across.

Now, how do we calculate the conversion rate if the same person converts multiple times? As discussed above, the conversion rate is the number of conversions divided by the number of visitors. So, to see what percentage of visitors converted (regardless of how many times they converted), you divide visitors’ responses into the total number of visitors and multiply by 100. 

Conversion Rate Calculation Example

Okay, now take a look at this example and try your hand at conversion rate calculation:

Imagine that you own an online store, selling watches. You check your analytics and realize that in the last month, 60,000 people have visited your website. You go on and check the number of people who have made a purchase in the last month, and the number is 1,500. 

How do you calculate the conversion rate in this case?

Based on the conversion rate formula we explained above, you first need to divide the number of people who have bought from you (which in this case is 1,500) by the total number of your visitors (60,000 in this example). The number we get from this division is 0.025. Finally, we need to multiply this number by 100 to find the percentage.

So, the conversion rate in this example is 2.5% which is quite a nice conversion rate to have if your website is not Amazon!

How to Calculate Conversion Rate: Things to Consider

There are a couple of points you need to take into account when doing the calculation. Let’s discuss them here. 

Getting Meaningful Data

When we talked about how to calculate conversion rate, the assumption was that the data was relevant. Relevant or meaningful data has two factors:

1. Time

Data should be collected in a period that shows the real information about the business. So, for example, for a small website with 100 visitors in a month, we should take six months to have the data that we can work with.

2. Number of Visitors

If we have a 100% conversion rate, we can assume that something is not right because the sample can be one visitor who has converted. But on a bigger scale, the number drops, and that’s why we need a big sample size to measure the actual ROI.

What Is a Good Conversion Rate

There is no clear-cut answer to that question. A good conversion rate is defined based on the niche of the business. What is excellent for one industry, might be considered under the average for the other.

For example, a good conversion rate for eCommerce is around 2.5% to 3%. However, this number is 11.2% for the finance industry. Therefore, a good conversion rate for eCommerce is considered terrible for other industries like finance.

This is because different industries attract different numbers of buyers. Imagine an online store with 100,000 average visitors per month with a 3% conversion rate. Since you’ve already learned about the conversion rate formula, you can measure that this eCommerce closes 3,000 sales per month.

On the other hand, a business in the finance industry with let’s say 2,000 customers and 11.2% CR, only gets 224 deals per month. So, lower conversion rates for different business niches don’t translate into lower profit.

Therefore, if you’re curious to know what a good conversion rate is, take a look at your niche, objectives, website metrics, the investments you’ve made, etc. And, whatever your business niche is, a CRO tool is always helpful to increase the conversion rate of your website. If you wish to know how, just keep reading.

Average Conversion Rates for Different Businesses

Now you understand how different conversions work for different businesses, let’s discuss what conversion rate is good for each business. Here is a list of good conversion rates for businesses such as B2B, consumer services, education, legal, and e-commerce.

Average conversion rate for eCommerce based on different industries
Average Conversion Rate According to Different Industries

Conversion Rate and ROI

Higher conversion rates translate into a stronger return on investment. Measuring the conversion rates is essential for tracking the efficacy of your public-facing content and the ROI of your campaigns.

Let’s say you have spent $10,000 on a campaign and got 50,000 views (CPC: $0.20), which resulted in 2,000 purchases. And you profit $5 for each purchase.

Based on the conversion rates formula, number of conversions (2,000) / number of interactions (50,000), your conversion rate is 4%. Which is very promising at the first glance. And you might take a day off.

However, after considering ROI, you’ll realize that all your efforts brought you zero profit! But how? Isn’t 4% a good conversion rate? Yes, it can be. But there are other factors to consider when measuring ROI.

 To make everything more clear, please take a look at the following table:

Sales 2,000
Conversion rate4%
Profit per sale$5
Total profit2,000*5= $10,000
Total cost for campaign$10,000
ROI Calculation According to Conversion Rate

I believe it’s now more clear why we can’t give an absolute number for a good conversion rate.

But, how can you improve ROI considering your conversion rates?

Improve Your Conversion Rates for a Better ROI

We will get to this one in detail in a few minutes. But let’s give you an example to help you better understand the undeniable effect of improving conversion rates here. 

Let’s use our table once more. But this time, we’ll imagine you have used a CRO tool such as WatchThemLive and doubled your conversion rates. Therefore, you have 4,000 purchases with the same amount of visitors and expenses.

4% Conversion Rates8% Conversion Rates
Sales 2,0004,000
Profit per sale$5$5
Total profit2,000*5= $10,0004,000*5=$20,000
Total cost for campaign$10,000$10,000
Conversion Rate Calculation for ROI

See? The effect is unbelievable. Instead of spending more on your campaign you just improved your conversion rates and by increasing your CR, your ROI increased as well. That’s all thanks to the conversion rate calculation and choosing a good strategy.

Reduce CPC to Improve ROI

Now imagine someone who doesn’t know how to work out conversion rate and believes 4% is enough for their business (which can be, depending on the type of the business). How can the business owner improve the company’s ROI without boosting conversion rates?

The answer is reducing the cost per click for advertisements or campaigns. If you can’t get more people to buy from you, optimize your marketing efforts for a better ROI.

Once more we are going to discuss our previous example. However, this time we’ll measure ROI based on reducing CPC to 75% ($0.15).

4% Conversion Rates4% Conversion Rates
Sales 2,0002,000
Profit per sale$5$5
Total profit2,000*5= $10,0002,000*5=$10,000
Total cost for campaign$10,000 (0.20 CPC)$7,500 (0.15 CPC)
ROI Rate Calculation

As you can see, there is a negative relationship between the cost and ROI. So, another method of increasing ROI is through reducing costs. 

However, after conversion rate calculation and tracking every piece of information about your users, you’ll definitely come to the conclusion that combining these two strategies is the best option on the table. 

Now let’s talk about how you can optimize your website conversion rates in more detail.

Conversion Rate Optimization (CRO)

Now that you know the essentials of calculating conversion rate, we can talk about optimization.  Conversion rate optimization involves improving your landing page and website to generate more conversions from your traffic!

Here are some of the technical things you can do to boost your conversion rate:

1. Use CRO Tools

Conversion rate optimization can be accomplished with a variety of techniques. User behavior analytics tools are a great choice because they provide useful insights into customer behavior. Let’s look at how WatchThemLive can assist you in improving your conversion rate.

WatchThemLive: The Best CRO Tool

WatchThemLive is one of the top conversion rate optimization tools that offers user behavior analytics to help website owners boost their conversion rate. This program includes significant features such as heatmaps and session recordings that make it easy to understand every step of a user’s journey on your web pages 

WatchThemLive’s session recordings will give you a better insight into your visitors’ actions and how your website affects them by showing recordings of their entire journey. This way, you can minimize weaknesses and emphasize the better parts of your website.

Not only does WatchThemLive help you boost conversions, but also, by functioning as a conversion rate calculator, it helps you measure how many of your visitors have converted! 

That’s right! Using WatchThemLive’s goal-tracking feature, you can now set goals for your website and calculate conversion rate of a web page, button, signup link, etc. Yet, this is not the end! This user behavior analytics tool provides everything you need to fix and set up a great strategy for your company. 

WatchThemLive Features

As stated earlier, WatchThemLive is feature-rich! Take a look at some of the valuable tools it equips you with, apart from tracking your conversion rate, in the picture below.

WatchThemLive features
WatchThemLive Features

Sign up on WatchThemLive now and get rid of dealing with numbers and every single stiff conversion rate formula as you improve your user experience.

2. Create a Dedicated Landing Page 

If you are doing any paid advertising (Google Ads, Bing Ads, etc.), you should be sending your traffic to a dedicated landing page. There are many good reasons to do this, but the biggest reason is page optimization. If you’re going to pay to get traffic to your site, you want to send them to a page that is designed to sell.

A Landing page is also the best type of page to leverage in order to optimize conversion rates. So, if you’re still sending your traffic to your homepage, this is the first place I’d start. To check whether your landing page is performing well, check out our post on landing page testing.

3. A/B Test

The easiest way to start doing CRO is the A/B test. If you’ve got traffic coming out of your ears, you can do some really cool (and complex) multivariate testing, but for most companies, A/B testing is the easiest and most effective way to go.

To run an A/B test, all you have to do is to set up two different variants of a page and split your traffic between them. Half of your traffic goes to variant A and the other half to variant B.

We have discussed some of the best optimization strategies in another blog post. Click here to see 3 conversion rate optimization strategies to consider.

FAQs on How to Calculate Conversion Rate 

Enjoying the ride?! Congratulations! You have now mastered the art of calculating your conversion rate! Now, it’s high time we answered some of your most frequently asked questions. 

#1. How to Calculate Lead Conversion Rate?

Basically, the conversion rate formula for any type of it can be explained in the number of users who have actually taken your desired action divided by the ones who could have taken it in a specific time. Therefore, in order to calculate lead conversion rate, simply divide the leads’ number by the total number of visitors. 

But don’t forget to multiply them by 100 at the end!

#2. How to Calculate Website Conversion Rate?

To begin with, this is a tough act to follow as there are many types of conversion rates involved. As a website owner, you might wish to calculate the conversion rate for your buttons, newsletter subscriptions, signups, etc. 

Gathering the metrics for all these and doing the math is a demanding task. However, leveraging a robust CRO tool like WatchThemLive makes everything as smooth as ever.

#3. What Are Two Metrics for Calculating Conversion Rate?

The variables you need to measure your conversion rate are the number of people who have converted and the total number of visitors. Now, do the division and multiply the result by 100. Congrats! You’re all set!

#4. How to Calculate Click Conversion Rate?

To do so, simply divide the number of conversions by the total number of clicks. Then, multiply it by 100 to get the percentage you need.

How to Calculate Click Conversion Rate
How to Calculate Click Conversion Rate

Conversion Rate Calculation Final Verdict

In this article, we explained what conversion rate is, what types it has, why it’s important, how to calculate conversion rate using meaningful data, and how to improve your conversion rate.

It’s crucial also to note that this is not the only factor that shows the success or failure of your marketing approach. It’s just one of many, but an essential one. But if you are searching for a solution to improve your conversion rate and make more profit, you can signup for WatchThemLive. It’s free and very easy to use. Give it a shot, you won’t regret it!

Mohammad Sayar
Mohammad Sayar
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