What does conversion rate mean and why is it important?

I received a question in the mailbox that goes:

“What is conversion rate, and why do so many people talk about it?”

Those are actually really good questions. Let me address them one by one.

First – what does conversion rate mean?

The conversion rate is the percentage of visitors who convert.

As mentioned above, a conversion rate shows the percentage of your visitors who “convert.” But what does it mean to convert?

A conversion is when a visitor on a website (or another digital platform) takes an action you want them to take. Some conversions are “harder” or “softer” than others.

A soft conversion could be when a visitor signs up for a newsletter.

A hard conversion could be when a visitor contacts you about a potential collaboration.

It takes more effort to get a visitor to start a collaboration than just signing up for a newsletter.

Other examples of conversions could be:

• Creating an account on a website
• Making a purchase
• Booking a meeting
• Requesting a demo

The conversion rate illustrates the percentage of visitors who convert by taking a specific action.

Whether a conversion rate is good or bad depends on many factors, which we won’t go too deep into in this article.

How to calculate conversion rate

You can calculate your conversion rate very easily. Let’s say you have a website with 1,500 visitors per month. Out of those 1,500 visitors, 40 contact you by phone.

Your conversion rate would then be:

100 divided by 1,500 times 40 = 2.66%

If you run a consulting business and those are potential customers contacting you, I would consider that a very good conversion rate.

Why do so many talk about conversion rates?

The reason many people talk about conversion rates is that if you can increase your conversion rate, you get more value out of your existing website traffic. So when you convert more visitors, you get more from your marketing efforts.

The process of increasing your conversion rate is called conversion optimization.

Conversion optimization usually involves doing user tests, split tests, and analyzing your existing data to see if there is anything you can improve so that more people convert.

It could be the website text, design, or specific images.