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Thursday, Jan. 27, 2005 at 4:50 pm

How To Measure Conversion Rates

By Jeffrey Eisenberg
January 27th, 2005

Conversion rate measures the number of visitors who took the action you wanted on your site divided by the total number of visitors. Every end-goal conversion (Macro-conversion), like a purchase, is composed of Micro-conversion points, like the click-through path in a shopping cart. In order to achieve the Macro-conversion a series of decisions has to be taken by the visitor, these clicks are measurable evidence of those decisions.

Only when you define and plan for Macro-conversions vs. Micro-conversions then you can understand why conversion rate is truly a measure of your ability to persuade visitors to take the action(s) you want them to take. It’s a reflection of your effectiveness in planning for every decision and the customer’s satisfaction with your plan’s implementation. Since every click represents a person making a decision then for you to achieve your goals, visitors must first achieve theirs first.

  • Overall conversion rate: Total number of actions considered conversion divided by total number of visits. This is a site’s overall effectiveness rating for getting visitors to fulfill your goals within a single visit.
  • Scenario conversion rate: Total number of visitors starting a specific scenario divided by total number who complete it. Scenario conversion rates enable you to quickly identify specific conversion processes that require improvement or ones whose successes should be modeled.
    • Linear – when visitors need to complete a registration process or checkout process.
    • Non-linear – these are the explicitly planned or implicit scenarios that are created by visitor segments as they navigate your website. In this type of scenario we measure from where people enter the scenario to where they complete the intended scenario and whether or not they hit our key value pages. Explicitly planning these non-linear scenarios is what we call “Persuasion Architecture."
  • Conversion over time: There are several measures that reveal a site’s effectiveness in generating conversions over time. Use this for situations where conversion is likely to occur over time or multiple visits.
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Comments (3)

  1. Hi Jeffery,

    My question is that since we are a software company, and offer a free demo dowload of our product; pc tattletale, we’ve been basing our conversion metrics on the number of downloads that convert to sales rather then the number of visitors that convert to sales. Is this not the best way for us to mesure?

    Thanks for your comments.

    Amy Cainfield

    http://www.pctattletale.com

  2. Amy,

    Fortunately you don’t have to choose between measuring one or the other — instead just measure both. I think your question should be reframed in that light.

    example, suppose for the sake of argument that your metrics show that 90% of people who download your software convert to sales. It’s just such a wonderful program that they can’t help themselves. :)

    In this case, your upside on improving conversion is fairly limited, so your real attention will be on the front line and driving traffic to that download page. Suppose there your conversion rate is the measy industry-average of 3%. Clearly, you’d be able to say that if you could convert more on the front-line leading up to downloading then you’d register a major plus to your bottom line.

    Now flip the numbers, and suppose you had 90% of visitors downloading, but only 10% of those purchasing. Now you know that your focus has got to be first on improving the factors that go into the decision to buy the software.

    Of course, your numbers are not going to be so stark, and the point here is that if you only measure the one number of the download-to-purchase conversion then that’s insufficient to determine where else there may be holes. In fact, the most likely place for holes, generally speaking, is the place one is NOT looking.

    If you don’t know what your visitor conversion rate is then you’ve got less than half the puzzle. You literally cannot do anything proactive with the download conversion rate you are measuring since you don’t yet have a handle on how it fits into the whole persuasion architecture picture.

    Whatcha reckon?

  3. Jeffrey,

    I’m a student working on a team that’s trying to help the owner of Roadgear Apparel with his website. He is mentioning that he is not satisfied with his conversion rates.

    I brought up the need to market his business on the internet more yet he seemed to think that it’s not worth it (or at least that is the impression that i get).

    If you could give me any information on current online conversion rates (viewers compared to buyers) or even any ideas/examples on how to pitch e-marketing to him that would be great.

    Please email me, and thank you for your time.

    Julia M.

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Jeffrey Eisenberg, founder of FutureNow, is a professional marketing speaker and the co-author of New York Times and Wall Street Journal bestselling books Call to Action and Waiting For Your Cat to Bark. You can friend him on Facebook.

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