Definition
Conversion rate is the percentage of people who take a desired action out of the total number of people who had the opportunity to do so. In eCommerce, it is typically the proportion of website visitors who complete a purchase. In retail, it is the proportion of customers who enter a store and make a purchase.
How to Calculate Conversion Rate
The formula is straightforward: divide the number of completed actions by the total number of opportunities, then multiply by 100. If 10,000 people visit an online store in a month and 250 complete a purchase, the conversion rate is 2.5%. Average eCommerce conversion rates across industries tend to sit between 1% and 4%.
Why Conversion Rate Matters
Conversion rate is a measure of how efficiently a business converts interest into action. Two businesses with the same traffic volume can generate very different revenue if their conversion rates differ. Improving conversion by even half a percentage point can be worth more than doubling the marketing budget.
Conversion Rate in Physical Retail
In physical retail, conversion rate is tracked by dividing the number of transactions by the number of customer entries (foot traffic). A store with 500 visitors on a Saturday and 150 purchases has a 30% conversion rate. Low conversion in-store can point to pricing issues, product availability gaps, poor layout, or staff engagement problems.
Common Conversion Killers and CRO
For online stores, the most common conversion killers include slow page load speeds, complicated checkout processes, lack of trust signals (reviews, security badges), and friction in the payment step. Reducing the number of steps to complete a purchase, offering guest checkout, and displaying clear return policies are proven ways to lift conversion.
Conversion rate optimisation (CRO) is the discipline of systematically testing and improving elements of a website or store to increase the proportion of visitors who convert.