People Innovation Excellence

What is “Conversion Rate”?

Written By: Dony Saputra, S.Kom, M. Kom, MM

A conversion rate is an equation that online advertisers and marketers use to compare the total number of visitors to a website to the number that become paying customers, subscribers or users. Conversion rates are extremely helpful to electronic storefront owners, who can use website traffic results to determine what other marketing methods should be enlisted to increase product sales. (www.techopedia.com, 2016). It’ s also can be defined as the percentage of visits to a website that result in a “conversion” of desired action such as a sale, filling out form or a lead of some other goal of the web page, typically related to the number of visits or sessions.

Conversion rate can be formulated as :

Conversion Rate = Number of Sales / Number of Visits

If an online shop is visited 100 times and 20 of those visits end in a sale, you have a 20% conversion rate. The idea of conversion rate is conversion optimization/maximization that can figure out how to increase conversion percentage; you will make more sales for the same traffic costs.

But there are problem that conversion rate can’t answer such as A Higher Conversion Rate Doesn’t Always Mean Higher Performance, Not All Visits to Your Site Have the Potential to Convert, Making Your Site More Engaging May Reduce Your Conversion Rate, Conversion Rates Vary Wildly Based On Visitor Type and Growing Your Site Will Often Decrease Conversion Rate.

 

Reff:

http://www.smartinsights.com/goal-setting-evaluation/goals-kpis/why-conversion-rate-is-a-horrible-metric-to-focus-on/ , 8 April 2016

https://www.techopedia.com/definition/1450/conversion-rate, 8 april 2016

 

 

 

 

 


Published at :
Written By
Dony Saputra, S.Kom, M. Kom, MM
Deputy Head of IBM | SoBM
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