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Conversion Rate Optimisation Terms You Should Know About

A conversion is when a consumer performs an action that you want and have encouraged them to take. Examples of conversion are customers:

  • Phoning your business premises.
  • Making a purchase.
  • Signing up to your newsletter.
  • Sharing your social media posts.

Most businesses aren’t sure where their customers come from because they don’t track conversions. The first step to understanding your marketing performance is knowing your conversion rate.

What is a Conversion Rate?


It’s the percentage of people who take action out of everyone who sees your call-to-action. A common one is the proportion of visitors to your website who go on to become a lead. It can also be the percentage of leads who become customers.

One conversion rate for an e-commerce business would be the percentage of website visitors who turn into sales. If you use a funnel as mentioned in part two of this course, you can see which stage of the customer journey where your conversions are lowest.

How to Calculate Conversion Rate

Say you have a thousand visitors on your website one month and 30 of them make a purchase. This represents a 3% conversion rate.

We calculate conversion rate by dividing the number of new customers by the number of leads and multiply by 100. In this case, it’s 30 (customers) divided by 1000 (website visitors), multiplied by 100.

This calculation tells you the rate at which leads become customers. This is a very common conversion rate to calculate as it indicates where your money is coming from.

Conversion Rate Limits

Conversion rates are not the only aspect to consider when calculating your marketing budget. Other factors include cost per lead, lead volume and lead quality per channel.

Cost per lead — Simply put, if you spend more money getting leads than you get back with a sale, you’re wasting your money! Social media, for example, may not generate a lot of leads but they are cheap to acquire and therefore, worth it — most of the time. Other methods such as trade shows may look good when you see the conversion rate (as most who attend them are interested in what’s on offer) but it costs a lot of money to be a part of such an event.

Lead volume — Image you get ten leads a month and eight of them convert into a sale. That means you have an 80% conversion rate, which looks good. When you look deeper and see only eight sales, the conversion rate becomes less impressive. What needs to change is the volume of sales. This may mean increasing your number of incoming leads through marketing efforts.

Lead quality per channel — It is also important that you don’t just look at the overall conversion rate. Considering the rates from each channel will give you a greater insight. If your conversion rate looks lower than you expected, maybe one of your channels is weighing down the results.

Conversion Rate Averages

It is common for businesses to compare their conversion rates to the average rates of others. A lot of them feel disappointed, feeling that they are below average. They do not take into consideration that this average can change depending on a huge variety of factors. Simply put, don’t compare apples to oranges!

Most businesses will have different criteria for what constitutes a conversion. For example, a retailer’s conversion is often based on purchases or signing up for a loyalty programme. A finance company might offer free quotes and evaluations as well as an email newsletter to sign up to. If both of these companies count these actions as conversions, the finance company will naturally have a higher conversion rate.

The position of the customer within the sales and marketing funnel affects your conversions as well. Early in the funnel, rates will be lower than they’ll be at the end. You will see this when you start tracking conversion rates yourself. The reason for this is that people at the end of the funnel have already expressed interest in your business. Thus, they’re more likely to continue to be a customer, compared to an unknown visitor browsing the internet.

Landing Page

If your website receives lots of visitors but they bounce — meaning they leave soon after arriving — your conversion rate will be low. This could be because your landing page doesn’t give the consumer what they’re looking for.

The first part of your website that a visitor sees should reflect what else can be found on the site. Often, Google will display a piece of text from your page alongside the link. This is called a meta description. Users expect to see related information on your landing page.

Conversion Rate Per Channel


When measuring conversion rate, you should create a chart similar to the one below. This chart shows the conversion rate from each platform your business uses to make conversions. It gives a visual representation of which platforms are performing well.

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