Conversion Rate Formula: How To Calculate Conversion Rate

inverted pyramid funnel: calculate conversion rate

When ecommerce store owners discuss their most important marketing metrics, conversion rate is almost always near the top of their list. That’s with good reason—the number of people who visit your online store and make a purchase is crucial for a store’s success. But improving it is easier said than done. It’s important to understand how to calculate it, how to improve it, and what factors inform what a good conversion rate for you is.

What is a conversion rate?

Conversion rate is calculated by dividing the number of conversions by the total number of interactions or visits to a webpage, expressed as a percentage.

Store owners consider it to be highly important because it affects the return on investment (ROI) of all your other marketing efforts. Whether a potential customer visits the site from a social media campaign or Google Ad, a higher conversion rate means you’ll see a bigger return on those campaigns. Assuming your traffic stays the same, if your store can convert 2% of website visitors instead of 1%, your revenue doubles.

Conversion rate formula

 The conversion rate formula is:

 Total conversions / Total visits to your website

Total conversions

 This is the number of desired actions completed by visitors on your website. It could include actions like making a purchase, signing up for a newsletter, or filling out a form.

Total visits to your website

This represents the overall number of visitors who have accessed your website within a specific time period. It includes all the interactions and sessions on your website, regardless of whether a conversion occurred.

 By dividing the total conversions by the total visits to your website, you can calculate the conversion rate, which indicates the percentage of visitors who converted or completed the desired action.

Many marketing analytics tools will calculate conversion rate for you. Shopify Analytics calculates it automatically and Google Analytics calculates it once you set up its conversion tracking (or set up its automatic integration). These tools provide more options for segmenting this number as well, such as by marketing campaign or device.

Sometimes, marketers will calculate conversion rate based on the total visitors to your site, instead of visits. This helps account for customers who visit multiple times before purchasing. This is referred to as a user-based conversion rate. But a visit-based conversion rate is the industry standard for conversion rate benchmarks.

How to improve your conversion rate

When a website has a high conversion rate, that means the value of what they offer is clear, the shopping experience is simple, and the customer feels the need to buy as soon as they can. Understanding how your website can improve on these three factors is the key to improving your conversion rate.

  1. Communicate your value proposition
  2. Reduce friction
  3. Increase urgency

1. Communicate your value proposition

Ultimately, customers make purchases online because they see the value of the item they’re purchasing. The value they see in the product could be practical (this vacuum is designed to pick up dog hair, which is a problem I have), economic (this vacuum is 20% cheaper than the alternatives I found), or emotional/personal (buying this vacuum will make me feel like a smart homeowner). 

Your job is to understand what value your customers see in your products and communicate it. A value proposition can be communicated through your website’s copy, images, video, and brand feel.

2. Reduce friction

If a potential customer wants a product but doesn’t buy it, there’s likely something standing in their way. Any part of the customer’s experience on the website that creates hesitation is called friction. Some of the main causes of friction are:

  • Poor checkout experience. This can be caused by a lack of payment options or by unnecessary form fields.
  • Unclear product/shipping information. For example, not clearly displaying how big a product is.
  • Lack of clarity around which product is the best fit. This is common in stores with lots of product variants.
  • Bugs or poor branding. This hurts the customer’s trust.
  • Slow landing page site speed. This makes the customer impatient and can derail their experience, especially on mobile.

To diagnose friction issues on your site, start by looking at page-level conversion rates. If some pages drive conversions better than others, there may be issues on specific pages.

3. Increase urgency

Sometimes, customers are interested in purchasing, they just aren’t sure if they want to purchase at the moment, or if they want to come back later. This is a particularly common issue if there are also value proposition or friction issues.

Stores can work to overcome this by establishing a sense of urgency on the website. If customers have a logical reason to purchase that day instead of later, the website’s conversion rate will be higher.

Some of the common ways to increase urgency are:

  • Time-sensitive sales
  • Informing customers when product stock is low
  • Seasonal/limited product drops
  • Education about shipping cutoffs—for example, letting customers know that if they want a product by Christmas Eve, they need to order 14 days before

Of course, if your store creates fake urgency, such as saying products are low in stock all the time, you will lose your customers’ trust, ultimately hurting conversion rate even more. So it’s important to apply urgency ethically and strategically.

What factors can affect my conversion rate?

Many store owners want to know a universal benchmark for a good conversion rate. However, the truth is that a high-performing conversion rate is highly dependent on a series of factors outside of website performance itself. Any holistic analysis of conversion rate performance should consider these factors:

  • Channel mix. Different traffic sources, or channels, will naturally convert differently. For example, visitors who find your site when searching a keyword with high purchase intent (e.g., “best cheese grater”) in a search engine tend to convert at a higher rate than those from social media. Why? These visitors are already seeking out a specific answer, as opposed to just browsing their feed.
  • Funnel mix. If a business is only focused on the bottom of the funnel, with tactics such as email marketing and remarketing ads, it will naturally have a higher conversion rate than a business that runs lots of awareness-focused ads reaching new audiences. That doesn’t necessarily mean one site is stronger than the other from a conversion perspective—it just means the business’s marketing is more focused on attracting pre-qualified people.
  • Product price. High-price products often naturally require more consideration. A site selling $2,000 products will naturally have a lower conversion rate than one selling $20 products, all else being equal. In ROI terms, expensive products make up for this with a higher average order value.
  • Returning customer mix. When a customer has already purchased, they are much more likely to purchase again. Sites that have regular returning customers, such as those that sell consumable goods like food, will have a naturally higher conversion rate.
  • Industry. Every industry, whether it’s food and beverage or electronics, has its own standard conversion rate. See your industry’s benchmarks with Shopify’s ecommerce conversion rate calculator.

Calculating conversion rate FAQ

What is a good conversion rate?

Although conversion rates should always be considered in the context of the type of site or store (see above), for ecommerce sites, 3% is generally considered a good conversion rate.

How can I improve my conversion rate?

To improve your conversion rate, focus first on improving how you communicate your value proposition. Additionally, improving your site’s shopping experience to reduce friction or adding urgency for shoppers will improve your conversion rate. Assessing, improving, and testing these factors is the practice known as conversion rate optimization (CRO).

What tools can I use to improve my conversion rate?

Shopify Analytics and Google Analytics are the two most common tools for conversion rate tracking. Channel-specific tools, like Google Ads, will also help you calculate more segmented conversion rates, such as your keyword conversion rate.