This shall be my first post related to web analytic; I will try to make my words as smooth as possible since I’m new in the writing world.

Conversion ratio or rate is a very important metric that’s something all analytic geeks agree upon, how it will be used and how obsessive people with it is something else we can get to… later.

Let’s first step back for moment to explain what is conversion ratio, in very short words it’s the percent of visitors who were converted into buyers. Whatever the target was, from registration into purchasing, the desired action of the website was taken. This is the very simple explanation from my humble point of view.

Conversion Rate = Outcomes / Unique Visitors

Note: In the above formula I’m using the unique visitors not the visits which is I prefer as it’s more accurate, lot of debate on this topic so let’s not get into it, whatever the method you will take will not make any difference as long as you will be consistent along the way. I personally prefer the unique visitors because in e-commerce people come and go several times before they decide to do the purchase.

As i mentioned above the outcomes or the actions could be anything from website objectives, let’s say for e-commerce websites it will be purchasing or downloads or total number of orders or signing up for newsletter. For none commerce websites such as newspapers and blogs it could be number of articles were read.

Conversion ratio could be calculated for online and offline actions, you could measure your support team (Customer service) conversion ratio or your sales team conversion ratio (calculate the numbers of sales leads with the closed ones).

Let’s have a quick example of conversion ratio.

If your website is receiving 100 visits per week and you are selling 10 items of chocolate bars (Mmmm) each with $5, the conversion in this case is 10% and the sales is $50. Apply this to anything, imagine you have a store, newspaper, website, or blog. Whatever your business is the metric is the same.

Take into consideration that when you measure the numbers try that be in specific time period. So for the above example it’s total visitors and total purchases in the specific week or month for example.

I think now you have a clear vision on what is conversion, the question now should be how does that help me?

Simple answer on this question is it’s a tool with your hand based on it you can start measuring your success, for example if you did a usability test how did that improved your business or you did a million dollar SEO or you’ve run a campaign online and offline. The conversion ratio is your baseline but again don’t be obsess with it as there is a lot we will talk about in the coming posts.

There are different elements that effect the conversion ratio will be discussed later during the coming posts.