What is a Conversion Rate and Does it Really Matter?

While we should all be just a little obsessive about increasing our conversion rates, the problem is everybody measures them differently.

Your Conversion Rate is simply the business results your site achieved (EG: Sales, registrations, names gathered etc) divided by the number of visitors to your site.

But do you use Visits, Unique Visits or even something else as the basis of your conversion rate calculation?

Even the Experts Can't Agree

According to analytics gurus such as Avinash Kaushnik and Brian Clifton, Unique Visits can be a problematic measure.

Kaushik goes into great detail about the issues with Unique Visits here. So much so that you're brain will hurt after reading it.,

Clifton goes even further saying that using Unique Visits is virtually meaningless.

The argument goes that Unique Visits are dependent on so many variables such as cookie session time, whether a user regularly clears there cookies, if a single user comes to a site via range of options such as there home computer their work computer, laptop, smartphone or ipad.

All of which he argues makes the data flawed and using Visits is a much more "accurate" measure.

What Marketers Really Want

While I understand their argument, it's coming from a technical perspective. As marketers we're more interested in how many "people or "customers" come to the site, and we don't want one person being counted as 10 people or more just because he comes to the site several times a week.

Unique Visits, I think are a much better measure, despite their technical flaws. But, like most things on the web, it doesn't end there.

Depending on how well you set up your analytics package, you can filter out all sorts of unnecessary data that is probably skewing your results. Things like traffic from staff, suppliers, robots and more.

Plus if you want to get really serious, you can filter out anyone who doesn't stay on the site longer than say 5 seconds.

The rationale is that if they left as soon as they got to your site, they were never really a prospect and you were never going to convert them.

So your neighbour's conversion rate may be very differently calculated than yours.

Measure Something Tangible That You Can Bank

So what and how should you measure a conversion rate?

Before we get to that, the issue highlights the importance of having a tangible metric that no-one can argue with. In most cases this will be a financial one. EG: How much revenue did your site generate last month?

Or how many names did your lead generation campaign gather?

Metrics like these are inarguable, because everybody understands what they mean. You'll feel a lot happier knowing exactly how much money and business is coming from the website and how it was generated.

And these are the types of metrics you should define first before moving on to conversion rates.

It doesn't matter that much how you calculate your conversion rate as long as you pick a method and stick to it. What you're really interested in is increasing the trend.

And more importantly, conversion rate is not the be all and end all of results.

As I've discussed elsewhere: A site with a 2% conversion rate can easily be a better performing site than one with a 20% conversion rate.