Starting an Online Business All-in-One For Dummies®, 3rd Edition

Calculating Your Site's Conversion Rate

In any retail business, the goal is to convert a window shopper to a real buyer. For online businesses, you can use a simple formula to determine how successful you are at converting shoppers to buyers. The formula, called your conversion rate, is the number of visitors that come to your site and then buy from you for a given period of time. For example, suppose that on one day, 15 people buy something from your Web site and you get a total of 1,500 unique visits to your site. You calculate your conversion rate by dividing 15 by 1,500, for a 1 percent conversion rate for the day. That's simple enough. The concept becomes complicated, though, when you try to pin down exactly which number represents a good conversion rate.

People cite different acceptable conversion rate percentages. Over the years, we've seen everything from .05 percent to nearly 8 percent, depending on the type of site you have. For more established, larger online brands, it's not unusual to see a conversion rate of 20 percent or more. Research included in the Coremetrics Benchmark Report noted that online retailers experienced a new customer conversion rate of 4.41 percent during Cyber Monday in 2010 (a day following the Thanksgiving holiday that is typically thought to be the busiest online shopping day of the year).

Considering that this is a numbers game, we like to take a somewhat conservative approach. We believe that 2 percent is a good conversion rate for first-time ...