Conversion rate
Also known as: CR, CVR, conversion ratio
Conversion rate is the share of people who complete a defined target action, such as a purchase, a demo request or a sign-up, out of everyone who reached the step before it.
Conversion rate = target actions / people who reached the previous step × 100%Conversion rate tells you how well one step of the funnel turns traffic into the action you care about. It is always a ratio between two named steps, so “our conversion is 3%” means nothing until someone names both steps. Click-through rate measures the step before the visit; conversion rate starts where CTR ends.
Example
A fintech app tracks three steps for May. Pricing page visitors: 40,000. Free trials started: 1,200. Trials that became paid accounts: 180.
Visit to trial: 1,200 / 40,000 = 3%. Trial to paid: 180 / 1,200 = 15%. Visit to paid: 180 / 40,000 = 0.45%.
All three are conversion rates. The figures are illustrative and only show the arithmetic.
How to use it
Name each rate by its two steps and keep the definitions fixed in a shared document. Track step-by-step rates, because an end-to-end rate cannot show where people drop off. A funnel analysis puts the steps side by side so the weakest one stands out.
Count people or sessions, then stick to that choice. A user who visits five times and buys once gives 100% by users and 20% by sessions.
Before celebrating a higher rate, check volume. Cutting a paid channel often lifts conversion while total sales fall.
Common mistakes
- Comparing rates with different denominators, for example landing page sessions in one report and unique users in another.
- Reading a rate from a small sample. Twelve conversions out of 200 visits can swing by several points from week to week.
- Counting events that are not the business goal, such as button clicks, as conversions.
- Ignoring time lag. A B2B lead that converts in 45 days lands in a different month from its visit.