Summary: A "conversion" is when a prospective customer takes the marketer's intended/desired action. The "conversion rate" is the percentage of people who come to your website who actually take your intended action. The conversion could be a purchase, an enquiry, a subscription or a download.
Depending what industry you are in, conversion rate can mean different things and a range of 'outcomes' can be considered to be a 'conversion'.
Wikipedia has a great summary of conversion rates, they say:
"In Internet marketing, conversion rate is the ratio of visitors who convert casual content views or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators.
Successful conversions are interpreted differently by individual marketers, advertisers, and content creators. To online retailers, for example, a successful conversion may constitute the sale of a product... To content creators, a successful conversion may be a membership registration, newsletter subscription, software download, or other activity that occurs..."
ECommerce Website Conversion Rates
This is a very straightforward scenario and easy conversion rate to calculate (and understand). You get xx number of people to your website through you advertising, pay per click, search engine optimisation (etc) and a percentage of those visitors actually make a purchase. Let's say you have 1,000 visitors to your website in a month and you sell to (on average) 10 of those visitors; your conversion rate is:
10 divided by 1,000 multiplied by 100 (result = 1%)
Retail Conversion Rates
In retail, a conversion rate can be looked at in a couple of different ways.
Firstly, the percentage of 'foot flow' (how many people come through the door) who actually buy some goods. For example if you get 200 people in the shop in a typical day and 125 people buy something, the conversion rate would be 62.5%. The reason for the high conversion rate is that most people don't go into a store unless they are ready to buy.
The other way of calculating conversion rate in retail is calculating the number of people who 'see' an advert and then come into the store and make a purchase. This type of (more accurate) conversion rate commonly produces an extremely low conversion rate, for example; let's say an advert is published in a regional newspaper or magazine that is 'read' by 50,000 people, and let's say the store gets 50 new customers. The conversion rate, 50 / 50,000 * 100 = 0.1% (which is fairly good in print advertising as a typical conversion rate on print adverts is around 0.01 to 0.02% or 2 in every thousand readers).
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Starting at just £199 the cost of a website review is (most likely) less than the value of sales you'll lose today - and every day until you know how to get more customers.
See also: Website Conversion Rate Calculator | Website Reviews |