The term “conversion rate” refers to the ratio between the number of users or visitors to your site and the number of sales within a specific period. Please note that your e-commerce site’s conversion rate helps you measure your site’s effectiveness at generating sales. After all, it’s great to have high-volume traffic, but traffic doesn’t do much for your bottom line if you cannot convert those visitors into customers.

Let’s consider the following situation:

A fashion brand receives 100 visitors per hour on its main website. The site makes 25 sales per hour. The ratio between visitors and sales is 25% (25 divided by 100). Let’s take a look at Google’s Definition of conversion rates:

“Conversion rates are calculated by simply taking the number of conversions and dividing that by the number of total ad interactions that can be tracked to a conversion during the same time period. For example, if you had 50 conversions from 1,000 interactions, your conversion rate would be 5%, since 50 ÷ 1,000 = 5%.”

Now, there’s a catch to this assumption. We must be able to differentiate unique conversions from returning conversions.

Why is this important?

Let’s think about that for a moment. Unique conversions mean that you’re bringing in new customers. In contrast, returning customers means you aren’t truly expanding your customer base. Your revenue may increase, but your customer base remains the same. Boosting unique conversion rates, therefore, is the best way to measure your site’s ability to attract new customers.