PMs & Metrics: Conversion Rate

PM Metrics - Conversion Rate

As a PM, what are some important metrics to measure for your product? In each post of this series we’ll be covering a different metric, why this particular metric is important, and how it’s measured.

If you’re a PM of a website, a product that’s sold on a website, or an app, one of the most important metrics to measure is the conversion rate. Simply put, the conversion rate is the percentage of all visitors or users who take a desired action.

 One of the most common examples is the percentage of visitors who end up purchasing on a website.

Why is conversion rate such an important metric, not just for PMs but for the company as a whole? A solid conversion rate is indicative of a good user experience and means that the company is efficiently capturing sales. It’s the barometer of all the efforts spent to optimize the user experience through user research, A/B testing, interviews, etc. In other words, the conversion rate quantifies and validates whether the team’s efforts to improve that page or product has been successful. A higher conversion rate after a page redesign, all else equal, typically means that the redesign had a direct role in having more customers purchase the product.

Here’s a simple example to illustrate the conversion rate: in the month of May an e-commerce site is visited by 1 million people. Out of all visitors 30,000 people purchased something from the site. 30,000/1,000,000 = .03 or 3%.

The conversion rate measures the conversion event, which in the above example was sales. But it doesn’t necessarily measure sales only. There may be other key performance indicators (KPIs) that are important for your business.

Examples of Conversion Events:

  • Signing up to become a member
  • Saving credit card information
  • Signing up for a newsletter subscription
  • Downloading a whitepaper, software, or ebook
  • Filling out a more information form
  • Using an app after downloading it
  • Upgrading to the paid version of the product

As shown in the examples above there are countless possible conversion events that could be measured. The key is identifying the ones that are right for your company and your specific goal.

Many people ask what makes a good conversion rate. While there are industry averages – a good conversion rate is relative. The best answer to this question is a conversion rate that is higher than it was before. PMs should always be looking for ways to tangibly show improvement in their products, and the conversion rate is one of the most definitive ways to do so.


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