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Website conversion rates are bandied about the ecommerce industry all the time, and despite many being familiar with the concept, I consistently find that a lot of people are a bit fuzzy on their website conversion and abandonment rates. This blog is intended to define the different website conversion rates and explain how to use them—and how not to.

Whatever your particular goal, getting visitors to engage and follow a path to conversion is at the heart of driving value from your website. While most web teams track website conversion, the diversity of potential factors that affect conversion (and its evil twin, abandonment) makes this a very hard process to manage.

The biggest of these factors is promotions, which can cause massive changes to your website conversion rate. Equally, your competitors’ promotions can also have a big impact on your website conversion rate. Seasonally, customers have become conditioned to expect promotions at certain times of the year; as a result, looking at your conversion rates without considering these factors is a bit like stumbling around in the dark looking for the light switch.

In the early days of the web, we focused first on page views and bounce rates, and finally on the website conversion rate, which has become a core method of measuring site success.

Website conversion is usually defined as a percentage as follows:

Desired Actions / Unique Visitors * 100

Of course, there isn’t just one website conversion rate. There are several, and this is one of the challenges when it comes to comparing your website conversion with other sites’ website conversion rates.

Here are the three most common website conversion rates:

Visitor-to-Sale / Visitor-to-Goal

The visitor-to-sale website conversion rate currently averages 2-3 percent for most ecommerce sites. It’s a simple measure of the percentage of visitors that land on your website and purchase in the same session. Divide the total number of sales/goals by the total unique visitors. By contrast, top-converting websites currently convert 23 percent of visitors to sale, and what they do differently is worth understanding. SeeWhy recently published a free eBook titled “Lessons Learned from the Top 10 Converting Websites,” and this is well worth reading. The visitor-to-sale/goal website conversion is the easiest to compare with other sites.

Funnel Conversion Rate

The funnel website conversion rate looks at the proportion of visitors that complete your conversion process. If it’s a shopping cart, then the start of the conversion funnel is usually when a visitor places an item in the shopping cart. In a web form, this would be arriving at the first page of the form itself. The funnel conversion rate is probably the most widely used rate when people are talking about their ‘website conversion rate.’ It’s a simple percentage: divide the number of sales/goals achieved by the number of visitors that started the process. SeeWhy tracks conversion rates across approximately 9,000 ecommerce sites. This data shows that website conversion rates can vary wildly, but the average funnel conversion rate is 29 percent, meaning that more than 7 in every 10 visitors that start conversion processes do not complete them. The average abandonment rate is 71 percent (i.e. 1 minus the conversion rate).

Page Level Conversion Rate

The page level conversion rate is the proportion of visitors that arrive on one page and subsequently progress to the next stage of the conversion funnel. It’s typically used to examine the performance of each step in the conversion funnel itself to ensure each step is performing well and to eliminate bottlenecks.

If you’ve got a problem with one of the pages in your conversion funnel, it will show up on your page conversion rate. Running a split test (using Google Website Optimizer or similar) will enable you to test two different versions of the same page and see which one works better.

Of these three website conversion rates, the most useful is the funnel conversion rate. This tells you what proportion of the traffic that demonstrates intent to buy, actually go on to buy in the same session. In many ways, it is one of the most important measures of a site’s effectiveness.

If you are interested in learning more about this topic, I recently discussed conversion strategies with a panel of industry experts—Danny Dover of SEOMoz.org, Tim Ash of SiteTuners.com, and Loren McDonald of Silverpop. You can view the webinar recording here; select ‘View’ under ‘The Conversion Leaders Summit.’