What does "Conversion Rate" mean?

Definition of Conversion Rate in the context of A/B testing (online controlled experiments).

What is Conversion Rate?

Alias: CR

Conversion rate is the proportion of conversions versus a base metric such as users, sessions, email subscribers, etc. with a generic formula being CR = C/N where C is the number of conversion events and N is the number of events during which a conversion could have occurred. It can be expressed as a proportion or percentage, for example a user-based conversion rate can be calculated from 10 conversions out of 100 users as 10/100 = 1/10 = 0.1 = 10%.

Different kinds of conversion rates are often used as a Primary KPI or a Secondary KPI since being a binomial metric makes them easy to work with due to their analytically known standard deviation.

If the revenue per conversion is equal or about equal across conversions, a conversion rate can be used as the metric closest to the business bottom-line. However, when revenue per conversion varies significantly the conversion rate becomes a proxy metric and one should consider measuring ARPU, AOV and other metrics instead despite the increased difficulty.

Like this glossary entry? For an in-depth and comprehensive reading on A/B testing stats, check out the book "Statistical Methods in Online A/B Testing" by the author of this glossary, Georgi Georgiev.

Articles on Conversion Rate

Statistical Significance for Non-Binomial Metrics – Revenue per User, AOV, etc.
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Conversion rate calculator
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Related A/B Testing terms

Binomial MetricA/B Testing

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About the author

Georgi Z. Georgiev

Georgi has over twenty years of experience in online marketing, web analytics, statistics, and design of business experiments.

Author of the book "Statistical Methods in Online A/B Testing", white papers on statistical analysis of A/B tests, and a speaker, he has been distinguished as a winner in the Data & Analytics category of the 2024 Experimentation Thought Leadership Awards.

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Statistical Methods in Online A/B Testing

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