In plain words
Conversion rate is the share of visitors who place an order: orders divided by visitors, over the same traffic. It is the most common success metric for a product page or an offer test.
On its own it misleads, because it counts a $40 order that earns $15 the same as a $102 order that earns $48. Lower prices and richer free gifts raise conversion almost by definition. Whether they raise profit depends on the margin they give up, which is what profit per visitor measures.
Formula
- Conversion rate = orders ÷ visitors
- Profit per visitor = conversion rate × margin per order
Worked example
At 3.0% conversion the coffee bag earns $0.46 per visitor on a $15.36 margin. Adding a mug might raise conversion. It has to raise it by 40.8% just to stand still.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| cogs | per unit | −$12.00 |
| pick_pack | per order | −$1.18 |
| packaging | per parcel | −$0.50 |
| shipping | per parcel | −$7.50 |
| processing_fixed | per order | −$0.30 |
| refunds | percent | −$2.00 |
| processing | percent | −$1.16 |
| Gross margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
Conversion rate is not the metric an offer test should decide on
Decide on profit per visitor, and read conversion as one of its two parts. An arm that converts worse and earns more per visitor is the better offer. A report that shows only conversion will pick the other arm.
Using it
Measure conversion for the offer, not the page: the share of visitors who saw the offer and bought one of its options. Split it by option when an offer has several, because the mix between options moves profit as much as the overall rate does. And read it next to profit per visitor, never alone. Watch the traffic mix as well: a campaign that sends colder visitors lowers conversion without the offer having changed at all, which is why offers should be compared on the same traffic at the same time.