When visitors reach an online store, some of them will purchase products or services. Others will choose to go somewhere else on the Internet. If you count all of your traffic as a 100% metric, the conversion rate is the percentage of the total that decided to buy something.
The conversion rate measures a company’s performance during an advertising campaign. Although it is possible to gather this information during in-person shopping, most businesses use it for their online outreach efforts.
Cost-per-click (CPC) advertising and the click-through rate(CTR) describe the conversion rate metric's first step. When a company know show many people click on their ads, the incoming traffic levels serve as the foundation for this information.
If an e-commerce platform has four people out of 100 make a purchase, that means their conversion rate would be 4%.
Since most websites have more visitors than 100 per day, the mathematics expands to whatever traffic levels they achieve. If the company gets 10,000 visitors daily with 400 sales, they'd still earn the 4% conversion rate.
A conversion rate often tracks sales, but it can also monitor specific visitor behaviors. Companies can designate a business call, form submission, subscription signup, or site registration to get tracked by this metric.
DTC, or direct-to-consumer, refers to a business model where a company sells its products or services directly to consumers, bypassing traditional retail channels.
ERP stands for "Enterprise Resource Planning". It is a type of software system that allows businesses to manage and integrate their core business processes, such as accounting, procurement, inventory management, human resources, customer relationship management, and more.
A 3PL, or third-party logistics provider, is a company that offers outsourced logistics services to businesses that need to manage their supply chain operations more efficiently.