Conversion rate and revenue

Your store’s conversion rate is the approximate number of visitors, expressed as a percentage, who take a desirable action — in your case, probably “convert” from a visitor into a paying customer. So if 5 out of every 100 visitors to your store buy something, you have a 5% conversion rate.

Generally speaking, your conversion rate scales up and down along with your traffic. So your conversion rate would likely remain close to 5% even if your traffic spiked from 100 visitors a month to 1,000. It’s not a perfect science, but you can generally assume that the rate will remain consistent if the environment is the same.

Following this same line of thinking, you should be able to see how your site revenue will increase along with your traffic. Your site also has something called an average order value, or an AOV. If 5% of your 100 visitors convert, and your AOV is $50, that’s around $250 in revenue. But if 5% of 1,000 visitors convert, that’s $2,500 instead!

In short, you’re going to multiply your average monthly sessions by your conversion rate to get a new value: the estimated number of visits that result in a conversion. You’ll then multiply this value by your average order value to get a dollar amount — that is, your estimated monthly revenue.

Try substituting your own values in this formula, then increase the traffic amounts to see how additional visitors could affect your revenue. You might be surprised by the difference an extra 500 or 1,000 sessions can make.

The great part about this formula is that you can use it to estimate how extra traffic will help your site over time. You can also use it to determine exactly how much traffic you need to aim to meet any revenue goals you’ve set. Now that you know just how much additional revenue your store can gain from increasing your traffic, the next step is obviously to get more traffic and there is no better tool for that job than Babylon.