Why conversion rate matters to a first-time founder
Conversion rate shows where your funnel leaks. Each step, from visit to sign-up to paying, has its own rate, and the weakest one usually limits growth more than traffic does. Ignore it and you may pay for more visitors to a page that turns most of them away. On its own, though, it cannot tell you whether you attracted the right people.
Examples of conversion rate
Fifty designers open a trial page and five start a trial. The conversion rate on that page is 10%. If five hundred people open it and five start, check who the extra visitors were before you blame the page. A crowd of the wrong people will make a healthy page look broken.
Common misunderstanding
People compare conversion rates without checking the denominator. Sign-ups divided by visits gives a lower figure than sign-ups divided by unique visitors, because one person can visit several times. Others confuse it with click-through rate, which counts people who clicked an ad or link, not people who completed the action you wanted. State what you divided by, or the comparison means nothing.
When to use it
Look at the conversion rate when people reach a page or a call and too few of them take the next step. If almost nobody arrives in the first place, fix how you reach them before you tune the page.