The formula
Visits = target income ÷ average order value ÷ conversion rate
What it means
The calculation has two steps: income divided by average order value gives the sales needed, and sales divided by the conversion rate give the visits. The interesting part is not the number but the comparison next to it: lifting conversion from two to three per cent cuts the traffic needed by a third, and getting a third more traffic usually costs far more than gaining a point of conversion.
How to work it out by hand
- Divide the income you are after by your average order value: those are the sales
- Divide the sales by your conversion rate as a fraction
- The result is the visits needed over the period
- Repeat with one more point of conversion to see the traffic you would save
What is worth knowing
Traffic is bought and conversion is worked on, which is why the second is nearly always cheaper: the same effort put into the product page or the checkout returns more than the same effort put into ads. Watch two assumptions the formula takes for granted: that new traffic converts like your current traffic, which it almost never does because cheap traffic is usually worse, and that average order value does not change with volume.