A conversion is a user completing a desired action – a purchase, an enquiry, a newsletter signup. The conversion rate is the percentage of visitors who complete that action.
Conversion rate is the most honest measure of a website's effectiveness: traffic can be bought and likes cost nothing, but a conversion means someone did the thing you care about. In e-commerce, typical values are 1–3%; B2B service sites count conversions in enquiries.
The arithmetic is striking: at 10,000 visits a month, raising conversion from 1% to 2% doubles sales – without a penny spent on extra traffic. That is why conversion optimisation is often cheaper than advertising.
Mind the definitions: micro-conversions (add to cart, view pricing) help diagnose the funnel, but celebrate the macro ones – revenue and leads.