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Bounce Rate (also called % Exit) is a term used in website traffic analysis. A Bounce occurs when a website visitor leaves a page or a site without visiting any other pages before a certain session timeout elapses. It is important to note that there is no standard minimum or maximum time limit a visitor must leave by in order for a bounce to occur. Rather, this is determined by the session timeout of the analytics tracking software. A commonly used session timeout value is 30 minutes. In this case, if a visitor views a page and leaves his browser idle for 31 minutes, they will register as a “Bounce”. If they then continue to navigate after this delay, a new session will occur and the last page they view before exiting or timing out again will result in another “Bounce”. Thus, it is important to note the dependency between bounces and sessions.

The Bounce Rate for a single page is the number of people who visit a page and leave within the specified timeout period, divided by the total number of people who have visited the page. In contrast, the Bounce Rate for a website is the number of web site visitors who visit only a single page of a website per session divided by the total number of website visitors.

Bounce rates can be used to help determine the effectiveness or performance of an entry page. An entry page with a low bounce rate means that the page effectively causes visitors to view more pages and continue on deeper into the website.

Avinash Kaushik, Google’s Analytics Evangelist states, “it is really hard to get a bounce rate under 20%, anything over 35% is cause for concern, 50% (above) is worrying.”

How can the bounce rate be improved?
As a first step, consider updating entry pages to decrease the bounce rate. Start with homepage. Think about the old adage that “first impressions are the most important”.

Websites do not get a second chance to make an impression. If you are expending energy to attract visitors, you should be putting at least as much energy into keeping them, if not more.

Use a visitor tracking service to find out what search terms people are using to find your site: if visitors are leaving quickly, make sure that your content and search terms are well-matched; the cause of a high bounce rate may be that visitors are not finding what they expected.

Check your exit pages to see where most of your visitors are leaving and try to determine why they leave, especially if that is not where you intend them to leave from.

Reference: http://en.wikipedia.org/wiki/Bounce_Rate