How to define conversion in small business marketing campaigns

One pain point in a small business marketing campaign is the definition of targets and conversions.

Here is a way to define conversion.
A small business company could classify its market in 6 different groups:

Group 1) People with no contact with the shop at all
Group 2) People that pass by the shop
Group 3) People that enter into the shop
Group 4) People that bought once from the shop
Group 5) People that bought more than once
Group 6) People that recommend the shop.

A good definition of conversion for a small business marketing campaign is the evolution of a customer from a group to the next.