Conversion Rates Are the Key to Achieving Your Sales Goals
How many leads do you need to make the amount of money you want to have in a year? While this may seem like an easy question, not a lot of people can come up with the number.
When answering this question, there are two considerations. Expenses are your first consideration. You should make sure to have an online accounting program advanced enough to help you analyze your costs and how they relate to your profitability.
Second, you need to know how well you are able to turn your prospects into sales (conversion rate). The better you can convert your leads, the more profitability you are capable of achieving.
Let’s take a look at the process more closely:
The first thing you will do is to work out what sales level you want to achieve each month. Let’s use $100,000 as the figure for our purposes.
The next step is to work out what your conversion rates are. In order to keep this example easy, suppose that all of your leads come from your website.
Assume that you are able to convert 2.5 visitors into sales for every 1000 visitors to your website. You have a .25% conversion rate.
Here is a formula to calculate the number of visitors your would need to meet your monthly sales goals. Let’s assume every conversion will actually purchase from you in order to keep it easy.
(Desired Sales / Sale Price / Conversion Rate) X 100
So, if you want $100,000 in sales and your average sale price is $20, with a conversion rate of .25%, the formula would look like this:
($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.
Ouch! That is a lot of visitation! Now, there are a few things you can do to change things. The average price can increase. Or, you can increase your visitors or the conversion rate.
Many begin by increasing the conversion rate. By testing various options and changes, it is possible to improve a .25% conversion to about 2%.
Let’s look at the difference that would make using the formula:
($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.
I could live with that change!
If you want to decrease the number of visitors you need even more, try increasing average sales to $47:
($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.
If you are like most, you would rather make smart changes to improve your sales success rather than work harder. Hopefully these examples drive home the importance of planning the leads you will need to reach your sales goals, and testing the factors you can change to become more efficient.
Get more small business success strategies and claim your free white paper: “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year” to learn about an online accounting program that makes it simple to track your conversion rates.