How Tracking Conversion Rates Can Help You Meet Your Sales Goals
Do you know the number of leads you need to generate to reach your income goals? This may seem like a simple question, but I haven’t found a lot of folks that have the answer.
When answering this question, there are two considerations. First, there are your expenses. 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.
The second factor is your ability to convert leads to sales (conversion rate). The more efficient you are at converting leads, the more income you will be able to make.
Let’s take a look at the process more closely:
The first step is to determine your monthly sales goal. For our purposes, let’s use $100,000 as your monthly sales goal.
Next, you need to calculate your current conversion rates. While this process can be used for any type of prospecting, for this example, let’s keep it simple and assume the only way you get leads and sales is through your website.
Now, let’s say that for every 1000 visitors, you “convert” 2.5 into sales leads. Your conversion rate is .25%.
Use this formula to figure out how many visitors you would need to your website to acquire enough leads to get the sales you want. 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! Luckily, there are a few adjustments you can make. You can increase the average sales price. 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.
That’s a nice change!
You can improve things even more by raising your average sale to $47:
($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.
Everyone would rather work smarter than 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.
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Tags: conversion rates, internet marketing, lead conversion, leads, market research, marketing, profit, small business online accounting program, web based accounting