Track Conversion Rates and Meet Your Sales Goals
Do you know the number of leads you need to generate to reach your income goals? As simple as this question might be, I’ve found very few people actually have this number in the top of their minds.
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 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 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.
Next, you need to calculate your current conversion rates. 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. That’s a .25% conversion rate.
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. To keep it easy, suppose that each conversion will ultimately result in a sale.
(Desired Sales / Sale Price / Conversion Rate) X 100
Therefore, if you have a $20 average sales price, a conversion rate of .25%, and you want to achieve sales of $100,000, your calculation would look like:
($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.
Yikes! That’s a bunch of visitors! Luckily, there are a few adjustments you can make. The average price can increase. You can change your visitation, or you can change your conversion rate.
Most find the easiest fix is to improve conversion rate. If you test a bit, it’s actually quite easy to bring a .25% conversion rate into the 1.5% or even 2% range.
Take a look at the difference that makes to the number of visitors you need to achieve your goals:
($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.
That’s a nice 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.
Tags: conversion rates, internet marketing, lead conversion, leads, market research, marketing, profit, small business online accounting program, web based accounting