How Tracking Conversion Rates Can Help You Meet 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.
There are two things to consider regarding this question. The first is your costs. 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. For our example, let’s say you want to make $100,000 in sales a month.
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
The formula would look like this, if you want to achieve $100,000 a month in sales, you have a conversion rate of .25% and your average sales price is $20:
($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.
Yikes! That is a lot of visitation! Not to worry, there are things that can be adjusted. You can change your price. Your can improve your conversion rate or you can multiply visitors.
For most people, the best place to start is conversion rate. It is very possible to increase to ablut 2% from an original .25% rate.
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.
What a difference!
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.