There are 7 ways in which to grow your business. This blog is focused on the third way to ensure business growth – increasing your sales conversion rate.Are you measuring your success at converting leads,quotes,and proposals to sales? Do you regularly review why you aren’t converting more quotes?
A sales conversion rate is a way in which to measure the percentage of leads that contact your business that result in a sale. This important metric will help you understand how successful your sales tactics are and increasing this area can see businesses increase sales without investing in generating more leads.
Working out your sales conversion rate doesn’t have to be complicateddespite the multitude of different variables the self-help blogs sometimes try to throw in. However, before you start measuring, don’t get confused between marketing conversions and sales conversions. They are two very different metrics with very different results.
Your first step is to consider what you want to measure. In most cases your sales conversion rate will be sales made as a percentage of proposals or quotes sent. However, this may not be the right sales metric for your business. For example, you may want to know how many leads are generated that result in a sale.
A basic formula for working out your conversion rate is:
Number of Sales / Number of leads = Conversion Rate (%)
So, if you sell 50 units but had 200 enquiries your conversion rate is 25%.
Looking at this metric from a lead stage, when a prospect shows an interest in your products and or service, compared to measuring from quote stage will be the number of insights you can gain from that metric. Generally, quote conversions are higher than lead conversions and often the success of the quote at this point is reliant on price and how value for money is displayed.
If you analyse from a lead stage, you may then decide to look at lead source. From this you may identify that a higher proportion of leads generated from the website convert but they make less money than those that call through. This insight can help focus your business strategy and tailor your efforts for the desired results.
Further to this, if you are currently using a pipeline system or CRM system and you have different leads at different stages, you may want to analyse the stage-to-stage conversion:
Number of leads in stage “A” / Number of leads in stage “B” = Conversion Rate (%)
Measuring the success at each stage provides wider insight and more scope for targeted improvements. Each stage of the pipeline will represent
Your sales conversion rate is a powerful metric to measure and way in which you can grow your business. If you know your conversion rate, then you can identify ways in which you can improve the results and work out how many leads you need to make sure you hit your business growth targets.
So, if you’re not measuring your conversion rate, you need to start right now!
When you are measuring your conversion rate, your next step will be to consider how you can improve this metrics. There are many ways in which you can have a positive impact on your conversion metrics.
Here are 4 simple ways to impact your conversion rates:
- Use a follow up system to ensure all leads and quotes are contacted, feedback issought,and changes are made.
- Offer guarantees so prospects feel more confident and safer when parting with their money.
- Invest in sales training so you and/or your team can really tailor your quotes, having fully understood the requirements and so that you can articulate the value you offer.
- Proposals with options (give prospects the choice of which yes, they want to pick).
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