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? This may seem like a simple question, but I haven’t found a lot of folks that have the answer.

There are two things to consider regarding this question.  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 next factor to take into consideration is how successful you are at converting sales from your leads (conversion rate).  If you are successful at lead conversion, you will see a significant improvement to your bottom line. 

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.

Now you need to figure out your conversion rate. Let’s suppose that all of your leads are generated through you website in order to keep this example simple. 

Suppose you convert 2 and a half out of 1000 visitors into paying customers. 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

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.

Yikes!  That’s a bunch of visitors!  Luckily, there are a few adjustments you can make.  You can increase the average sales price. You can change your visitation, or you can change your conversion rate.

Most find the easiest fix is to improve conversion rate. It is very possible to increase to ablut 2% from an original .25% rate.

Look at how that will affect the calculation:

($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. 

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.