How Tracking Conversion Rates Can Help You Meet Your Sales Goals
Written by rifqi on March 18th, 2010 in Entrepreneurialism.
What is the number of leads you will need to earn the income you want this year? This may seem like a simple question, but I haven’t found a lot of folks that have the answer.
There are two factors to take into consideration. 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.
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 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.
Now, let’s say that for every 1000 visitors, you “convert” 2.5 into sales leads. That’s a .25% conversion rate.
Here is a formula to calculate the number of visitors your would need to meet your monthly sales goals. Let’s assume every conversion will actually purchase from you in order to keep it easy.
(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.
Ouch! That is a lot of visitation! Now, there are a few things you can do to change things. You can change your price. Your can improve your conversion rate or you can multiply visitors.
Many begin by increasing the conversion rate. It is very possible to increase to ablut 2% from an original .25% rate.
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.
What a difference!
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.
Related posts:
