What is the number of leads you will need to earn the income you want this year? While this may seem like an easy question, not a lot of people can come up with the number.
When answering this question, there are two considerations. 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 second factor is your ability to convert leads to 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 step is to determine your monthly sales goal. For our purposes, let’s use $100,000 as your monthly sales goal.
Next, you need to calculate your current conversion rates. While this process can be used for any type of prospecting, for this example, let’s keep it simple and assume the only way you get leads and sales is through 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.
Here is a formula to calculate the number of visitors your would need to meet your monthly sales goals. To keep this example simple, we will assume every “conversion” described above will ultimately purchase from you.
(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.
Ouch! That’s a bunch of visitors! Luckily, there are a few adjustments you can make. You can change your price. Or, you can increase your visitors or the 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.
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!
By increasing your average sales price to $47, you can improve your results even more:
($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.
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