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 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.
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 purposes, let’s use $100,000 as your monthly sales goal.
Now you need to figure out your conversion rate. 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.
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
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 lot of visitors! Not to worry, there are things that can be adjusted. You can change your price. Or, you can increase your visitors or the conversion rate.
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.
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!
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.
Today, it’s all about working smarter, not 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.
