Track Conversion Rates and Meet Your Sales Goals

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.  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).  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. For our example, let’s say you want to make $100,000 in sales a month.

Next, you need to calculate your current conversion rates. 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. You have a .25% conversion rate.

This is the calculation you can use to determine how many visitors you will need to your website to meet your income goals.  To keep it easy, suppose that each conversion will ultimately result in a sale.

(Desired Sales / Sale Price / Conversion Rate) X 100

Therefore, if you have a $20 average sales price, a conversion rate of .25%, and you want to achieve sales of $100,000, your calculation would look like:

($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 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. If you test a bit, it’s actually quite easy to bring a .25% conversion rate into the 1.5% or even 2% range.

Look at how that will affect the calculation:

($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.

I could live with that 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. 

Everyone would rather work smarter than 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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