Sniper Marketing Tactics

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? As simple as this question might be, I’ve found very few people actually have this number in the top of their minds.

There are two things to consider regarding this question.  Expenses are your first consideration.  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).  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:

First you need to settle on a sales goal for each month. Let’s use $100,000 as the figure for our purposes.

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. 

Now, let’s say that for every 1000 visitors, you “convert” 2.5 into sales leads. That’s 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 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.

Yikes!  That’s a lot of visitors!  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.

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.

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.

That’s a nice change! 

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.

This entry was posted on Tuesday, March 9th, 2010 at 2:36 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.