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.

When answering this question, there are two considerations.  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. 

The next factor to take into consideration is how successful you are at converting sales from your leads (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.

The next step is to work out what your conversion rates are. 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. 

Now, let’s say that for every 1000 visitors, you “convert” 2.5 into sales leads. That’s a .25% conversion rate.

Use this formula to figure out how many visitors you would need to your website to acquire enough leads to get the sales you want.  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 lot of visitors!  Not to worry, there are things that can be adjusted.  The average price can increase. You can change your visitation, or you can change your conversion rate.

For most people, the best place to start is 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.

I could live with that 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. 

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.