Conversion Rates Are the Key to Achieving 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. 

The second factor is your ability to convert leads to 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:

The first step is to determine your monthly sales goal. For our purposes, let’s use $100,000 as your monthly sales goal.

Now you need to figure out your conversion rate. Let’s suppose that all of your leads are generated through you website in order to keep this example simple. 

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

The formula would look like this, if you want to achieve $100,000 a month in sales, you have a conversion rate of .25% and your average sales price is $20:

($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.

Wow!  That’s a bunch of visitors!  Not to worry, there are things that can be adjusted.  You can increase the average sales 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.

Let’s look at the difference that would make using the formula:

($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. 

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.