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.  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. 

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. Let’s use $100,000 as the figure for our purposes.

Next, you need to calculate your current conversion rates. 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. Your conversion rate is .25%.

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

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!  Not to worry, there are things that can be adjusted.  You can change your price. You can change your visitation, or you can change your conversion rate.

For most people, the best place to start is conversion rate. By testing various options and changes, it is possible to improve a .25% conversion to about 2%.

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.

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. 

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.