Meet Your Sales Goals By Understanding Your Conversion Rates
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 factors to take into consideration. 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). 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 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. 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. 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.
Wow! That’s a bunch of visitors! Luckily, there are a few adjustments you can make. You can increase the average sales price. Your can improve your conversion rate or you can multiply visitors.
For most people, the best place to start is conversion rate. It is very possible to increase to ablut 2% from an original .25% rate.
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.
What a difference!
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.
Tags: conversion rates, internet marketing, lead conversion, leads, market research, marketing, Profit, small business online accounting program, web based accounting
Uncategorized | zero2millionaireguru | 
March 14, 2010 1:11 am | 
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