The success of any business, no matter what its size or the sector it may be operating in, is going to depend on one thing – sales. Without a company’s products or services being bought, there simply is no business. So retaining customers, driving repeat business and converting leads into sales is vital for success.
But we’re going to let you in on a little secret – some businesses may be missing a trick when it comes to their sales figures and recording vital information that could help them chase the money and streamline their operations.
So what is this info that’s just there for the picking? It’s knowing where each of your sales is coming from and what each lead is actually worth to you.
This may sound a simple concept, but you’d be amazed how many companies forget to track conversions, or let it slip when their workload is high (only to be most in need of it when they then hit a dip).
Knowing the number of leads you’re generating is just the first step, you need to know how many you’re converting and what journey these leads have been on. When you’re armed with this information you will have a fantastic insight into how your sales process is working, from which marketing routes are giving you the best returns to where there may be missed opportunities.
The overall aim should be to work out how many leads, and what type of leads, you need to be generating to achieve your company’s financial targets. Start with how many leads you are converting. Knowing if you have a good conversion rate will depend on your individual business model but as an example:
If you have 5,000 website visitors you may convert around 2% (100 visitors) into leads. From these 100 leads, you may then manage to convert 5% into sales, making the overall result = 5 new clients.
The value of each of these new clients will again depend on your type of business and how it works when it comes to sales, for example if it’s a subscription model, monthly fee, or one off payment. Usually it’s best to work with the average life-time value of a client, as a guide for your workings. Understanding your own leads is going to be key here.
To work out the value of each lead, you’ll need to know the total number of leads spoken to and those that were turned into clients: Lead value = value of sale / number of leads
Return on your investment
If you’re not already doing so, then start recording your website visitor numbers and track the leads that are coming from them. What you want to know for your website conversions is how many visitors you need to achieve your sales target and what you’re spending to get them. If you’re spending more than you’re getting back then it doesn’t take a maths genius to spot that something’s not right – and that goes for any marketing activity you’re shelling out for.
Here’s an example of how it may break down, if you’re converting around 2% of web visitors to sales leads:
You need to make £10,000 revenue through your website > so you need 10 clients worth £1,000 each > to get the 10 clients you need 200 leads > to get 200 leads you need 10,000 web visitors.
Now the important part – how much are you spending to generate the 10,000 web visitors you need? The more you spend the less revenue you make from your conversions.
What you need to know is – what is proving the most cost-effective way to generate them? And what activity is generating the most leads that go on to be converted to sales? Is there a source that results in a higher conversion rate?
You can use this information to help you critically evaluate which lead generation activities to invest in moving forward. All these insights will ensure you’re spending in the right places.