Remember that article on outsourcing? Well, Bizwize has taken our own advice and outsourced our feature for this quarter’s newsletter. Cat from Benchmark Business Coaching brings you this key tip to make more money, without more advertising or higher prices! Let’s see how she does it. ~ WizeOwl
A lot of business owners are making the same mistake. There’s one thing they are missing, that if they tracked it and improved it, it’s the difference that would make all the difference. (see the video explanation here) It’s the one thing that allows you to make more money, right now, without doing more advertising and without raising your prices. This is the conversion rate, and I’m going to explain how it works.
When I first started in sales, the only thing I knew how to track was… my sales. I could tell you how many customers I had, and how much money I made. If you’re in the same boat, know that you’re not alone!
It wasn’t until I began learning the importance of having a sales process, doing lead generation, and tracking conversion rates, that I began to see exactly where my sales were coming from. And now that I could see my SALES, I could also see all the other leads that were coming into my business that WEREN’T turning into a sale. All the potential business that went unconverted from a lead into a sale. This is the metric that the conversion rate tracks.
What percentage of your leads (enquiries, phone calls, requests for information, responses to your marketing) turn into an actual sale?
It’s not 100%. It will never be 100%.
But there IS a number. You will find that your business has an average, standard, approximate conversion rate. And the REALLY EXCITING this about this is that you’ll also learn that your INDUSTRY has a standard too. If your conversion rate is higher than your industry standard, rock on! But if it’s lower – this means you’ve definitely got potential to immediately increase your sales just by converting a few more of your existing leads!
Here’s why focusing on your conversation rate is better than more marketing or raising your prices.
In the figure below, you’ll see that for our example company, they generate 100 leads per month, with a conversion rate of 30%. This is 30 sales, and with an average dollar value of $1,000 per sale, it’s $30,000 revenue.
Simply by improving their conversion rate by 5%, they will generate an extra 5 sales, for $5,000 extra revenue.
If their plan was to raise prices or sell more to each customer, it means they would need to add $167 to each sale. That’s 16.7%. Tell me if I’m wrong, but if you could raise your prices by 16.7%, wouldn’t you already have done that? And in reality, how many of those 30 customers would still buy if your prices went up?
Improving your conversion rate is not about being pushing, or learning “tricks of the trade” in order to twist peoples’ arms to do business with you. It’s about following (and training your staff to follow) a sales process, so you can see exactly where in the sales conversation requires improvement. It’s about learning more about your customers, what they need, and selling to them in the way THEY WANT to be sold to. It’s about customer care, follow up, accuracy with quotes and professional, timely proposals.
There are MANY variables that impact your conversion rate, so it might take a bit of trial and error. But now that you have the number, focus on it, learn how to increase it, and watch your sales skyrocket!
If you’ve suddenly realised (like me, all those years ago) that you have no idea what your conversion rate is, or where to start, then it’s ok. I get it. Comment here or drop me a message and we’ll figure it out together.