Conversion Rates Are the Key to Achieving Your Sales Goals
Do you know the number of leads you need to generate to reach your income goals? While this may seem like an easy question, not a lot of people can come up with the number.
There are two things to consider regarding this question. First, there are your expenses. 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.
Second, you need to know how well you are able to turn your prospects into sales (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:
First you need to settle on a sales goal for each month. Let's use $100,000 as the figure for our purposes.
The next step is to work out what your conversion rates are. 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. That’s a .25% conversion rate.
This is the calculation you can use to determine how many visitors you will need to your website to meet your income goals. To keep it easy, suppose that each conversion will ultimately result in a sale.
(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.
Yikes! That’s a lot of visitors! Not to worry, there are things that can be adjusted. You can change your price. Or, you can increase your visitors or the conversion rate.
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.
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