Track Conversion Rates and Meet 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 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:

The first step is to determine your monthly sales goal. For our example, let’s say you want to make $100,000 in sales a month.

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. 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 lot of visitors!

Not to worry, there are things that can be adjusted. The average price can increase. Your can improve your conversion rate or you can multiply visitors.

Most find the easiest fix is to improve 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!

You can improve things even more by raising your average sale to $47:

($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.

If you are like most, you would rather make smart changes to improve your sales success rather than work 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.

Marty Dickinson has been an small business owner and founder of HereNextYear.com for over a decade, and loves to share small business success techniques with other business owners. Claim your free report: “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year” and learn about an online accounting program that makes it easy to track your conversion rates.

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