Boiled down, your company’s conversion rate is a measurement of how well you qualify your leads. What does that mean?
It means that you shouldn’t be focusing on how many zillions of people you can bring through your doors – or to your website or your Yelp page or your phone or your email inbox. You should be focusing on how many of those people who come to you actually buy from you.
After all, what good is it if your store is filled with people but nobody’s compensating you for what you have to offer?
Your conversion rate comes down to your sales ability, the value you offer, and the service you provide. If you aren’t already, you must, must, must begin tracking your conversion rate if you’re ever going to attempt to increase it. Here’s a super simple way to calculate what it is:
#1 Commit to 1 Month of Tracking
The first thing you need to do is to resolve to track your conversion rate for one full month. Set a start and end date now and resolve to stick to it. Put it on your calendar, cover your house and car in sticky notes, set electronic reminders, tell your couch doctor… whatever you need to do to stick with your tracking system for one month.
#2 Build Your Database
For the month you’re tracking, build a database of all the customers who come to you and track each and every purchase they make. Customers are used to being asked for certain information about themselves. Don’t be afraid to take down names and even email addresses or phone numbers. Keep track in your CRM or if you don’t have one, on a spreadsheet, a note on your phone, or a running tally on a beer coaster. Whatever works.
#3 The Simple Calculation
After one full month of tracking, it’s time to figure out your company’s conversion rate. Simply take the number of sales you made during the month, divide it by the number of leads you got during the month, and finally multiply by 100. So let’s say you start tracking on April 1. Between April 1 and April 30, you get 5,000 inquiries, phone calls, and people walking through your door. During that time, you make 1,250 sales…
1,250/5,000 x 100 = 25%
That’s your current conversion rate, 25%.
This is, of course, the simplest of conversions and doesn’t take into account customer lifetime value and your sales cycle length. But now that you have at least this one important number to focus on, the doors have opened for you to strategically increase it.