3 Ways To Leverage Your Sales Conversion Rate
Small Business October 23, 2017 JD Mckenzie
Many small businesses live from one sale to the next without looking back examine why a lead closed or not. As a business owner, you may think you just need more leads, or the only number they need to worry about is the bottom line. But there’s more to it if you want to get serious about closing more deals.
If you want to take your company from just maintaining to purposefully and inevitably scaling, you will need to take the first steps to using the data that is all around you so you can make better decisions each day.
Consider these questions:
- What changes are you making that help, or hurt your business?
- How good is each member of your team at converting leads to customers?
- What is your niche, what are you better at than anyone else?
- What are the top reasons you’re losing business?
Can you answer all of these questions and have the numbers to back them up? If not, then you’re just guessing. Your gut might be best when it comes to how you navigate a single sale, but when making long-term decisions on the direction of your company, it is better to rely on more than just your intuition. If you shift to becoming a metrics-driven business, you can make the tough choices and be confident they are right because you have the analytics to back them up. While this might sound difficult, starting with the basics can make a huge difference.
Where to Start?
In sales, there are probably 100s of different KPIs and metrics that you can use, all of which have their use. And for every metric there are dozens of experts saying their favourite metric will turn your business into a success, while others telling you that very metric is useless or out of date. Moving towards a more data-centric business is a journey and can take you a while to find which metrics work for your business.
So, where do you start?
Conversion rate is an essential sales metric that all other sales metrics can be built on. If you aren’t already, it will make you start to track your sales process and learn more about why you are winning and losing. It is a starting point going from sale to sale to working in a more strategic way.
You can easily calculate your conversion rate with this formula:
See What Is Working & What Is Not
If you can’t pinpoint which changes have improved your bottom line and what changes have negatively affected it, you won’t know if you should double down on what is working, undo what’s hurting, or merely stop that which isn’t making a difference. Conversion rate is a critical metric that can help your decisions whenever you make a change that may affect your ability to win new business. Perhaps you changed your website, new ad campaigns or the lowered prices.
If you are keeping track of your conversion rate, you can see whether it starts to improve, showing that you’re on the right track. If your rate declines, you can save money by undoing the changes sooner instead of waiting for feedback from prospects or complaints from your team. Instead of guessing what is working and what’s not, isn’t better to be able to see exactly what is happening, sooner?
Zooming into conversion rate, you can start to measure performance as a team as well as the individuals. You can use this as a general indicator of performance, highlighting the good and flagging the bad. For example, if you have a salesperson with a lower rate, consider pairing them with a team member with a higher rate.
Many businesses hold daily huddles where they discuss where they are stuck, starting a dialog where more seasoned salespeople can share techniques. Alternatively, you may find that not everyone on your team is a great closer, but they have important skills that you rely on. In that case, you can build your team to take advantage of their skills and create a balanced group of hunters, closers, and farmers.
Find Your Niche & Optimize
Finding your niche is a powerful insight that helps optimize your business because you can make decisions that are focused on what you do best. By removing distractions from your niche like services that have lower conversion rate, you can reduce considerable expenses to your business and make you more profitable. Finding your niche can help you reduce the costs of turning leads into clients as well as the time it takes because you’re more focused and target only those you know will convert.
Analyze deals that have a higher conversion rate. Find the average total of a deal, which services clients are buying, and learn which solutions they are looking for. Focus on these trends and work to exploit your advantages. Review the deals that failed to close and do the same thing. If you see a deal that is more than you normally deal with, consider walking away. These take longer to convert and the time spent on this one deal could be better spent closing multiple deals which are within your niche.
Knowing your conversion rate is one of the fundamental sales metrics that your business needs to be tracking. By seeing what is working and what is not, you can measure what impact changes have on your sales, helping you choose whether to push harder or stop these changes. As you review your conversion rate for each member of your team it can help you gauge the performance of your team and can help you determine who your top salespeople are, and identify when you need to start taking action. Analyzing your conversion rate can be pivotal to finding one of the most potent insights that a business can achieve, finding your niche, by filtering out which types of leads result in wins and which results in losses. Through this, you can optimize everything you do in your business and move from a company that is maintaining to one that is growing.