How many leads do you need to make the amount of money you want to have in a year? 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.
The second factor is your ability to convert leads to sales (conversion rate). If you are successful at lead conversion, you will see a significant improvement to your bottom line.
Let’s take a look at the process more closely:
The first thing you will do is to work out what sales level you want to achieve each month. For our purposes, let’s use $100,000 as your monthly sales goal.
Now you need to figure out your conversion rate. In order to keep this example easy, suppose that all of your leads come from your website.
Suppose you convert 2 and a half out of 1000 visitors into paying customers. You have a .25% conversion rate.
Here is a formula to calculate the number of visitors your would need to meet your monthly sales 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.
Wow! That is a lot of visitation! 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.
For most people, the best place to start is conversion rate. If you test a bit, it’s actually quite easy to bring a .25% conversion rate into the 1.5% or even 2% range.
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.
Today, it’s all about working smarter, not 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.
Get more small business success strategies and claim your free white paper: “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year” to learn about an online accounting program that makes it simple to track your conversion rates.