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.
When answering this question, there are two considerations. Expenses are your first consideration. You should make sure to have an accounting program advanced enough to help you analyze your costs and how they relate to your profitability.
The next factor to take into consideration is how successful you are at converting sales from your leads (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:
First you need to settle on a sales goal for each month. For our purposes, let\’s use $100,000 as your monthly sales goal.
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.
Now, let\’s say that for every 1000 visitors, you \”convert\” 2.5 into sales leads. That\’s a .25% conversion rate.
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
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!
Now, there are a few things you can do to change things. You can change your price. You can change your visitation, or you can change your conversion rate.
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%.
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.
That\’s a nice change!
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.
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 has a passion for sharing 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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