Knowing Your Sales Conversion Numbers and Why it’s Important

Only through knowing your sales conversion numbers can you truly begin to grow your business.  Analysing this information gives you areas to improve your sales and follow-up processes.

So here’s an explanation of the sales and marketing funnel and what you can do to improve your sales success rates.

TRANSCRIPT

In this session, we’re going to look at something which has come about because of a discussion on a business Facebook group that I belong to. It’s all about knowing your sales conversion numbers.  Now, I don’t mean your financial numbers because you should know those as a matter of course anyway. I mean the numbers that will enable you to more scientifically analyse your sales and marketing success and, hopefully, to improve it. And these numbers actually revolve around your marketing funnel.

Your Marketing / Sales Funnel

Now, if you don’t know what I mean by a marketing funnel, I’m going to draw it out for you right now. So a sales and marketing funnel typically looks like this. It’s very wide at the top, narrow at the bottom, and right at the top, goes the number of leads that you generate. Now, the leads are people who’ve expressed some kind of interest in you, your product, your business, what it is you have to offer. They’ve come along and some have said, “That looks interesting. Can you tell me more?” They aren’t customers. They’ve not said that they want to become a customer. They’ve just simply expressed some kind of interest in what you have to offer.

And, right at the bottom, then, this goes down to sales. This is the point at which they become a customer. Now, if you consider this black line here the numbers, then you see it gets narrower as it gets towards the bottom of the funnel because the number of leads you generate and the number of sales that you get from it are always going to be different, and there’s always going to be fewer sales than there are leads. And that’s simply because not everybody up here is truly going to buy. And, if you think that that’s always going to be the case, then you are probably deluded, probably naive. It’s just never going to be.

But it can be quite a bitter pill to swallow. If you’re new in business, then not everybody who says they’re interested in what you have to offer are going to buy. These could be just people who are generally interested. They’re thinking about it for some point in the future.

To be honest, you get quite a few time wasters. Some of them won’t be a good fit for your business. They haven’t got the money. They can’t afford it. Then, what you’re offering isn’t quite what they had in mind and you can’t shape it that way. So there’s loads of different reasons why people who become leads or make an inquiry don’t eventually become sales.

But don’t get too hung up on that. If it’s a common reason and we’ll show you how to work this out in a moment. Then, maybe you need to have a think about how you do things yourselves – process your product, your pricing, etc. You can adjust all of this. But, for now, we’re just going to work out some very, very basic numbers and I’ll show you how it’s done from top to bottom.

An Example Sales Process

So what I’m going to do is I’m going to show you our sales process, our sales funnel.  I’m not going to give you our numbers simply because you can work on your own numbers and work out your own funnel. So this becomes quite scientific.

But, first of all, when somebody expresses an interest in what we’re doing and what we have to offer, whether that’s giving us a call, sending us an email, filling in an inquiry form on our website, etc., we then look to, in the very first step, make an appointment with them.  And the reason we want an appointment is so we can learn more about them.  They can learn more about us.  We can understand what it is they want from their website, what kind of results they expect, where they expect their website to help their business, and then we want to make sure that what we hope to be doing for them is going to meet those aims.

Now, this is where the numbers start to come into play.  Not everybody who expresses an interest is going to want to sit down with us for 45 minutes to have a chat about a website.  A lot of people just want a quick price over the phone.  We don’t typically do that because we know that building a website is far more involved than just, say, buying a book off a shelf. And, unfortunately, a lot of people don’t fully understand that having a website isn’t as straightforward as just phoning somebody up and ordering it, you have to put a lot more thought into it.  And we want to work with people who put that thought into it and who are willing to work with us to develop that concept.

So, from that appointment, we’ll also be able to then take people down to proposal.  Now, not everybody who we get an appointment with are we going to write a proposal for.  It could well be that they can’t really afford it, that what we have to offer really can’t meet their needs, and that does happen.  It could well be that we just don’t get along.  It’s great to be able to work with people who you get along with because you’re going to have a better working relationship, and longer-term, it’s going to lead to more than likely than just the initial bit of work.

So it could well be that we’re not a good fit for them.  They’re not a good fit for us.  They may not necessarily have the money.  They may be looking for something that we can’t do.  Or they may have had the complete and total wrong idea of what a website is going to be, and that does happen.  They completely underestimated the amount of work that they’re going to have to put in and they go running away thinking, “Oh, my God, I’m going to have to do something.”

So, again, these numbers will start to narrow down.  The numbers who get to proposals from -leads is quite a bit lower. So the next step, if they get to proposal, is follow-up.  Now, here’s the interesting thing about follow-up, and I’ve said this before in a previous video.  The follow-up is a massive chunk of sales success.  In my view, 75% of sales success is all about the follow-up because it’s fairly straightforward to develop leads and get people interested in what you have to offer.  From there, it’s a matter of asking for an appointment, and then it’s a matter of process to go to proposal.

But the follow-up is absolutely massive, and far too many businesses, big and small, give up far too soon in the sales follow-up process.  Now, this is something that we’re working on improving.  We think we’re fairly good, but we realise that there are some things we could probably tighten up on.  And over the next few months, we’re going to be looking at that because, despite the fact that we know these numbers already, we also realise that there’s a lot of follow-up improvement that we can do.  We’ve examined this quite a lot and we’re still trying to improve, and so should you.

But don’t rest on any laurels with this.  It’s not a one-size-fits-all and neither is it a fixed game because the sales and marketing techniques, especially with online marketing, are constantly shifting.  Who’d have thought that Facebook five years ago would be so big?  Who’d have thought that Google would be the dominant search engine not that long ago? You’ve now got LinkedIn.  You’ve got certain loads of other different social media and marketing channels coming into play.

So don’t assume that this is going to stay the same forever, work on constant improvement.  Adopt the Japanese “kaizen,” the way of constantly improving things.  If you improve things by 1% a month, the compound effect could be massive on your business success. So don’t rest on the laurels.

But we want to follow them up to the point we get to a yes or no response.  Either they become a customer or they exit the sales process and go into our CRM system so we can keep in touch.  The CRM is client/customer relationship management and there’s a post on our blog about what a CRM system is and why you should use one.  So that’s where they’re going to go.  They’re going to go to sale or they’re going to go out of the funnel into our CRM process.

Find out more about CRM here: https://www.buzzwebsitedesign.com/why-use-crm-in-your-business/

Going through the numbers

Now, I’m going to run through some hypothetical numbers for you so you can hopefully work something out for yourself because this is our business.  It’s not yours. But that’s okay. It doesn’t matter.  The process and the way you work it out is largely the same.

So imagine we get 30 leads, for example, and out of those 30 leads, 15 of them turn into appointments. Now, what am I also at?  Every single one of those leads also goes into our CRM system because, even if they don’t become a customer now, they may want something from us at some point in the future if we keep in touch.  So a big lesson: get people into your database if they express some kind of interest at any point.

Okay, so anyway, back to the story. 30 leads up here. Imagine 15 of those them turn into appointment. From out of those 15, we realise that 5 of them probably aren’t a good fit. They may not necessarily have the money. They might not have thought about how much work that they’re going to have to put into helping us build a website for them. It could well be that we just don’t get along, or I don’t feel that they’re going to be a good fit for us and us for them. It could well be that they want something that we can’t build, and that does happen.

So ten of those, then, become a proposal. From those proposals, then, we’ve got ten follow-ups to do. So we’re going to take them through the follow-up process to take some of them to a sale. So imagine half of those follow-ups get to sales. So, if we say we started right at the top, we’re 30 leads, 15 appointments, 10 proposals, 5 sales.

Now, if this is a long-term pattern and you can work this out on a monthly basis, whereby each month, you get 30 leads and they eventually funnel down to five sales, you could become very scientific about this.  And this is why knowing your sales conversion numbers is important because you will then be able to work out whether — if I want more sales down here — if I want five more clients, I’ve got to generate 30 more leads.

And, then, you can look further up in the process and say, “What are the marketing activities that we can do to fill the top of this funnel?”  In other words, can you improve your email marketing?  Can you go to more networking events? Can you do better tradeshows? Is there stuff that you can do?  Can you do more pay-per-click marketing or Facebook marketing? Can you advertise on the radio, or in a local newspaper, or in a magazine?  All these different things that you can do to fill the top of the funnel to get these 30 leads, can you do more of it?  Can you do it more effectively?  So you know that every 30 leads that you get, you get 5 sales. But only by knowing your sales conversion numbers will you gain these insights.

So, then, it becomes quite scientific, and you could almost predict this.  And, if you work it out correctly, getting more sales could be as simple as turning on a tap of improved and more effective marketing or more marketing aimed at the same people, more spend on marketing aimed at the same people.

So, hopefully, that’s given you some idea of a sales funnel.

Tracking the Numbers – Keeping it simple

Now, the easiest way of keeping track of all of this is with a simple spreadsheet whereby, on the left-hand side, you’ve got all of the people who are leads, and the next column, you write down when they all become appointments from our point of view.  On the next column, you’ve got proposals, and then you’ve got the various follow-up steps you put in there.  And then, finally, you’ve got sales.  So you’ll know the number of people in this far left column versus the number of people in the far right column will give you your ratio from top to bottom.

It really is that simple. You don’t have to make it any more complicated than that. Just use a simple number on this side versus number on this side gives you your ratio. And it also enables you to calculate the number of people who go from leads to appointments if that’s part of your process; appointments to proposal, again, if that’s part of your process. And it also enables you to map out the various follow-up steps as well.

So, hopefully, you can analyse this in great detail to improve the ratios.  Imagine what it would do if you could take that from ten appointments to six sales. You’ve just increased your sales by 20%. That’s massive, and all you’ve done is improve the follow-up process. You haven’t generated any more leads. You’ve just improved part of the sales funnel. So I hope you’ve got to grips with that, and I’m really hoping that you can do something with it in your business.

The Sales Funnel Today

But there’s one thing more that I want to show you, and it’s this.  Imagine this is the bottom of your funnel.  And the reason I’ve done this is because modern sales funnelling is more like an hour glass, and the reason is because there’s massive value in post-sale marketing.  And the reason is very few businesses sell just one product or service.  And, so, you’ve got the opportunity, with the right clients and at the right time under the right circumstances, to sell more things to your existing customers.  And you should be doing that anyway.

The number of times I’ve visited accountants who were doing the bookkeeping and the payroll for a limited company, but weren’t doing the tax return for the directors, seriously, come on. It’s just a next step. And the only reason they hadn’t is because they hadn’t bothered to make the effort to sell that additional service, or a financial adviser who would do a pension for a company but didn’t look at their life cover.

So have a think about ways where you can do post-sales as well. Instead of just having a funnel, develop an hourglass kind of mentality because some of your clients, if they trust you, they know you, and they like you, will buy if it’s presented to them in the right way. We offer a handful of additional services, SEO services. We offer some blogging services, some managed hosting, etc.  We do training.  And some of our clients buy them because we make the effort to let them know that it’s available to them.  And, well, of course, we make it attractive for them to come and talk to us about it.  So can you do the same and add this to the bottom?

What amazes me is the number of people, like plumbers for example, who will get a client and never talk to that client again until the client picks up the phone.  The churn amongst plumbing clients is phenomenal.  How much would it take for a plumber to develop an email marketing system?  Okay, once a month, send out an email just to let you know cold’s coming up. If you haven’t had a cold check on your system, or you haven’t bled your radiators, or if you haven’t had your boiler looked at, now might be a good time.  Spring’s coming up, time to bleed the radiators.  You might have to switch your central heating off, but if something’s not right, let me know.  How difficult would that be? It wouldn’t. But how many plumbers do you know that actually do that? I don’t know a single one.

So have a think about how you could use this process. It doesn’t have to be complicated but there’s little excuse for not knowing your sales conversion numbers. There’s no rocket science involved. Just keep it as simple as you possibly can, and analyse it, and work on it to improve it.

Thanks a lot and bye for now.