Sales Conversion Rates: The Ultimate Sales Metric…or is it?
Lots of sales leaders and sales people monitor their sales conversion rates since it’s a good top line indicator as to how things are going…from staying steady to gently increasing or, heavens forbid, heading south.
But, I also know some firms who don’t pay that much attention to it at all. Personally, I think that’s a huge mistake and hopefully, soon, you’ll agree with me.
Sales Conversion Rates, whether you are a sales person or a sales leader, informs you how you are using your most precious money making commodity….time.
Plus: anything that allows you to predict future performance in sales is worth watching.
Sales Conversion Rates: Where do I measure them?
Your sales process, documented and detailed, rigid or flexible, will have certain gates in it.
If you subscribe to my idea of a Plug and Play Sales Model – see here – then you’ll know what I’m talking about.
But, for the sake of speed, let’s assume you don’t.
You’ll know (or should know) how many sales calls you make in a day. How many of those convert to opportunities – meetings (that’s one gate) or quotes (that’s another gate)…or declines, or call backs, or deadlines…(these are all gates too)
You’ll know how many of those meetings turn to quotes. how many convert to orders immediately. How many decline and how many pipeline for another time (that’s another 4 gates). Even more gates will you consider monitoring sales cycle times also.
From your quotes, you’ll get another series of sales gates….
And at the end of that, you’ll get a final, maybe monthly, weekly or daily overall sales conversion rate based activity during that period.
It’s all about knowing what gates to measure
What gates to pay especial attention to and how focusing on the quality of interaction at each of those sales gates can dramatically improve the sales conversion rates for the individual gates as well as overall sales conversion rates.
Further sales metrics that drill even further down into the sales process is you’re serious about really improving your sales performance are detailed here. Just hit the link for your free guide – instant download – The 7 Sales Metrics to Measure, Manage and Monitor.
You see, measuring just one overall sales conversion rate is just not enough…it doesn’t give you a detailed enough picture.
And certainly you won’t be able to do the sales improvement diagnostic you need if you’re serious about really boosting those sales figures…
Sales Conversion Rates: The Fastest Way to Predict the Sales Future
Once you know the metrics at each of your selected sales gates, you’ll have your sales recipe. If you’re struggling as to how to calculate this – see here.
Your sales recipe is the formula, which may fluctuate slightly, allows you to judge sales performance, manage sales resources, predict sales performance, optimise sales resources and most certainly is the first step in creating any scaleable sales model.
It’s also the crux of real sales or performance management program.
5 Things To Think About With Sales Conversion Rates
- Too high and it could mean you’re pricing too low, or at least it’s an opportunity to reconsider your offer, your pricing, your route to market, how you package your product/service, and how you compete in the market place.
- Too low and it could be an indicator that you need to look at the prospects your chasing and the offer your proposing. On the whole this presents a huge amount of opportunity for positive growth (Click here to find out how one company went from 1:25 sales conversion rate to 1:3, and tripled their average order value)
- A sales conversion rate that stays the same (as long as it’s healthy) could mean many things, but on the whole it means you’ve got a solid test bed for testing out some new sales initiatives; namely – testing out new pricing, new positioning, different sales techniques.
- A sales conversion rate that’s in rapid decline should set all alarm bells off very quickly. Are you under competitor attack? Is it dissent in the sales ranks? A change in product? A raft of customer complaints? (A branding issue? Pricing problems? Quality issues? Read here about poor customer service nearly killed one firms new business efforts).
- A sales conversion rate that’s increasing dramatically – well first thing you do is celebrate…obviously, the second thing you do is monitor customer complaints…and then refer back to my first point.
Sales Conversion Rates: The Sales and Business Thermometer
Sales Conversion Rates are gold to me. At a glance I know who is performing and who is not. I know where to focus my efforts and what to leave well alone.
I know who’s on fire and who needs a fire setting underneath them.
Sales Conversion Rates tell me what types of customers my clients should avoid. What types they should hunt for, what to charge in what sectors, how to pitch and present in those sectors, as well as when to actively hammer a region as well as when not to waste time.
Monitoring sales conversion rates works.
It’s very effective and takes no time at all to set up, and it’s the certain route to optimising sales resources and minimising costly waste.
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