How many leads do you need to make the amount of money you want to have in a year? As simple as this question might be, I’ve found very few people actually have this number in the top of their minds.
When answering this question, there are two considerations. 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 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 example, let’s say you want to make $100,000 in sales a month.
Next, you need to calculate your current conversion rates. While this process can be used for any type of prospecting, for this example, let’s keep it simple and assume the only way you get leads and sales is through your website.
Now, let’s say that for every 1000 visitors, you “convert” 2.5 into sales leads. 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 this example simple, we will assume every “conversion” described above will ultimately purchase from you.
(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.
Ouch! That’s a bunch of visitors! Now, there are a few things you can do to change things. The average price can increase. You can change your visitation, or you can change your conversion rate.
Most find the easiest fix is to improve conversion rate. It is very possible to increase to ablut 2% from an original .25% rate.
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.
What a difference!
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.
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.
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