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. 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:
The first thing you will do is to work out what sales level you want to achieve each month. Let's use $100,000 as the figure for our purposes.
Now you need to figure out your conversion rate. Let's suppose that all of your leads are generated through you website in order to keep this example simple.
Assume that you are able to convert 2.5 visitors into sales for every 1000 visitors to your website. Your conversion rate is .25%.
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
Therefore, if you have a $20 average sales price, a conversion rate of .25%, and you want to achieve sales of $100,000, your calculation would look like:
($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.
Yikes! That's a bunch of visitors!
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%.
Look at how that will affect the calculation:
($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.
That's a nice change!
If you want to decrease the number of visitors you need even more, try increasing average sales to $47:
($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.
Everyone would rather work smarter than 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.
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:
The first thing you will do is to work out what sales level you want to achieve each month. Let's use $100,000 as the figure for our purposes.
Now you need to figure out your conversion rate. Let's suppose that all of your leads are generated through you website in order to keep this example simple.
Assume that you are able to convert 2.5 visitors into sales for every 1000 visitors to your website. Your conversion rate is .25%.
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
Therefore, if you have a $20 average sales price, a conversion rate of .25%, and you want to achieve sales of $100,000, your calculation would look like:
($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.
Yikes! That's a bunch of visitors!
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%.
Look at how that will affect the calculation:
($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.
That's a nice change!
If you want to decrease the number of visitors you need even more, try increasing average sales to $47:
($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.
Everyone would rather work smarter than 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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