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Jan
10

What is a ‘Sales Conversion Rate’

by Grant Merriel

 

Typically there is a lot of confusion with what a ‘Conversion’ actually is and this confusion is not going anyway, as the word is specifically applicable based on what work is being completed.

What Types of Conversions Are There:

Within Conversion UP, we focus only on conversions that are relevant to the customer. Primarily focused around results that creates a lead for them (anybody they can talk to or sell a product to) or a conversion that creates a sale for them (actual money in the door). With conversions, you are only able to track the data that is available to you – as with this, whatever the conversion outcome that is closest to a sale, we call a ‘Macro Conversion’ and any other steps that can lead towards a sale or suggest a user moving towards that overall goal is called a ‘Micro Conversion’.

  • Micro Conversion:
    A small conversion that is quite easy to achieve but generally won’t directly lead into a sale.
    Eg, Newsletter Sign-Up, a User landing on a particular page, etc.
  • Macro Conversion:
    A top level conversion that is harder to obtain (usually creating income from it) and is typically related directly to a sale.
    Eg, Visitors of a website to a lead, a user turning into a sale, etc

 

Sales Conversion Rates:

As we are focusing on ‘Conversion Rates in Sales’, it is natural to be specifically talking about a ‘Macro Conversion’. A fairly simple calculation for a sales representative to use is:

( ‘y’ [successful sales]  / ‘z’ [leads received] ) x 100  =  xx% [Sales Conversion Rate]
 

 
Sales Team Benchmark Report
 

Service Businesses: “Sales Conversions”

Internal sales teams that are selling a service will typically only focus on the conversion rate that is: ‘Converted Sales’ divided by ‘Generated Leads’.

In most instances though, a good, analytical sales team will break the conversion data down into categories based off the ‘Generated Leads’ and are dependant on where the lead has come from. Examples of this can be:

  • Online Paid Advertising (Pay Per Click Ads)
  • Search Engine Optimisation (SEO)
  • Tradeshows / Trade Events
  • Business Network Meet-Ups
  • Business Referrals
  • Radio Advertising
  • Newspaper / Magazine Prints
  • Television Ads
  • etc, etc

No matter what type of marketing medium is used, they will almost always have data to show how many readers, viewers, attendees, clicks, etc there were to the companies brand and thus allowing a company to see the ‘Visitor’ to ‘Lead’ conversion rate (or ‘Micro Conversion’). Knowing where a ‘Lead’ has come from and comparing them against a ‘Macro Conversion’ or the ‘Sales Conversion Rate’ will prove the best return on investment for marketing the business and where the Sales team go to get the best return on their time.

E-Commerce Businesses: “Sales Conversions”

Pure Online Stores never really see their potential customers face to face, so the majority of the time, they do not focus on ‘Lead Generation’ as a conversion rate (eg, an email, phone call, live chat, etc). Which means that an E-Commerce store will look at the conversion rate from a ‘Visitor’ landing on the website and then track them until they make ‘A Sale’, which is their Sales Conversion Rate.

Similarly as to ‘Service Businesses’, a good E-Commerce store will break down the ‘Visitor’ data to get a better understand of what part of their marketing dollars is getting the highest return on investment. Examples of E-Commerce ‘Visitor’ breakdowns can be:

  • Social Media (eg, Facebook, Twitter, etc)
  • Search Engine (eg, Non-Paid Google, Non-Paid Bing, etc)
  • Pay Per Click (eg, Paid Google Ad, Paid Bing Ad, etc)
  • Sponsorship (eg, Sites that the business sponsored)
  • Directory (eg, Other sites that customers use to find businesses offering products / services)
  • etc, etc

Do note, that this is for the majority of E-Commerce stores, however, there are quite a few out there that look at ‘Micro Conversions’ for users navigating from a product page to the cart and then the cart to the checkout process – however, that is a completely different post.

 

Sales Conversion Rate Overview

As there is a lot to converting the general public into a paying customer, the ‘Sales Conversion Rate’ will usually look at the ratio of ‘Visitors / Leads’ that turn into a ‘Sale / Paying Customer’. If you would like to learn more about how you can improve your Sales Conversion Rate, feel free to send the Conversion UP team an email to contact@conversionup.com.au or to call on 1300 889 303

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Grant Merriel

Being in the business and online space for more than 8+ years and advising to over 600+ businesses Grant has become to know a lot about conversions. When he is not working, he travels and attempts to do handstands.

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