Conversion rates. Bounce rates. Click-through rates. It’s enough to make your head spin. Each Wednesday, I’ve been breaking down one of these factors into something that’s a little easier to understand. Last week we talked about bounce rates and your website design. This week we’re going to tackle a discussion on how to measure your conversion rates. So let’s get into it.
Conversion points are key. Where are all of the points where you can either move a prospect further down the sales funnel, kick them out of the sales funnel because they’re not qualified, or you can blow it and lose them? Let’s start at the beginning of the sales funnel. For your company that may be a direct mail piece, an ad on the radio, a prospecting phone call, an email blast (spam) or a million other things. Let’s just look at the cold call. You have an opportunity to convert the person on the other end of the phone into a desired action. Do you want to convert everyone? Hopefully not, unless everyone needs your product. Remember that sometimes it’s a good idea to qualify people and intentionally not do business with them. If it’s not a good fit for you or for them, that’s okay.
So, what’s the purpose of your cold call? Are you trying to sell them something right then and there? Do you have a one-call sales process? Most people don’t have it that easy. Normally, we’re talking about multiple steps and for some of you, it could be an 18-month process. Assuming you have a short sales cycle, you may only have one conversion point. If you convince them to buy your product right then and there, you’re done. That’s it. But for the rest if us, you’re likely just trying to qualify that prospect to see if there’s a good reason for you to move to the next step. That’s your first of many conversion points.
Or, for those of you who hate doing cold calls, maybe you wait for the phone to ring. Let’s say your strategy uses your website to generate leads. People most likely find your website through a Google search. That’s the first point on conversion in this scenario. Let’s say you sell water filters. When we do a search for “water filters” we find your site in the 4th position on Google. “Great!” you think to yourself. You made it on the first page. You think things are golden. If we can just get everyone who searches for water filters to click on your link in the search results, you’ll be a millionaire by this time next month. What are your odds of making a sale now? Probably a whole lot better than they were last week when you were on page 2. But let’s do the math and see what it might mean for your sales to be in the 4th position.
I just asked Google how many people look for water filters on average every month. They say that 22,200 people look for that phrase every month. Now, studies have shown that 56% of all people click on the first listing on Google. Do you know how many click on the #2 guy? Would you believe on 13%? So sad. 🙁 That’s amazing that the guy in the top position gets 4 times more traffic than the guy just below him. From there is gets worse. The #3 site gets 9%. #4 gets 4% and #5 gets 3%.
So, if you were in the #1 position when people search for “water filters”, you could potentially count on 12,432 visitors to your site. But at #4, you can only count on 888 visitors. It sure would be nice to move up a couple positions because that alone could double, triple or quadruple your revenue. But, for now, you’re stuck in that #4 position. It’s not quite as exciting as it was just moments ago when you found yourself listed in the 4th position, is it?
So, now we’re assuming you’re in the 4th spot on Google. You got 888 visitors to your site. Now you have conversion point #2. What is your goal when they hit your site? Are you trying to get them to buy a water filter? Maybe, if it’s a cheap $100 filter. But what if it’s an industrial water filter that costs $500,000. You can’t expect them to buy through a shopping cart. You’d better convert them into a phone call or perhaps some sort of form on your website. If 2% of the people on your site call, then you can count on 17 phone calls a month. If you’re selling a $500,000 product, that may be more than enough leads. If you’re selling $100 filters, then you’d better increase your conversion rates or else you’ll go out of business. You can’t expect that all 17 callers are going to buy from you so now you have conversion point #3. When you get a call, how many of those people move further down your sales funnel, requesting a demo or wanting to set up a meeting? Shall we say 10%? That’s 1.7 people a month. I think you see where I’m going with this. While we had 22,000 people searching, when it’s all said and done, you’re looking at potentially getting 1 sale a month in this scenario. For most companies, that’s not enough.
So what can you do? Test all of your potential variables and see if you can increase your conversion rates at each point. If you’re able to adjust things and move up a couple positions on Google, that alone could fill your pipeline with 4 times more people. If you start with 4 times more people, you will end up with 4 times as many sales. Then tweak something at your second conversion point and you might double it. What could that mean for your sales?
If you’d like to discover some tips for how to actually go about increasing your conversion rates, check back next Wednesday and I’ll give you some great ideas. Until then…go measure your conversion rates so you know what you’re dealing with.