Most businesses put lots of effort into generating sales leads. We want to get as many leads as we can, but if we don’t turn those leads into sales, we have only done half the job.
The number of times we sell something compared to the number of opportunities we get to sell is called the sales conversion rate. Sales conversion rates are often given little attention, but they can provide very valuable information. If you don’t have accurate figures, you should start collecting the data now.
Often, business owners and sales managers will massively overestimate their sales success rate … many will guess a sales conversion rate as high as 70% when in reality it is more like 30%. The real figure may come as a shock, but it may also reveal a significant opportunity.
Think of the bottom line difference you can make by increasing your sales conversion rate. An increase in your conversion rate from 30% to 40%, will increase your turnover by a third and have an exponential effect on the bottom line.
But how do you improve your sales conversion rate?
It is possible, and here are some ways to make it happen:
Set Sales Targets
Give your sales people a clear idea of what you need them to achieve and why, and outline the financial impact it will have. People want to succeed and need to know by what measure they will be judged. Ensure targets and measures of performance are clearly visible for all those involved. Provide incentives for staff to achieve targets. Incentives don’t have to be cash nor do they need to be large. It’s the recognition that provides the reward, so provide plenty of encouragement to your sales staff along the way.
Measure Sales Conversion Rates
When you start to measure things you will find ways to improve them. This holds true for sale conversion rates. Test and measure everything you do. And if it’s not working, don’t be afraid to change.
Define What is Unique About Your Business
If there’s nothing different about your business, people will only buy from you because of convenience or price, nothing more. Furthermore, it will be difficult to ever raise your prices because if anyone is doing it cheaper, people will buy from them. Work out what is special about your business, and let your customers and prospects know. And don’t just say “price and quality” as everyone will make the same claim. Having an appropriate quality level at an acceptable price is merely a ticket into the game, not a competitive advantage. Be very specific, and meaningful.
Sit down and ask yourself: What is it that we do better than the rest? What sets us apart? If you can’t come up with anything, you need to change or add something.
Create a Benefits and Testimonials List
You should have a statement on your website that you can also print out that contains the three or four most important benefits of your product or the five reasons why yours is a better choice. Have a clear and compelling answer to the question “Why should I buy from you?” Remember, it is always more powerful when those reasons are delivered by someone else, so develop testimonials and quotes from your past customers about how good you are. Reprints of (positive) press articles are also valuable.
If you can demonstrate the product first hand, do it. People like to see with their own eyes, and experience the product before they buy. If you can’t demonstrate, think of a way you can do something similar. A case study is a useful alternative to a demonstration and has the extra benefit of providing a third party reference. A video posted on your website is a useful alternative way to provide a physical demonstration for online customers or prospective customers researching online.
You will improve your conversion rates if you can write a guarantee that addresses the customer’s key perceived risk in buying from you. Buyers see an element of risk in almost every buying decision. Identify what that risk is and guarantee it won’t be a problem. If it is, offer to refund their money, or put things right. Once you’ve decided what the perceived risk is (and the best way to find out is to ask your customers), make sure you tell people and promote your guarantee. Also ensure your staff are empowered to deliver on the guarantee if required.
To seal the deal or encourage action now, throw in something that adds value (not a reduced price). Ideally, it is something with a high perceived value that doesn’t cost much (we have seen successful offers on $5000 pieces of equipment that offered no more than a polo shirt as a bonus). Availability of the bonus extra should have a time limit on it (to encourage buying action now). Alternatively, if you have confidence in your product, extend the warranty.
Display Awards and Certificates
When people see awards or certificates on your wall or your website, they think, “This place or product must be good”. It doesn’t matter what the awards or certificates are, or what they were for; even team awards will give the impression of quality. The only really relevant detail is the year. Displaying an award with 1998 showing prominently may damage rather than help your chances of making the sale.
Try Before You Buy
A free sample of the product or service is the best way for a prospective customer to get to know what you do and how you do it. It also provides the psychological element of there being a favour owed back to you in return, once they have had something for nothing. A free trial period to use your product may be more appropriate than an actual giveaway. Ensure the customer or prospect knows exactly how the product works so they can gain the maximum benefit from it.
The old adage that you can manage what you measure is true and certainly applies to sales conversion rates. Focus on lifting your ratio of sales to leads generated, measure it and you will see the benefit on your bottom line.