What is Sales Conversion and How to Calculate it?
March 23rd 2022
Sales Best Practices
how to calculate sales conversion
Have you ever appeared for an exam and dreaded looking at the results? It's probably nostalgic but still relevant with sales prospecting. Though converting leads to paying customers isn't an exam, the rate of sales conversion is an accurate measure of success. It will significantly improve your business and propel your profits to new heights if mastered. It does not affect your other sales metrics like bounce rates, click rates, customer acquisition rate, to name a few; in fact, improving your conversion rates will improve your other metrics as well. With that said, let's talk about what the sales conversation rate means, how to calculate it, why it is essential, and how you can boost it.

Table of Content

  • What is Sales Conversion?
  • Why is Sales Conversion important?
  • How do you Calculate Sales Conversion Rate?
  • How Can You Boost Sales Conversion Rate?
  • What’s Next?

What is Sales Conversion?

Sales conversion metric measures your sales team's ability to convert new leads into customers. It helps determine the rate at which quality leads become paying customers. It includes the sequence of activities in the sales pipeline that enable conversion. It is an essential metric for aligning your sales pipeline and performing quality control over it periodically.

Lead generation tactics are unique to every organization, but usually, the lead generation team and sales reps work separately. For example, around 100 leads are generated after a month-long work to share them with the sales department. If the sales department closes 30 deals out of 100 leads, you have a 30% sales conversion rate. It is critical to make sure you're working closely with the lead generation team to calculate and boost lead conversion. They must be involved at all stages to maintain consistency and bring synergy.

Remember that your company's ideal percentage rate or conversion ratio depends on your business model, growth estimation, and the industry average. So, you must focus on setting achievable sales conversion targets that match or supersede your competitors.

Why is Sales Conversion Important?

As already mentioned earlier, sales conversion is a crucial metric for you to measure the efficiency of your sales team. It helps you understand if your resources are being used efficiently to convert high-value customers or not. Aside from this, there are other aspects of tracking sales conversation that make it critical to all sales enterprises:

  • Control Sales Pipeline

  • Your conversion rate is crucial because it is one of the simplest yet most effective ways to track your sales. Without tracking your conversion, you will lose control of your sales pipeline. You would not analyze the sales pipeline critically and understand where it is not consistent. You will thus be unable to track failures that may occur. As a result, you may find yourself continuing with processes that are both inefficient and unprofitable.

  • More Conversion = More Revenue

  • As mentioned earlier, tracking the conversion helps you make your sales funnel optimized and pipeline more efficient. Greater efficiency equals more significant revenue. You can use the money saved by eliminating inefficient practices to increase revenue instead. Better sales techniques and optimized prospect touchpoints would help you win over prospects.

  • Accurate Forecast & Prediction

  • In contrast to other sales metrics, the sales conversion rate gives a more holistic view of your sales pipeline. It can help predict more engagement as the prospects pass through the sales funnel. It thus enables you to create data-driven predictions when it comes to deciding upon which sales playbook techniques to deploy. You can improve all aspects of your business by combining this with AI technology.

How Do You Calculate Sales Conversion Rate?

Sales conversion rate is simple to calculate and straightforward sales metric. You need to divide the number of sales by the total number of leads. Allow us to simplify this for you.

(Number of Sales ÷ Number of Leads) x 100

It can also be written as:

(Number of Conversions ÷ Number of Qualified Leads) x 100

Let's look at an example to understand the concept of calculating it. Suppose you made 20 sales in the previous month with 100 leads generated. As a result, the formula is: (Number of Sales ÷ Number of Leads) x 100, i.e. (320 ÷ 100) x 100 = 20%. As a result, your conversion rate is 20%.

Conversion rates can be calculated between each stage of the sales funnel to determine the conversion of leads as they pass through it. In terms of the sales funnel, it is the rate at which leads move from one to the next. It can be tracked to determine the problems in your sales funnel and identify areas of improvement.

Sales Funnel

How Can You Boost Conversion?

Calculating sales conversion aims to identify problems and improve the sales tactics to boost it While the nature of the issues that might affect the conversion differs from company to company, some tried and tested ways always work. Some golden tips to get you started are as follows:

  • Optimize Company Website

  • The company website is the virtual address of the company on the web and is often the first touchpoint for prospects. To engage prospects, it is essential to optimize the company website. The landing page, which is the first page of the website, should address the specific pain points of the prospects. You must have a call to action across the website. A call to action is nothing but activities on the website that prompt prospects to do what you want them to do after visiting your website or app.

    Set up contact forms, content upgrades, newsletter subscription forms, and so on to collect customer information or make a sale. Further, to improve your website's ranking in search results, create an optimized website with appealing landing pages and a user-friendly interface.

  • Create Useful Resources

  • The easiest way to boost conversion is by appearing as a trusted resource and not someone who wants to sell. Blogging is the new king of content marketing in the twenty-first century. Creating valuable, eye-catching content that entices your customers to buy your product while helping them achieve better results should be the goal. Make your products sound better than your competitors and make yourself appear as someone who cares.

  • Social Media

  • Getting your prospects to talk to you involves coming up with a strong outreach strategy. Social media is trending these days and where most of your target prospects are. Consumers today rely on social media platforms such as Facebook, YouTube, and Twitter to find recommendations, advice, and reviews.

    Investing in social media to build a multi-channel outreach is an excellent idea to engage high-value qualified prospects and boost conversion. It can help you reach prospects through the most active channels. It also enables you to convert your prospects into customers by making them believe that you can help them. It can also help you generate more organic traffic on your website and more organic leads.

  • Email Marketing

  • Email blasts are a thing of the past and are ineffective today. Sending highly personalized emails to prospects is what successful companies do. They try to address their challenges and pose a probable solution. Send out automated emails to educate prospective customers about your organization to build trust.

  • Automation

  • An AI-powered sales automation software saves time by automating time-consuming and repetitive tasks. It allows you to prioritize and focus on critical functions like making essential sales decisions or strategizing for increasing revenue generation. It helps you track interactions with potential and current customers. Furthermore, it provides daily sales reports and enables you to track essential sales metrics like bounce rates, new visitors, incoming traffic sources, click rates, and much more. These can be used to improve their sales conversion rate.

  • Referrals and Reminders

  • Existing customers are the best advocates of your company. They can recommend your products to someone they know who would benefit from them. Requesting referrals from your existing customers is thus another way to convert qualified prospects. Additionally, send reminders to existing customers to purchase from you again to keep the sale going.

  • Conduct an A/B test

  • A/B testing helps you compare two versions of your web pages, emails, or any other such content to find which one performs better. Through A/B testing, two or more variants of an email or page are run by users at random. Statistical analysis is then used to determine which variant drives more conversion based on clear evidence. It provides you with a data-driven approach to boost conversion.

What’s Next?

Businesses can gain valuable insights into what is working for them in their sales funnel and what isn't by evaluating their sales conversion. It is thus a measure of the effectiveness of your sales efforts. Once the problems in the sales pipeline have been identified, it's now time for you to take action and optimize your sales activities and cadences. Use the suggestions listed above to quickly increase your conversion rates and ensure that you win over high-value prospects consistently.

Shreya Palsani
Contributing Writer
Shreya Palsani
Contributing Writer
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