We deal with hundreds of business owners. They are all different but have one thing in common – they are all aiming to make good profits so they can pay their staff a fair salary and live a great lifestyle themselves. Many wish to go further than this and strive to grow their business as far as they can.
So in order to make those big profits you need to know what are the key numbers in your business. Well it’s not the cashflow, budget, profit and loss or bank balance……we are talking about non-financial figures that help the business to grow……CONVERSION RATES!
Why are conversion rates so important? Ultimately, you can only improve what you accurately measure, if you do not how can you ever improve, how do you know what is working and what is not working?
Most business owners measure just one conversion rate, being the number of quotes/estimates that convert into business. For example, if you issue 10 quotes/estimates in a month and secure five sales, the conversion rate is 50%. However, there are three more measures that we would recommend you monitor.
So let’s go through them:
No 1 – Marketing Reach to Enquiry
The marketing reach is every person you contact, whether that is physically or digitally. How do you quantify this I hear you ask…..broadly this will be based on estimates. If you post something on social media, whether that’s Facebook, LinkedIn, Twitter etc., you can generally see how many views that post has reached. It is also easy to monitor the number of visitors to a web page, the number of people listening to a webinar and the number of people on a physical mailing list. The possibilities are endless and in today’s world with various analytics at your fingertips, a good estimate can easily be achieved.
This figure should then be compared to the enquiries you receive. An enquiry is a first point of contact, somebody asking a question of what you do or what you offer. This conversion rate is probably a low percentage but to improve it you could consider if you might be targeting the wrong people or using the wrong message….this could be a MARKETING issue.
No 2 – Enquiries to Good Leads
A ‘good lead’ is a person or business that is willing and ready to do business with you now or in the future and this is something you will need to establish. So, for us as a firm of chartered accountants one of our core qualification processes for prospective clients is whether they are ‘organised or willing to be’. We can easily work out how many of our leads meet our pre-determined criteria as a percentage of the overall leads we get in a specific period.
Again if this is a low percentage, this is a MARKETING issue. Perhaps we are targeting the wrong people, perhaps our website is not getting the right message across. We need to ask ourselves why the wrong leads are not being filtered out through our qualification process, why we are potentially missing good leads that we would be keen to work with, what is missing in our message?
No 3 – Good Lead to Proposal
Ok so at this stage we hopefully know we are reaching the right people, providing the right message and have established they are good leads. Think about it, this conversion rate should be HIGH! If we have been through our qualification process and have delivered the right message in our marketing, there should be no reason why we are not delivering our proposals to prospective clients. Conversion rates up to this stage have been marketing but from here on in, this is all YOU! If this percentage is lower than you would like then you need to review process, delivery, services or prices.
No 4 – Proposal to CONVERTED BUSINESS
This is the part we all love, the blood sweat and tears in winning the work is a great satisfaction but as explained at the top of this blog, we MUST monitor our conversion rate.
Again, this should be a high percentage, if it isn’t, again this is down to YOU! The marketing has worked, you have good leads, you have issued proposals and the customer is ready to buy. If not, find out why, gather feedback and use it to improve.
Have a play with your numbers and see what a 5-10% increase could do to your financials.
If you are a client of Friend & Grant and want to grow your business, contact your accounts manager to find out more about our business growth packages.
The content in this blog is correct as at 4 April 2022. See terms and conditions.