Calculate sales conversion. Sales Conversion

The Brain of Uncle Denis is a marketing-oriented copywriter. Therefore, it is often necessary to explain to clients that the text, if written correctly, is more related to the field of marketing than to ordinary writing.

The problem is that small business owners don't know where to start promoting their brand or how to track its effectiveness. They try a lot different ways, money is invested in many. At the same time, they cannot understand the real return on investment.

In this article we will talk about such a concept as sales conversion - what it is and how to calculate it. You don't have to become a marketer. But understanding important indicators information about product sales will help direct efforts in the right direction, without wasting money on advertising that does not generate income.

What is a lead?

Initially, you need to define this concept. In marketing terms, a lead is any person or organization that is potentially interested in purchasing your product or service. Leads are divided into “cold” and “hot”.

“Hot” ones are more ready to buy; they already want to purchase your product. But “cold” leads need to be even more convinced that they really need the purchase. They need additional evidence to make a positive decision. It's easy to guess that "hot" leads are more valuable to you. But how much?

Let's take a closer look at their value. But first, let’s give a definition of conversion.

What is conversion?

So, sales conversion - what is it and what is it used for? In simple words, it refers to any action that you have set as a goal. For example, purchasing phone call, submitting personal information from the contact form, subscribing to site updates, commenting on blog posts and the time the visitor spends on your project page (playing videos, viewing products, leaving reviews about them, etc.).

Many small business owners whom Uncle Denis's Brain meets have little sense that their new business able to grow harmoniously, largely thanks to tracking conversion rates

This knowledge is the first step in understanding, Is the sales funnel working effectively?, and which marketing strategies provide the greatest return on investment.

Sales conversion calculation

Once you have identified the customer actions you want to track, you can calculate their effectiveness. Let's give examples.

If you do not yet have a fully functional and promoted website, you can track the number of product sales and the number of leads that visited your resource:

Conversion rate = total number of sales / number of leads * 100

Example: Let's say you sold 20 packs of Chappie sticks this year and you had 150 inquiries/leads (one of them being Uncle Denis the Brain, the stick chewer). The coefficient will be 13%.

If you're tracking everything through a website, your formula looks like this:

Conversion Rate = Total Sales / Quantity unique visitors * 100

Example: you sold 20 heads of delicious cabbage from Uncle Denis’s garden through your website in a month, and your website had 1,000 unique visitors. The coefficient will be 2%.

How is lead value measured?

The value is always the income you will ultimately receive. If a company sells smoked garden shovels at average price 2,000 rubles, and one lead turns into a sale, then the winnings will be 2,000 rubles.

However, not every lead will eventually turn into implementation. You can, for example, turn just two out of ten requests into direct sales. In this case, the conversion rate will be 20%.

It is not difficult to guess that you can count on an amount of 4,000 rubles from 10 potential clients (2 sales for 2,000 rubles). This happens because only two out of ten possible sales are closed, and the conversion is expressed at 20%. The cost of one lead is 400 rubles.

Let's give the formula:

Total Lead Value = Total Sales Cost / Number of Leads

This is a slightly simplified example. We need to understand this topic in more depth. Some leads are more demanding and we need to see the actual profit, not just the income generated.

Why Total Lead Value Is So Important

If you know the value of leads, you can determine how much money to spend each month to maintain your business and how much you need to pay for advertising. This is relevant if you use pay-per-click advertising or any other offline PR - mailing list, printed advertisements.

Desired Conversion = Desired Revenue / Lead Value

Example: Let’s say you need to generate 30,000 rubles in revenue per month to maintain your business in a sustainable state. Based on the previous example, we already know that each lead costs 400 rubles.

It will take about 75 potential clients per month (30,000/400 = 75) to receive 15 sales of 2,000 rubles each and an income of 30,000 rubles.

This example is very simplified - in it we are based on the revenue received. A more accurate analysis is possible by examining the profit received from sales, and not just the total income. Many companies have difficulty determining the meaning of profit, so Uncle Denis's Brain uses the income received as a guide to action.

Example: If each sale brings in revenue of 2,000 rubles, and its total cost is 1,000 rubles, the profit from one sale in reality will be 1,000 rubles. To generate actual revenue, taking into account advertising and other expenses, you need to generate 150 leads to achieve your monthly revenue goal of RUB 30,000.

Here are the mathematical calculations:

• 1 sale = profit of 1,000 rubles
• Conversion rate = 20%
• Average lead value = 200 rubles (1,000 * 20%)
• Leads required = 150 (30,000 / 200 = 150)

Even by using total revenue instead of actual profit in your analysis, and constantly monitoring these metrics, you can make much more informed decisions.

Understanding the sales funnel of your business, it is easy to determine the number of potential customers you need to receive each month, as well as calculate exact advertising costs and its effectiveness.

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Advertising companies on the Internet are good because they give you the opportunity to track your conversion, the effectiveness of each channel and understand how much the company earned. Therefore, it is important to know how to calculate website conversion. The problem is that not everyone knows how to calculate conversion correctly.

Read in the article:

• What is website conversion
• How is website conversion calculated?
• How to calculate other indicators (CPA, CTR, ROI)
• How to check conversion

What is website conversion

First you need to clearly understand what exactly you need from advertising. A goal like “Increase website conversion” will not work. You need to clearly understand how much you are willing to pay for one client and how many clients in this moment you are ready to process. Set realistic goals for your website and store.

What are the desired actions on the website:

• Purchasing goods, ordering services;
• Registration of visitors;
• Subscribe to the newsletter;
• A certain amount of time spent by a site visitor;
• A certain number of web pages viewed by visitors. That is, viewing depth;
• Number of people who returned to the site, etc.

You can also calculate the micro-conversion of website visitors. For example, clicking a link, watching a video, scrolling down a page, etc. These are also valuable because they indicate some level of interaction with the site. Such small actions by visitors can be useful in a website usability audit. Small elements also need to be tracked in web analytics.

Conversion site is the percentage of site visitors who completed the desired action.

Conversion allows you to understand how effective your website and your online sales are.

How is website conversion calculated?

The calculation is carried out using a simple formula.

How to calculate website conversion formula

= (the number of visitors who completed the target action divided by the total number of all visitors) and multiplied by 100%.

How is conversion measured?
Website conversion is measured as a percentage (%)

How to find out store conversion?
It's simple.

Let's consider an example: with a budget of 20,000 rubles. for contextual advertising and with a traffic of 1000 people receive 50 calls per day. Then your conversion will be 5 percent. That is, the calculation is as follows: (50 calls / 1000 people) * 100% = 5%.

Example of calculating website conversion

Let's look at another example of how website conversion is calculated. More clearly.

• Total number unique visitors - 1000 people.
• The number of views of products or services is 200. At this stage, 30 people called you.
• The number of goods/services added to the cart is 100 pcs. Another 20 visitors called.
• Paid for the order - 70 visitors.
• As a result, we get: the total number of calls in our sales funnel was 30 + 20 = 50 calls. Of these, 30 visitors paid.

Conversion site = ((70 people + 30 people) / 1000 people) * 100% = 10 percent.

Thus, you will find out which advertising channel is more effective for your store. Invest there more money. Where site conversion is low, you should check the quality of your traffic. Is your advertising campaign aimed at the target audience?

How to calculate other indicators

Let's consider a few points, namely what opportunities the information on how to calculate website conversion gives us.

If you use to attract web traffic to your site contextual advertising, then you know exactly the cost of one visitor. Those. how much money do you pay for one attracted buyer? Based on these indicators, you can understand whether contextual advertising is profitable.

CTR is an indicator of the quality of your ads. Click through rate. How attractive are your ads to visitors? The calculation is also quite simple.

CTR = (number of clicks on your ad divided by total number of impressions) * 100%

Search engine promotion site

If you use to attract traffic search engine promotion, then you either again know the exact cost of one visitor (if payment is for transitions, as with traffic promotion), or you can calculate this cost.

It is calculated easily (formula): you take the cost of promoting one request to the top and divide it by the number of people who came from this request.

Conversion in Yandex Metrica— the number of visits during which the target action occurred.

• Transition cost;
• Customer cost;
• Client's profit.

With this table, you can determine how profitable it is for you to invest in the Internet, that is, find your ROI (return on investment) for Internet marketing.

ROI formula

= ((profit from internet marketing – investment in internet marketing) / (investment in internet marketing)) *100%

• If ROI
• If ROI = 100%, then income = expenses.
• If ROI > 100%, then site sales are growing.

What is considered a good conversion?

The conversion rate depends on many factors: business topics, prices, competition, and the products and services offered. For example: If a store sells low-cost goods (pizza, office supplies, ice cream, etc.) where no major decisions are required, then the conversion rate will be higher. Compared to a store that offers expensive goods(apartment purchase, household appliances, car, etc.). But this does not mean that such a conversion ratio will be in profit.

For example: Website traffic is 1,000 people, conversion rate for apartment sales is 10%, then the company will receive a huge profit with this indicator. And it will be absolutely normal. And for a store selling pizza, this will be considered a small conversion, with a low profit.

What conversion rate is considered normal?
There are no standards, no universal numbers. Each industry has its own conversion rate.

Conversion is considered good- if your current value exceeds the value for the previous period.

How to check website conversion

2 popular counters will help you set up and check website conversion at any time.

• Yandex Metrica - https://metrika.yandex.ru
• Google Analytics— https://www.google.ru/analytics/

Conclusion

Now you know the answers to all the questions. Knowing the conversion will allow you to find out more information about the effectiveness of your website, your sales, the cost of one client attracted from different advertising channels, as well as ROI (return on investment).

Happy sales to you!

P.S. If you need a professional look at your website, then this is the place for you to increase online sales without increasing your advertising budget.

• Select the desired action.
• Calculate website conversion.
• Start improving your website to increase conversions.

Read other useful articles

The sales funnel is the customer’s path from the moment he learned about your offer until the moment of purchase. The funnel consists of several stages that you set yourself and according to which your potential client moving towards completing the deal.

Sales conversion: how to build a funnel

To track sales conversion, you need to build a funnel correctly. A funnel reflects the stages of a business process. Therefore, the first thing you need to do is describe your business process. The second is to track it using the employee’s working day card. Third, optimize the business process if necessary. Fourth, move it to .

You'll end up with something like:

• Cold call/request from the website
• Dispatch commercial offer
• Follow-up call/meeting/presentation
• Signing the contract and issuing an invoice
• Payment

In this funnel, it is important to control not only the conversion rate, but also the input - the number of leads, the output results - the number of successful transactions, the intermediate conversion between stages, the length of the transaction - the number of days spent on; the length of each stage is the number of days spent on intermediate actions.

Sales conversion: calculation formula

Conversion is the very first indicator that is important to be able to calculate and analyze in order to set up sales control. Let's look at an example of how to calculate the conversion rate of a sales funnel:

Conversion = Positively Closed Trades / (Positively Closed Trades + Negatively Closed Trades) * 100%

In our example, despite different number new customers every month, conversion has remained virtually unchanged. And this is a reason to think about what happens at different stages of the sales funnel, where you lose customers.

Conversion in the funnel allows you to see the real situation in sales. Positively closed transactions can only be divided into transactions for which a clear decision was made to buy or refuse. Probable clients do not influence this indicator in any way.

Please note that in in this case closed transactions in January – 8, in February – 14, in March – 24. The remaining clients, who are classified as “new”, move on to the next month. That is, 17 January transactions moved to February, in February the manager has 72 transactions in progress: 55 February and 17 January. From 72 transactions, we subtract 14 closed ones, and we get 58 transactions that moved to March. In March, the manager already had 158 transactions in his work, and the sales result has not changed at all. This means it’s time to analyze at what stage your clients get stuck.

Sales Conversion: Sales Channel Report

We analyze the sales funnel in terms of channels for attracting new customers. Let's say we calculated that the conversion rate for one sales channel is 8%, and for another - 38%.

Now you need to make the right management decision that will affect sales growth. It is worth considering that both channels are run by the same specialists, warm leads are processed by the same sales managers.

The only difference is the sources of attraction. Let's say you compare funnel sections for cold calling and Yandex.Direct.

The right solution for sales would be to strengthen the channel in which the conversion is higher. There is no need to invest effort where the result is worse. We need to improve what already works well. That is, you need to develop a channel with a conversion of 38% and abandon a channel with a conversion of 8%.

This is why it is necessary to measure sales conversion in the funnel. Then you can improve your results without recruiting more quantity managers, but through making competent management decisions.

Sales Conversion: Reference Manager

We analyze the sales funnel in terms of the work of managers.

Based on the data, this salesperson has a worse sales conversion rate than managers with the results shown on the previous two slides.

What conclusion can be drawn from this example? First of all, we see that this manager is qualifying leads strangely. He believes that almost all clients are not targeted. Judging by the conversion rate of the funnel, only 8% of them move on to the next stage of the funnel. For the manager from previous sections of the funnel, this conversion rate is 57% and 80%.

In this situation, two solutions can be taken to improve sales conversion:

1. Work with a manager whose conversion rate is worse until he achieves the same indicators as the sellers from the previous slides.
2. Fire this manager. Transfer his requests to an employee who has a higher sales conversion through the funnel.

What steps need to be taken to improve sales conversion

Step 1: Set up sales funnel analytics
Step 2: Increase your sales by improving the conversion rate of each stage of the funnel. You can work in two directions: increase throughput funnels and reduce the duration of each stage.

Analyze your business's sales funnel conversion rates. Swipe correct calculations and accept the right ones management decisions for profit growth.

The meaning of the word “conversion” depends on the scope of its application. In Internet marketing, this is the ratio between all website visitors and those who performed the target action: indicated an e-mail, registered for a webinar, etc. In online advertising, conversion is the ratio of banner impressions to link clicks. And in traditional sales, the conversion rate is the ratio between the number of all customers who showed interest in your product and those of them who made a purchase.

According to experts, all promotion work in the company is aimed precisely at increasing this indicator.

Counting on our fingers: calculating sales conversion

Most often this indicator is measured as a percentage, however, you can also use simple fractions. Let's try to calculate the sales conversion rate, the formula is very simple:

(Actual clients/Potential clients)*100%

Let's consider: for example, this month you closed 2000 transactions, and only 2 of them were won. This means the conversion is 0.1%:

(2/2000) * 100% = 0,1%

If we assume that the company from our example worked on the errors and was able to out of 2000 potential buyers bring not 2, but 200 to a sale, then the conversion will increase to 10%:

(200/2000) * 100% = 10%

Please note that when calculating conversion, only closed trades (won and lost) need to be taken into account, since open trades may still sell in the future.

Thus, we calculated general level conversions. If your cycle of working with a client includes several stages, forming a sales funnel, then you can calculate the conversion for each stage.

Similarly, you can calculate the conversion separately:

• for each manager - we identify who sells well and who needs additional training or a motivating kick;
• for each sales channel - for example, an online store brings in such and such a percentage of customers, and a physical one - so much;
• for each product or service - some sell better and some sell worse with a similar base of potential customers;
• for each location - somewhere your services are in greater demand, somewhere less.

Why do we need to know this: applying conversion in practice

As you understand, there is a conversion at every step of the sales funnel, and if you count them all, you will get a huge set of numbers. What to do about it now?

1. “Cure” the weak points of the sales process

Understanding how to calculate sales conversion and knowing it exact indicators, you can find and correct errors in the company's work. Have you discovered that a manager loses most of his clients at the cold calling stage? - and things will go better. Have you found that buyers respond well to cold calls, but fall off during the presentation stage? This means that the presentation needs to be improved.

For example, like this:

(joke)

We measure the effectiveness of innovations

Knowing the starting point makes it easier to assess the effectiveness of any changes. Have you made adjustments to your sales funnel? Have you changed the layout of the site? Did you give managers new scripts? This will immediately affect the conversion: if the indicators have increased, you are on the right track.

Dave Garr, co-founder of UserTesting, as part of a survey by the analytical platform Kissmetrics:
- We increased the speed of our website - and conversion increased by 73%!

Blake Williams, co-founder of Keepsy, as part of a survey by the analytical platform Kissmetrics:
- So far, nothing has increased our conversion more than the fact that we “slapped” two large green buttons with a call to action.

We forecast costs

Let's say you sell 5 units of product a week, but you want to sell 25. Having tracked the conversion, you realize that to sell 5 units you had to call 50 customers. This means that to sell 25 you need to make 250 cold calls. Now you know exactly what task to set for managers in order to achieve desired result and you can calculate how many resources this will require: in this case, 5 managers with a plan of 50 calls.

It can be even simpler: we use a CRM system

A CRM system will help simplify your work with conversion. Honestly, you may not even know how to calculate sales conversion: smart program it analyzes the data online and outputs visual reports. For example, to analyze the sales funnel, a special diagram is used: it indicates how many transactions are at each stage of work and what their amount is.

Screenshot of the report on transactions in the system

Moreover, the CRM system allows you to detail the funnel data. For example, display in it transactions not of the entire sales department, but of an individual manager. Or indicate only those transactions whose clients came from a specific source. This way you can compare the performance of different employees, look for more effective channels advertising and much more.

You do not need to personally collect and analyze information - the CRM system will do it for you. It also contains all the right set tools to take action quickly. Right now you can evaluate the ease of working in CRM, in the program.