In sales, a great deal of energy is spent on staying busy—sending emails, making phone calls, and so on—but applying the “more means more” philosophy in an effort to close more deals is not always the most viable approach.
The reality is, for all the time and talk that goes on in the pursuit of new opportunities, you might be wasting valuable time if none of these efforts are of benefit to the company or your targets.
Instead, your focus should be on the individual conversion rates (CRs) of each of these activities. Having a good understanding of these metrics will help you work more efficiently, improve your numbers, and generally make everybody happier.
Breaking the sales funnel down to broad strokes, there are four main phases to the process:
- Number of deals
- Average order size
- Conversion rate (as a percentage)
- The time it takes to close
Added together, the results equal the revenue of the transaction, which is, after all, the ultimate goal.
Sales conversion rates: what they are and why they matter
You might describe sales conversion rates as the extent to which you are able to stay with your prospects through every point of the buying journey.
As a multi-phased process, there are several potential conversion instances at every stage of the game. Take your website visitors, for instance. How well are you able to convert them to a particular action (such as signing up for a trial, entering their email, or scheduling a conversation)? Following that, how well are you able to move them towards the next phase – which would likely be a meeting, a demonstration, or something else that indicates a level up.
In any typical sales funnel, you should be able to track your conversion rate for each activity – in other words, how often do you manage to convert that customer to the next phase in your funnel?
It’s easy enough to determine your overall CR%, but if you can gauge activity through each point of contact, it will result in another number altogether. These are micro conversions. Micro conversions are a very interesting metric that, once you have an understanding of what they are, will help you align your efforts more effectively, leading to a more efficient and financially rewarding sales process.
Our proven four-step process is something that we have been leveraging to build better sales teams. It has helped hundreds of companies improve their CR, and it can help you too.
Four steps to better conversions
Step 1: Pinpoint those metrics you can realistically have influence on
In identifying these metrics, try to view the customer journey from every possible standpoint: start at the moment they know they have a problem, that all-important, action-driving moment when they are really feeling the pain, straight through to that moment when they have decided that you are the vendor they trust to alleviate that pain.
There are many points along the way where you run the risk of losing your customer, and they comprise some of the matters you will need to focus closely on in order to achieve maximum impact.
If you are measuring your success based on one type of conversion rate, such as how many customers you start with and what percentage of this group completes, you’re leaving money on the table. You will also not be any closer to comprehending why you aren’t getting the kind of results you want. Identifying micro-conversion points and knowing their corresponding CRs is the answer, as you will then have actionable data to work with.
In the end, it’s really about identifying the key metrics that will impact your efforts—and their results—the most. It’s also about knowing what you can change and going about that process mindfully in order to achieve the maximum influence for your efforts.
Converting a marketing-qualified lead into a sales-qualified lead
One thing that should always be considered in any conversation about conversions is how effectively you can acquire a sales-qualified lead from a marketing qualified lead.
It starts with a prospect taking an action of some sort. This could be requesting a call back, filling out your contact form, requesting a demo, or downloading a free trial version of your solution.
The next metric you would track is rate of conversion going from a sales-qualified lead to a SAL, or sales-accepted lead. The difference between these two lead types is very subtle. You have already had a conversation with the sales-accepted lead and it has been decided that your solution is what they are in need of.
The two conversion rate metrics that follow in the journey are in converting that lead to a proposal and finally, on to closing the deal.
In between each step there are any number of micro-steps, but these are the main, points you should consider as they will achieve the greatest impact. These will give you a good framework to work with in measuring the success of your funnel.
Having a good understanding of these points will help you build a better perception of where your process is winning and where it is going south. It will illustrate areas in which you might be too focused on the wrong types of leads as well. For instance, you might find you are quite successful in converting your marketing-qualified leads into sales-qualified leads, but you are largely unable to move them forward to the next phase, to be an accepted lead. If this is the case, you may be spending too much time focused on prospects that are, in the end, not worth your time.
Another example might be if your homestretch effort to the win CR is lackluster, perhaps you should look at your proposals and what it might be that is causing the process to stall. It would also be a good idea to examine upstream activities and question how your leads are qualified.
Step 2: Measuring your metrics
Your conversion rates on their own will not give you an accurate illustration of the areas in which you are doing well and where you might be falling behind. You should also look at how much activity is occurring – in other words, how many marketing-qualified leads, sales-approved leads are you processing? How many proposals? How many wins?
In essence, here’s what it boils down to: there is little point spending the majority of your valuable time on converting proposals if the result is only a scant few of these every month and your targets are suffering because of it. A more effective modus operandi would be to put some effort into getting more proposals and what might help you do that.
On the other hand, if there are voluminous prospects in proposal that you are unable to convert, you should instead look at that issue and improve those processes instead of bottlenecking more prospects into your funnel.
So, you can see how the number of prospects currently in the process will affect each CR metric. This is where your process should be monitored, and it is why having micro-conversion metrics is a good idea. Your success at every phase must be aligned with your activities in order to support the broader conversion rates.
If you have a good understanding of what’s going on within each of these stages and how that impacts your CR, it will help you pinpoint specific business processes and allow you to single them out for optimization.
Step 3: Prioritize problem areas for best results
When you have completed your analyses as outlined above, once you know what your CR metrics are and can connect them to their associated activity, it’s time to prioritize the areas of concern so you can achieve maximum impact.
It’s very common among sales teams to focus heavily on converting proposals to wins. You’re targeting the low-hanging fruit – but it’s not always the best approach as you are focusing on only one aspect of the process and ignoring what is getting in the way of closing those deals.
Think of it this way: you need to view your time as a commodity. Typically, the further you get into the process, each phase takes a little bit longer. It’s easy to waste a lot of time on these late-stage activities when adequate nurturing at an earlier phase will make the win much easier to accomplish.
You start with a marketing-qualified lead. It takes you very little time to convert them into a sales-qualified lead, but the next phase, likely a discovery-oriented phone call, could take a half-hour or more. If you are able to land the demonstration, this will take an hour to an hour and a half. The proposal you put together following the demo might take you a couple of days to put together.
Logically, the number of deals in the top of the funnel is much larger, so a 1 percent increase in conversion at the top of the funnel (such as marketing qualified-to-sales qualified) has a much bigger overall financial impact than working on a 1 percent improvement on the other end (such as proposal-to-close).
Adopting this sort of methodology will encourage you to think critically about where your time might be better spent in the effort to improve the bottom line.
Step 4: Time to Focus
Achieving this kind of focus is critical to improving the sales process. But, just like anything worthwhile, it takes a great deal of objectivity and a lot of work. You can probably think of a hundred different things you might be doing in an effort to make your process more efficient but mapping out the optimal steps towards that goal takes a lot of time and dedication.
First, choose one component and outline every step you will need to take and follow it through until you have designed a process that works. Once one phase is complete, you move on to the next, and so on.
Realize that all of these changes take time and there will likely be a lot of trial and error before you land on the processes that are going to work for you. While you are working with your team and other stakeholders, be conscious of how you are going to apply these processes to your own workflow. You can coach yourself in being a better salesperson at the same time that you are nurturing your prospects through their buying journey.
For instance, while you are focusing on outbound emails, try some alternative approaches to see what messaging gets the most action. As you progress in the sales journey, the types of queries you might ask and the way you frame them will change. Each of these stages provides more opportunity to affect a meaningful connection. Getting feedback after a “no” should be seen as big of an opportunity as any other phase. Getting turned down can sometimes be more powerful than making the sale in the long run, as it will redirect you towards areas upon which you need to concentrate as this is a crucial element in the effort to improve your results.
Wrapping up: taking a data-driven approach to conversion optimization
The ready availability of a wide range of data is allowing today’s salespeople to approach their conversion optimization on a much more scientific level. In doing so, you can potentially make a major impact on your results, and by proxy, the bottom line.
Understanding the sales journey, tracking, and being aware of conversion and micro-conversion metrics will help you to take ownership of your process and allow you to perform at a higher level from month-to-month.
So, embrace your data. Take a hard look at your funnel and your conversion rates through every step and craft a plan of action that will help you and your team to improve performance, perform more efficiently, and ultimately, more predictably.