Many businesses, especially online businesses, spend a lot of time thinking and talking about their prospect numbers. For example, an online site will talk about the number of hits they get each day. That’s akin to a bricks and mortar store counting the number of people who walked through the door.
That’s good information to have, but it’s incomplete at discovering your effectiveness and potential profitability. The real information you want takes that number (hits or walk-throughs) and divides it by the number of people who purchased from you. This gives you your conversion rate: the number of prospects versus the number of customers. Put another way, how many prospects converted into customers.
While knowing how many prospects you have is important, knowing how many of those prospects you convert is a much better number. If you change your store’s layout or your website’s layout or the deal or the urgency, does your conversion rate improve? If so, great. Keep making those changes to improve your conversion rate.
If you get one hundred customers walking through your door and one of them becomes a customer, your 1% conversion rate is not bad. And if you want more customers, you could improve your marketing efforts to get 200 prospects to come through the door and with your 1% conversion rate, you’ll end up with 2 customers. But wouldn’t it be better to take the 100 prospects you have coming through your door first and see if you can’t turn those into 2 or even 3 customers? Once you’ve discovered “the secret” that improves your conversion rate, then you can market to increase the number of prospects who come through the door.
How do you improve your conversion rate? If you have a website, watch how many people click onto your first page and compare that to the number of people who click to the second page. If you have a store, ask your employees to pay attention to what customers see and touch before they leave. If you have a great deal, but they never see it, it’s ineffective. If you are around, stop customers when they leave the store and ask them why they didn’t buy. This might be harder in a retail setting but I know a consultant who does a great job of always asking the prospects who didn’t hire him why they didn’t. He’s learned so much about his business from those who never bought from him. (He admits to getting the odd person who complains about irrational things, but on the whole, the advice is invaluable: helping him to see how his price and the urgency of his offer affect buying decisions). His offer, he says, is as perfectly honed as it could be: any higher or lower and he’s sure he’d lose clients.
Now that you know how to improve your conversion rate, when do you do it? The answer is simple: Never, ever be satisfied with your conversion rate. 100% conversion rate is the perfect, impossible conversion rate to attain. If you continually work to improve your conversion rate toward this number, you can create marketing efforts that will return many prospects who you’ll turn into many clients.
