Recently, I broke down the sales process for a small consulting firm and identified all of the conversion points. Conversion Points refer to steps or stages where prospective customers can fall out of or stall in your sales pipeline. I wanted to address important questions like:
- how many phone calls did we miss? answer?
- how many inquiries don’t schedule a free initial consultation (IC)?
- how many people schedule ICs but don’t show up? cancel?
- how many people have an IC but don’t become a client?
- how many people have an IC but are unqualified?
- how many clients don’t complete the full package they were originally quoted?
Turns out that only 32% of the inquiries we get become clients and of those only 64% finish their full package. I hope it’s obvious why we want to see these numbers. We’re losing a 68% of the leads that we worked so hard to get. What if we were able to improve these ratios?
Sales Benchmark for Conversion
When I see “32%” I think of a simplified sales benchmark: 1/3rd of the people will always say “yes”; 1/3rd will always say “no”. The difference in the success of your business is how many of the remaining 1/3rd eventually say “yes” too. It might seem like a crude benchmark but it tells me that a business converting 32% of leads into clients is probably doing the very minimum sales process and not getting any of the “remaining 1/3rd“. Turns out that IS the case!
We want to solve the problem but we might not know where to start or, at least, where we can get the most improvement from our efforts. Here’s where the conversion ratio for each stage in your sales cycle comes in handy: telling you where most people fall out of the sales process. In our case, it is right upfront. Our follow-up with inquiries is a single email; if you don’t reply or call back in, you’ll never hear from us again.
I don’t blame you if you say, “Wow! What a bunch of amateurs!” We deserve that because this was basic. Before pointing that finger, make sure you know all of your conversion points and the conversion ratio at each point. Any glaring holes? What are you doing about them?
On the other hand, if you are hyperventilating and feeling overwhelmed because you don’t know where to start, worry not. Just be patient while I work on my next post: the ultimate lead management tool: CRM.