It is every company’s goal to get a good conversion on their leads, which is why companies employ metrics to monitor the effectiveness of their lead generation strategies. But is your companies numbers standing up to industry standards? Can your sales still stay ahead of your lead generation expenses?
The important thing to monitor is if your conversions are keeping up with industry standards. Juxtaposing your results to that of the industry can tell you whether or not your teams and strategies are working. If your numbers fall under the industry standard, it allows for a clear picture on where your company is struggling and focus on implementing new strategies for success.
Importance of Measuring Success
Conversion rates tell you how quickly your leads turn into clients, and that is essential for business growth. High conversion rates mean that for every dollar you spend to get a lead, you receive more profits for turning the lead into a paying customer. Knowing whether you have a high or low conversion rate speaks volumes about how successful your marketing and sales efforts are.
More often than not, lead conversion is defined as being accomplished when the lead becomes a paying customer. But conversion in itself can mean any of these other customer behaviors: becoming a newsletter subscriber, downloading your white paper offer, signing up for an online seminar, sharing content on social media, or a specific length of time spent on your homepage.
High conversion rates means more sales for your business, the more sales, the more leads will likely move quicker down the sales funnel. A high conversion rate also points to successful alignment between the sales and marketing teams.
There are a number of reasons why your conversion rates may be low and avoiding any of them will lead to poor ROI and low profitability. The reasons for low conversion could be any of the following:
- Landing pages are not UX friendly – user experience is a big factor to your customers as complicated and bulky experiences can stop them in the middle of the buying process.
- Your offer is not comparable to the competition – comparisons may vary from price to quality of offerings. Check your offering against the competition and see where you might be lacking.
- Sales complexity – is the process in buying from you streamlined or do they have to go through many steps that make the process complicated? Remember, a simpler process goes a long way.
- Level of commitment – were you able to target the right audience? Leading the wrong people to your landing page will result in a high bounce rate.
How to Compute Lead Conversion Rates
Conversion rates, is the process of reaching out to the right target audience, presenting them with the right solution and getting them to take the action you want them to take. These could range from subscribing to buying from your website.
Computing for your conversion rate is easy. Once you’ve clearly defined what a conversion is, you now know what to measure and how to compute your lead conversion rate. Conversion rates are equal to the total number of conversions divided by the number of leads and then multiplied by 100.
If your conversion is defined as leads who become new customers, then the formula should look like this:
Lead Conversion Rate = Total No. of New Customers / Number of Leads * 100
So if you had 100 leads, and 20 of them became new customers, your lead conversion rate is 20%. If there is more than one conversion action that you’re tracking, the results can go over 100% due to each interaction can have multiple conversions.
Average Conversion Rate Per Industry
The standard conversion rate varies across industries. With industries having various targets and conversations, no single standard can be used. These could range from different products, sources, information, etc.
In most cases, you should also expect traffic coming from the top of the funnel to be a lot higher than those further down the funnel to become Marketing Qualified Leads (MQL) and Sales Qualified Leads (SQL).
Visitors that become MQLs and SQLs provide larger opportunities they have been identified as leads who have engaged with you and are interested in your product or service. On average, SQL conversion rates are higher than MQL conversion rates; the SQL is in the buying cycle while MQLs are not ready for the buying stage just yet.
Different industries have different conversion rates. For example, the average software industry conversion rate it 7% according to Marketingsherpa. Average landing page conversion rate should be 20-25% according to Hubspot. And average PPC Pay-per-click campaign average conversion rate is 2.35% according to Wordstream.
Improving Your Lead Conversion
Despite the need to keep up with industry standards or continue to soar above competitors you can increase your conversion rates. The first step is knowing where you stand by computing your conversion rates and contrasting them to the industry standard. Once you know where you stand, it’s time to find out how you can improve. Here are a few simple tips to improve your company’s conversions:
- Identify conversion goals – what do you want to achieve and are you nurturing your customers to do what you want them to do?
- Optimize your site – Build your site so it is user friendly. Allow for a simple customer experience in which prospects can navigate to the information they want efficiently and quickly.
- A/B test your landing pages and ads – Perhaps you think that your landing page is the best because that is what seems right to you. But does the same translate to your audience? Often, your target audience sees things differently, which is why A/B testing is your friend.
When you have identified where you need to improve, it then becomes your job to implement these new features. However, this is not a one-time process. These are continuous improvements that your company should be implementing especially as technology and the industry changes.
Getting good conversion rates should be a top priority as it is a good measurement of your company’s health. It is very important that you know your conversion rate so you know where you stand against your competitors and or risk of losing important clients.