As a business owner I only thought that conversion rates should be considered in reference to web-based businesses, but this is a big mistake. The conversion rate is the actual number of people that buy from your business after having contact with it.
So for example on a website if you get 100 visitors and one sale you would have a one per cent conversion rate. In a retail store you might have 300 people through the door in a given day and maybe 200 till transactions. This would mean that you have a 66 per cent conversion rate. In a B2B operation you might have contacted 500 customers in a month but only have 100 sales so you would have a 20 per cent conversion rate.
Why is conversion rate important? Think about how much effort you have put into reaching prospects and converting them into customers. Businesses spend thousands upon thousands of dollars getting people to come into contact with them. We do this through advertising, promotions, publicity, referral requests, direct marketing, websites... you get the picture and it's endless.
The more of these prospective customers, visitors, that we can convert into sales who already know us and have communicated with us at some point in our sales cycle the higher our conversion rate.
The higher our sales and hopefully the higher our profits. Now we are not talking here about higher average sales as we will discuss that in the next chapter and how you can increase average sales to increase profits. What we are talking about here is your sales model. How are you engaging customers and encouraging them to actually buy from you and do it more often? In order to engage our customers more often we need to figure out first why we might be turning them away.
Almost every business I talk to wants to get more profitable by increasing sales, but few actually ask the question why don't people buy from them. I like to ask the question "what is it that people don't like about your industry?"
For example, if you have a trades company, you need to know that people don't like you because you probably leave a mess or you track dirt on their floors. If you have a medical supply or health related business, people probably think you are expensive, have limited stock and don't have enough educated staff. If you have a grocery store, maybe people don't like the fact that you don't have service staff or you are out of stock. If you have a medical or dental office, people hate going to the doctor or dentist!
Every industry has reasons why people don't like it. What is yours?
What are you doing that frustrates your customers? Is it the long lines? The fact that your sales staff don't listen but only talk?
Perhaps your product leaks or has technical issues. Maybe your software always needs upgrades? Perhaps when your customer gets an upgrade it doesn't work properly?
Think about the complaints you have heard. Ask your staff or even your friends.
Ask your customers.
If you want to increase your conversion rates, you need to figure out what are the core reasons that people don't like your industry and this can be like finding gold. If you can provide reasons why they can trust you and how you can overcome their dislike you will be successful and increase the number of people that will buy from you.
Of course you have to communicate that to your customer and you might have a winner. You will be able to convert more prospects and get your current and past customers to buy from you more frequently.
This will save you money and make you profits. Remember as a business owner you have a responsibility to your staff, your customers, your family and yourself to ensure that you are profitable. Without profits your business won't be around for the long run and you may have wasted years of your life.
Get started today.
Dave Fuller is a certified professional business coach that believes that small business owners need to be profitable. Dave can be reached at 250-617-7467 or [email protected]
