The ultimate goal of your marketing efforts is to capture leads and convert them into paying customers. Your success lies in how you use lead generation campaigns and marketing efforts to convert leads into opportunities and into sales for your business.
Marketing professionals often find it difficult to convert their traffic into leads and ultimately into paying customers. You may have been experiencing this problem too, but there are ways to solve it: at the end of this guide, you’ll understand the essential lead conversion metrics you should be tracking and how to measure them, so that you can understand your lead generation funnel and ways to improve conversion at each step of the way. You will also be able to develop strategies to improve your lead conversion and get more value from your marketing efforts.
What is lead conversion?
Lead conversion is when a customer takes the desired actions to convert into a lead. For example, viewing an advertisement and then signing up on your site for a meeting. Converting visitors into leads is typically a combination of strategies, which may differ in some aspects depending on whether the person you are trying to convert is qualified or not.
Leads go through many nurturing steps before they become customers. A typical process involves nurturing visitors to become leads, leads into marketing-qualified leads (MQLs), then MQLs into sales-qualified leads (SQLs), and finally into customers.
When working with leads, the goal is to encourage them to take some sort of action to either move to the next level or convert them into a customer. Every business follows different steps when converting leads, however, the ultimate goal is to turn them into a customer.
5 Metrics You Should Track to Improve Lead Conversions
Lead Conversion Rate
The lead conversion rate is your percentage of visitors that turn into leads. It measures how successful you are at converting website visitors to become leads for your business. This is one of the most important top-of-the-funnel conversion metrics. About 2.4% of visitors click on a link and convert to leads for a typical web page globally.
Lead Conversion Rate = Counts of Leads / Counts of Visitors
Based on the number of leads you acquire, you can make predictions and estimates about your customer acquisition by looking at your lead conversion rate. This will provide an opportunity to future-proof your marketing metrics, allowing for an increase in customers.
The lead conversion rate is essential for understanding how much you can afford to spend to acquire a new lead. If your product is less expensive, then the conversion rate needs to be higher in order to make it worthwhile.
Lead-to-sale Conversion Rate
The lead-to-sale conversion rate defines the percentage of leads that turn into sales. This metric focuses on the number of leads that turn into sales and drive revenue. It assesses how effectively your business and the various marketing channels convert qualified leads into actual customers.
Lead-to-sale Conversion Rate = (Number of Converted or Qualified Leads / Total number of Qualified Leads) x 100
For the lead-to-sale conversion rate, we use qualified leads instead of regular leads. It makes sense to use qualified leads since qualified leads influence the final stage in a lead’s lifecycle. If you convert a lower ratio of visitors into leads, but the leads are properly qualified, then your lead-to-sale conversion rate will be higher. Therefore, rather than focusing on the number of leads overall, you should focus on the number of qualified leads.
Lead-to-opportunity Conversion Rate
The lead-to-opportunity conversion rate is the percentage of leads that turn into opportunities. It’s important for all businesses to constantly adapt and optimize it. Monitoring opportunities in your sales data will enable you to plan for future performance and contribute to forecasting. Opportunities in business often come as qualified prospects that have a high chance of converting into paying customers.
Lead-to-opportunity Conversion Rate = (Leads converted into Opportunities / Total number of Leads) x 100
When you see an abrupt change in the number of opportunities at different stages of your sales pipeline, it’s time to determine what changes need to be made. Studying your leaking funnel report and lead-to-opportunity conversion rate will show you where improvements are needed. If you want to increase your lead-to-opportunity conversion rate, you need to put more focus on buyer-centric practices. An audit of your lead follow-up strategy is the first step in this.
Bounce Rate
The bounce rate shows the percentage of visitors to a particular website who navigate away from the site after viewing only one page. You want your leads to stick around and interact with various pages of your website. Bounce rate can tell you whether they’re doing just that or leaving from the first page they visit.
Bounce Rate = (Number of Single page visits / Total number of visits) x 100
A good bounce rate is somewhere between 26-40% but varies depending on many factors. Monitor your bounce rate closely when you make site changes that may affect your visitor’s behavior. This way, you can evaluate which elements are performing well and which need improvement.
Click-through Rate
The click-through rate (CTR) is a percentage that determines how many people clicked on your ad to visit a website or landing page. Paid ads on Facebook, Google AdWords, and other advertising platforms will often have a higher click-through rate if they have a greater relevance score.
Click-through Rate = (Total number of clicks on an ad / Total number of Impressions i.e people who saw the ad) x 100
Not all high CTRs give positive signals. If your ad doesn’t have the right keywords, if it’s not relevant to visitors, you might end up wasting a lot of money on ads that don’t impact your bottom line. The key is to test every element that you intend to bring you conversions and start conducting keyword research that will make sure that every ad you pay is relevant to your target audience.
Other metrics you could consider tracking:
Cost per Conversion
The cost per conversion (CPC) tracks the average cost to get a conversion. CPC can vary wildly depending on the type of conversion you are measuring (such as lead conversion or click-through rate). You should segment your cost per conversion data by the audience, so you can find out the specific costs of your social media, paid advertising, email, and other marketing campaign efforts.
Cost per Conversion = Total Advertising or Marketing Cost / Number of conversions
It is vital for you to measure and monitor your CPC as this metric will reveal the true ROI of your marketing efforts. This information should inform smarter decisions about how much you should spend on conversion campaigns, ads, and even what online marketing options you should continue to invest in. Cost per conversion should not be confused with cost per click, which is also abbreviated CPC.
Lead Value
The lead value is the total potential value each potential customer has for your business. The result from the lead value is roughly the value that leads contribute to the overall success of your business, which can help you make smarter decisions about how you get more leads. The lead value also helps forecast sales and influences your spending to acquire more potential customers.
Lead Value = Total Sales Value / Total number of Leads
An effective way to measure the impact of your marketing efforts is by monitoring lead value. By looking at changes in qualified leads, an increase in leads means an increase in ROI. A decrease in your lead value suggests less qualified leads are coming in through your efforts. Comparing lead value month-over-month or year-on-year can give you a benchmark of progress made (or potential for progress) to work off of.
Conclusion
To be successful in the lead conversion process, your sales reps need to be customer-centric. This means you have to personalize each interaction, provide value with different products and marketing campaigns, and give leads the right information at the right time. You also need to focus on following up with the leads that are interested and engaged, and also identify high-value leads and prioritize those for follow-up efforts.
It is important to be able to track the success of your lead generation efforts. It might also be worth engaging the services of a specialist partner if you would like to increase your chances of attracting quality leads. Experiment Zone’s conversion rate optimization (CRO) services will help you reach verified and validated leads, as well as monitor and assess key metrics to ensure the efficacy of your CRO efforts. Schedule a free discovery call today to get started on your lead conversion journey.