A 10% Conversion Rate Could Boost Your Revenue by 50%. Here's How to Take Advantage. Revenues are often the uppermost metrics businesses use to assess success, but I'd argue there is an even better unit of measure: missed sales opportunities and the reasons why.
By George Deeb
Key Takeaways
- Increasing a sales conversion rate even slightly can have dramatic revenue/profit impacts.
- Tracking where and how potential sales are lost requires an awareness of both internal and external factors, including those seemingly out of your control.
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It's common to close approximately 20% of leads and lose 80%. What's frequently overlooked in the search for growth, however, is that increasing that conversion rate by just 10% can be the equivalent of increasing revenues by no less than 50%. That's why, in my experience, a rigorous analysis of lost opportunities is among the most pivotal steps to consider when a change in strategy is needed.
Typical reasons for lost revenue
Some missed sales are directly related to the selling company, including the product and its pricing and marketing. Some are related to buyers' companies, including having management approval and budgets in place. Some are related to individuals involved in a transaction, including salespeople, the buyer at a customer's company or some other middlemen. Finally, some are related to entirely external factors, including competition and economic conditions. The key is figuring out which of these is/are the reason you lost each opportunity, and then putting detailed actions into place to address each.
Related: I'm an Economist — You Need to Ask These Questions About Your Business as You Look Toward 2024.
Issues related to your company
It's always helpful to keep in mind the four "P"s of marketing (product, price, promotion and place), because each is a variable as to whether someone will buy from you, or not. So, do some research: Ask customers what they do and don't like about your product, then lean into the positives in your marketing messaging, fix the negatives, and try again. Also, test the elasticity of demand by changing pricing to determine the sweet spot that produces the most revenue (drive conversions) — in the process make sure products can be discovered at any and all places a customer may be looking for them.
Buyer company-related issues
By and large, the most pressing issues at a buyer's company are whether or not they have the management approval to proceed and a pre-approved budget in place. No matter how much a junior-level staffer wants to purchase something, if the answer to both those questions isn't a resounding 'yes,", they won't. So, make sure to ask who the key decision-makers are and whether they have approved funds in place. Only then can you truly work to get people sold.
Related: The Top 5 Challenges Facing Today's B2B Sales Teams (and How to Fix Them With Marketing)
Issues related to individuals
As the band Depeche Mode memorably observed, "People are people:" It's entirely possible that you may not get a sale because of a specific individual. Maybe your salesperson is simply not very good, or a client has a personality conflict with one of them. There is a myriad of potential complications like these, so, make sure you have a firm handle on the "people issues" of everyone involved in a transaction. If you hit a wall, consider selling to others at the same target company who might be more open to a transaction.
External factors
There are, inevitably, things that are simply out of your control. Maybe a competitor just dropped their prices, and you didn't react quickly enough, or the economy is soft, and buyers are nervous about making discretionary purchases. It might be that government regulations are getting in the way (say, your product is made in China, and is suddenly subject to high tariffs). But you can always make a study of these and other potential external drivers, and have messages ready to go that best resonate with customers in response.
Related: Wondering How to Overcome Sales Challenges? Focus on These 3 Areas.
Prioritizing your measures
There's much to keep on top of in a sales-based business: Are you tracking the success of marketing campaigns, and doing A/B testing with different offers and creatives? Are you measuring the success of salespeople, then cross-fertilizing best practices and weeding out underperformers? Are you tracking competitors' moves, and asking the right questions of customers who didn't purchase? And, as with anything else in business, you can't manage what you're not measuring, so make sure you have reports that track all of the above "lost revenue" drivers, then prioritize solutions accordingly.
