Calculating Lead Conversion Rate: A Step-by-Step Guide for Online Businesses - Bumper Leads

How to Calculate Lead Conversion Rate

 

In today’s competitive digital landscape, small business owners need to stay on top of their game when it comes to lead generation and conversion. Understanding how to calculate lead conversion rate is crucial for determining the effectiveness of marketing campaigns and making data-driven decisions to drive growth. Whether you operate in the SaaS industry, eCommerce or B2B sector, tracking your lead conversion rate online is essential for evaluating the success of your marketing efforts.

 

What is Lead Conversion Rate?

 

First off, what do we mean by Lead Conversion? The lead conversion rate measures the percentage of potential customers (leads) who take the desired action, such as making a purchase, subscribing to a newsletter, or filling out a contact form. It helps businesses determine how effective their lead generation strategies are in converting prospects into paying customers.

So how do we calculate ‘Lead Conversion Rate?’

To calculate your lead conversion rate, you can follow this simple formula:

Lead Conversion Rate = (Number of Converted Leads / Total Number of Leads) x 100

For instance, if you generated 200 leads and 50 of them eventually made a purchase, your lead conversion rate would be:

(50 / 200) x 100 = 25%

If you’re getting over 25% in conversion rates you should be going out celebrating!

 

Importance of Lead Conversion for Small Businesses

 

1. Maximising Return on Investment (ROI)

 

Calculating the lead conversion rate helps small business owners gauge the ROI of their marketing efforts. By tracking this metric, you can identify which marketing channels and campaigns are most effective in converting leads into customers. This valuable insight allows you to allocate resources wisely, optimising your marketing budget and boosting revenue.

You can understand now why having dashboards and checking campaign reports is crucial for your marketing in general.

Let’s take a quick look at an example.

Imagine you’re running an eCommerce store. By correctly measuring your lead conversion rate, you discover that leads from social media ads have a significantly higher conversion rate compared to organic SEO traffic. Armed with this knowledge, you may choose to reallocate some of your content marketing budget to social media ads, resulting in a higher ROI.

 

2. Enhancing Marketing Strategies

 

Understanding your lead conversion rate enables you to fine-tune and optimise your marketing strategies. By identifying the strengths and weaknesses of your campaigns, you can make data-driven adjustments to increase conversions. Testing different approaches, such as improving landing page design or adjusting call-to-action elements, becomes essential when aiming to improve lead conversion rates.

Let’s say you’re providing software-as-a-service (SaaS). Through tracking your lead conversion rate, you notice that potential customers often abandon the sign-up process at a specific stage. By analysing user behaviour and conducting A/B tests, you identify that simplifying the registration form increases conversion rates. Implementing this optimisation results in a higher percentage of leads converting into paying customers.

Complicated sign-up forms in general slow down your progress in getting more people to take action, resulting in low conversion rates.

 

3. Identifying Bottlenecks in the Sales Funnel

 

Calculating lead conversion rate aids in identifying bottlenecks within your sales funnel. It allows you to pinpoint where potential customers drop off or lose interest, helping you focus on areas that need improvement. By addressing these bottlenecks, you can smooth out the customer journey and increase conversion rates.

For example:

Consider a service-based business. By monitoring your lead conversion rate, you discover that a majority of leads drop off during the consultation phase. Recognizing this bottleneck, you can adjust your approach by offering clearer value propositions, introducing testimonials, or even simplifying the consultation process itself. We find that these types of optimisations lead to a higher percentage of leads successfully converting into clients.

What could be one bottleneck you see in your business right now?

 

3. Automating Your Lead Conversion process

 

Did you know you can automate the lead conversion process?

This is what we do every day for our clients. We help clients simplify and automate their sales and marketing systems so they make more money. We focus on the best lead conversion strategies for our clients regardless of the vertical their business is in.

By leveraging automation, business owners can streamline their lead gen processes, saving time and resources while maximising ROI.

how to automate lead conversion process

Here are a few lead conversion steps a business owner can automate:

 

1. Lead Qualification

 

Automate the process of lead qualification by setting up criteria that categorise leads based on their behaviour, interactions, and demographics. For instance, if a lead visits specific product pages multiple times, the system can automatically label them as “highly interested.”

 

2. Personalised Email Campaigns

 

Craft personalised email sequences that automatically trigger based on lead actions. For example, if a lead downloads a resource from your website, they could receive a follow-up email automatically with related content or a special offer tailored to their interests.

 

3. Appointment Scheduling

 

Implement automated scheduling tools that sync with your calendar. This is a must-have for any business owner! Sign up to tools that allow for automations, such as Calendly or Acuity Scheduling. This allows leads to book appointments or consultations at their convenience without the need for back-and-forth emails. It’s also useful when booking times with people from different Time Zones.

 

4. CRM Integration

 

Integrate your customer relationship management (CRM) system with your automation platform. This facilitates seamless data flow, ensuring that all lead interactions are recorded and can inform future automated actions. One of the best tools for automating your sales and marketing processes is ActiveCampaign. Of course, there are others on the marketing HubSpot and Salesforce to name a few.

 

5. Follow-up Surveys

 

Automatically send follow-up surveys to leads who have recently made a purchase or interacted with your business. Their feedback can be invaluable in refining your processes and understanding customer satisfaction. For an ecommerce business consider using Klaviyo for your email marketing automation. Klaviyo integrates natively with a third party platform called Typeform that you can use for customer surveys. ( At the time of writing this post, Typeform has released a new AI tool, called ‘Formless‘ – check it out here – you might as well use this for all your surveys if you want to really wow your customers!)

So by embracing automation in these areas, small business owners can create a more efficient lead conversion process, allowing them to focus on what they do best – growing their business.

 

OVER TO YOU

 

As you can see from today’s post, calculating lead conversion rate is crucial for small business owners in gaining valuable insights into the effectiveness of their marketing efforts.

As a business owners, you’ll often feel overwhelmed and stuck, not knowing which marketing activities bring you the most ROI. It’s an everyday battle trying to work out where you should be investing your time and money in. But once you start tracking and measuring your lead conversion rates you’ll know exactly where to go all in.

Remember, higher conversion rates mean more sales!

Don’t worry, we can help you automate your lead conversions. If you need help automating your sales and marketing, don’t hesitate to reach out to us here: bumperleads.com/contact.

You can also follow us on Instagram where we post more marketing automation tips for business owners.

 

FURTHER READING

 

Designing Effective Sales Funnels: The Questions You Need to Answer

Create a Marketing Automation Plan For Your Business

Email Deliverability: 5 Tips to Dodge the Dreaded Spam Folder

Milena Vujnic

Milena Vujnic

eCommerce Strategist at Bumper Leads

 

Milena loves helping small business owners grow their business through smart systems and automations.

Milena lives in Adelaide, Australia with her Chileno husband and her best friend Netflix. She suffers from mild email OCD, ie hates small font and cluttered newsletters. Milena is on a mission to make online business a less confusing place for a business owner.

She loves anything podcasting, eCommerce and is honoured to be supporting clients all over the world with her coaching.

You can follow Milena on Twitter (@MilenaTheGreat)

 

Share This