How to Measure Your Sales Conversion Rate
Are your sales lead efforts paying off? In this blog, we outline the components you should measure to determine your lead to sales conversion rate.
Do you have a PSP? No, not the game controller. Although the PSP I’m talking about can help you control the game.
I’m talking about a Predictable Sales Pipeline. It’s the reason MarketLauncher exists.
Early in my career, I worked for a joint venture with a well-known national publication. We were rolling out a new CEO peer group program, and I was tasked with sales development. This meant that before each market rollout, I would be called into a conference room and asked, “How long will it take to see a positive ROI once we enter our next market?” In hindsight, I could have rattled off a rough guess and begged for forgiveness later. But it was early in my career, and I hadn’t learned how to play that particular corporate game yet, so instead, I did the math.
I came back into that conference room and said, “My team did the research, and there are 3,000 companies in our next metro market. Based on our historical conversion rates, we know we’ll reach 20% of our target CEOs, and 20% of them will agree to a meeting. Then, 60% will pass our qualification criteria, and 80% of those will receive an invitation to join a group. 60% of the invitee pool will result in a win. We will then see about a 15% fallout and will end up with our first 30 new customers in the market, an initial 1% penetration of the total market in the first 90 days. Based on our price point, we’ll cover our cost of sale within another 90 days. After 6 months, the market will begin generating positive ROI.”
There’s something about sitting in a room full of savvy, seasoned executives all nodding their heads in agreement that makes you want to achieve exactly what you said you could. That’s exactly what my team did, and I’ve been chasing that high ever since.
The model my team built was a predictable sales pipeline. And you cannot achieve it without heavy scrutiny of every stage of the lead and sales cycle. It’s essential to adjust for other external factors. For example, we found that CEOs in Dallas were quicker to say yes to a meeting, CEOs in Boston were more likely to be early adopters of new ideas and moved through the cycle faster, and CEOs in some markets needed to see more tangible proof and required adding steps in the process.
It’s all about listening to the data and adjusting to optimize the outcomes. It sounds simple, but it takes discipline and a willingness to sometimes look closer at the warts rather than relying on a "rough guess." You also have to build a culture of trust because a lot of people touch the process that you are measuring, and you need to know your data is truthful.
ML will be heavily focused on PSP in 2024. If you are currently an active client, expect to see me asking a lot of questions about your sales process as we implement more measures to tighten the ROI ratios and closely track outcomes. So, if you see me coming, whip out your calculator and prepare to take your game to a whole new level!
Thanks for listening,
Lara
