Do you have a leaky funnel?
If you have good traffic and plenty of leads flowing through to sales, but too many drop-offs during the purchasing process, then your answer should be “yes”.
Optimizing the way you convert those sales qualified leads to happy customers is our focus today as we aim to treat the causes of that undesirable symptom – the low close rate. Read on to learn how to increase your sales conversion rates.
No stupid questions: What is the sales conversion rate formula?
Let’s start with the overall win rate formula. This is a helpful metric, displayed as a percentage that says:
If my sales team talks to x number of leads, y% of them will become paying customers.
The formula for your overall win rate is quite simple:
Number of customers divided by number of sales qualified leads
It’s a powerful metric because it allows you to define how many leads your marketing team should be on the hook for. This is an important piece in the puzzle of defining a service level agreement, which is step one to aligning your sales and marketing team.
Now, in the sales pipeline, many use a CRM to distinguish the different deal stages in their sales cycle. Between each stage, a conversion must happen, and the rate of leads who move from one stage to the next is the sales conversion rate.
The formula for the sales conversion rate is:
Number of contacts in deal stage 2 divided by number of contacts in deal stage 1.
Your sales conversion rate is just one of many sales pipeline metrics that will help you optimize your sales process. Once you have a handle on the metrics that are important to your sales process, get a deeper handle on the practice through our post: Sales Pipeline Analysis Made Simple.
1. Provide Value Up Front
Why it works: builds trust, establishes authority, and increases brand affinity.
The art of sales is rapidly changing. Today’s trendsetters have replaced the mantra you once knew as “Always Be Closing” with the more approachable “Always Be Helping”.
Almost any sales manager will tell you a deal can take upwards of 15 touches before you’ve even reached the proposal stage of closing a customer. If those touches look like “did you get my last email?”, you’re doing something wrong. In your first few engagements, serve up valuable content and information, working to solve the prospect’s problems while educating them on your brand and services.
We buy from people we like and trust. As simple as it is, it may be the reason that deal stuck in your pipeline hasn’t closed. Build the relationship from the get-go and you’ll start to see the results.
2. Improve Your Sales Scripting
Why it works: improves natural dialogue within a relationship, reduces time-to-close
If you’ve ever been on the receiving end of a sales call, there are always red flags you’re waiting for. Those free trials with crazy promises, the sales rep who gets your name wrong, and the ones who hijack the conversation to talk about themselves for 10 straight minutes – these are the obvious ones that slap you in the face saying, “don’t trust these people”, and they’re the easy things to eliminate your sales teams’ scripts, but there’s also words and phrases that turn buyers off on a subconscious level.
For instance, if your sales rep mentions your company’s name six or more times, “close rates drop 19%”, according to Gong.io, a sales intelligence platform. There are plenty of obscure phrases to fine-tune out of your pitches. Saying “We provide ____” four times in a call results in a 22% drop in close rates. Using collaborative subject words like ‘we’, instead of ‘I’ increased success rates by 35%.
These specific data points might be hard to drill into your team so know this: at the end of the day, your sales calls should be helpful and relationship-driven, providing value while showing empathy before pushing a contract at a prospect.
3. Use Social Proof at Your Conversion Points
Why it works: consumer psychology, increased trust and authority
Social Proof is a psychological phenomenon in which people conform to the actions of others under the assumption that those actions reflect the correct behavior. (Source)
In other words, people do things because other people are doing them. This isn’t news, but it is something that you should incorporate in your optimization strategy. Include components like testimonials, stats on how many customers bought a product, reviews, and pictures of customers in key conversion points. This can look like testimonials on landing pages, case studies brought up in sales calls, or positive reviews next to services and products. Train your sales team to include social proof where they can in dialogue with warm leads.
4. Introduce a Sense of Urgency or Fear of Loss
Why it works: psychology of loss aversion, overcoming scarcity
Loss aversion is the psychological principle that says that humans fear the pain of losing something in their possession. Introduce a benefit that the customer receives if they can buy within a defined time frame to improve times-to-close. Just make sure the discount they receive doesn’t outweigh the positives of closing the lead in much less time.
This isn’t a new tactic. You see it on Amazon.com when there are ‘only 1 of these items left in stock’, and you see it on Ticketmaster.com when you begin check out and there’s a timer in the bottom left corner.
If you aren’t in an e-commerce space, provide a benefit to customers who sign a contract early on. Such a benefit may be financial or can even just draw on the fact that they get access to whatever they’re purchasing more quickly.
The important thing here is that you’re transparent and providing equal value for the extra lift and stress you’re asking your prospect to take on. Careful messaging can go a long way to keep your offer from sounding like an annoying radio ad (which no one wants).
5. Testing, testing, testing… Is this thing on?
Why it works: optimization of resources, abandonment of ineffective processes
We don’t sell snake oil on our blog. Everything stated above has been proven to work for other companies before, and it might even work for you, but it’s important that you test these tactics against a baseline (baseline = what you’ve been doing before making a change) to ensure that you attribute success or failure to the right factors.
In fact, setting up a healthy environment to test tactics and confirm hypotheses is just as important as actually testing the tactics. A/B testing new theories and practices against your old stuff will make for a smarter, more efficient system.
Your product, your team, and your prospects will interact differently than what every case study reports. Find the tactics that work for you and drop those that don’t. That’s what Conversion Rate Optimization is all about, after all.
What’s the point?
Well, it all comes down to revenue growth at the end of the day. Optimizing at each conversion opportunity, even when it’s just a percentage point here and a few more leads there, all boil down to more revenue in the door in less time than ever.
We have an entire guide on the subject right here: Achieving and Understanding Revenue Growth. It’s free, ungated, and super helpful. Take a look and share it with your team.