The meaning of the word “conversion” depends on the scope of its application. In Internet marketing, this is the ratio between all website visitors and those who performed the target action: indicated an e-mail, registered for a webinar, etc. In online advertising, conversion is the ratio of banner impressions to link clicks. And in traditional sales, the conversion rate is the ratio between the number of all customers who showed interest in your product and those of them who made a purchase.
According to experts, all promotion work in the company is aimed precisely at increasing this indicator.
Counting on our fingers: calculating sales conversion
Most often this indicator is measured as a percentage, however, simple fractions can also be used. Let's try to calculate the sales conversion rate, the formula is very simple:
(Actual clients/Potential clients)*100%
Let's consider: for example, this month you closed 2000 transactions, and only 2 of them were won. This means the conversion is 0.1%:
(2/2000) * 100% = 0,1%
If we assume that the company from our example worked on its mistakes and was able to convert not 2, but 200 potential buyers out of 2,000, to sales, then the conversion will increase to 10%:
(200/2000) * 100% = 10%
Please note that when calculating conversion, only closed trades (won and lost) need to be taken into account, since open trades may still sell in the future.
Thus, we calculated overall conversion rate. If your cycle of working with a client includes several stages, forming a sales funnel, then you can calculate the conversion for each stage.
Similarly, you can calculate the conversion separately:
- for each manager - we identify who sells well and who needs additional training or a motivating kick;
- for each sales channel - for example, an online store brings in such and such a percentage of customers, and a physical one - so much;
- for each product or service - some sell better and some sell worse with a similar base of potential customers;
- for each location - somewhere your services are in greater demand, somewhere less.
Why do we need to know this: applying conversion in practice
As you understand, there is a conversion at every step of the sales funnel, and if you count them all, you will get a huge set of numbers. What to do about it now?
1. “Cure” the weak points of the sales process
By understanding how to calculate sales conversion and knowing its exact indicators, you can find and correct errors in the company's work. Have you discovered that a manager loses most of his clients at the cold calling stage? - and things will go better. Have you found that buyers respond well to cold calls, but fall off during the presentation stage? This means that the presentation needs to be improved.
For example, like this:
(joke) We measure the effectiveness of innovations
Knowing the starting point makes it easier to assess the effectiveness of any changes. Have you made adjustments to your sales funnel? Have you changed the layout of the site? Did you give managers new scripts? This will immediately affect the conversion: if the indicators have increased, you are on the right track.
Dave Garr, co-founder of UserTesting, as part of a survey by the analytical platform Kissmetrics:
- We increased the speed of our website - and conversion increased by 73%!
Blake Williams, co-founder of Keepsy, as part of a survey by the analytical platform Kissmetrics:
- So far, nothing has increased our conversion more than the fact that we “stuck” two large green buttons with a call to action in the middle of the site.
We forecast costs
Let's say you sell 5 units of product a week, but you want to sell 25. Having tracked the conversion, you realize that to sell 5 units you had to call 50 customers. This means that to sell 25 you need to make 250 cold calls. Now you know exactly what task to set for managers in order to achieve the desired result and you can calculate how many resources this will require: in this case, 5 managers with a plan of 50 calls.
It can be even simpler: we use a CRM system
A CRM system will help simplify your work with conversion. To be honest, you may not even know how to calculate sales conversion: the smart program itself analyzes the data online and displays visual reports. For example, to analyze the sales funnel, a special diagram is used: it indicates how many transactions are at each stage of work and what their amount is.
Screenshot of the report on transactions in the system Moreover, the CRM system allows you to detail the funnel data. For example, display in it transactions not of the entire sales department, but of an individual manager. Or indicate only those transactions whose clients came from a specific source. This way you can compare the performance of different employees, look for more effective advertising channels, and much more.
You do not need to personally collect and analyze information - the CRM system will do it for you. It also contains all the necessary tools to quickly take action. Right now you can evaluate the ease of working in CRM, in the program.
CONVERSION
CONVERSION
(lat.). 1) transformation, transformation, change. 2) the conversion of interest-bearing securities into others, yielding less interest compared to the previous ones.
Dictionary of foreign words included in the Russian language. - Chudinov A.N., 1910 .
CONVERSION
[lat. conversio - transformation, change] - 1) Finnish. exchange of one currency (CURRENCY) for another at the current price rate; 2) transfer of industry from the production of military products to the production of civilian products or vice versa; 3) linguistic the way a word is formed by changing its grammatical characteristics; transition of a word from one part of speech to another.
Dictionary of foreign words. - Komlev N.G., 2006 .
CONVERSION
a change in the terms of a debt made to relieve the debtor. Government loans are most often converted. State holders. papers are offered to receive money on them or exchange old sheets for new ones, and it is warned that the interest on the loan will be reduced. This usually happens when money becomes noticeably cheaper, so that the new conditions are still beneficial, and the state. papers willingly change hands.
A complete dictionary of foreign words that have come into use in the Russian language. - Popov M., 1907 .
CONVERSION
changing the terms of the loan in the interests of the debtor - with a decrease in the interest paid.
Dictionary of foreign words included in the Russian language. - Pavlenkov F., 1907 .
Conversion
(lat. conversion, transformation)
2) k. gene - a change in one of the allelic (paired) genes under the influence of another member of this pair;
3) internal - the emission of an electron from an atom when excess energy of the atomic nucleus is transferred to it; accompanied by X-ray and optical radiation;
4) linguistic a way of forming a word by changing its grammatical characteristics ( English love love - love love).
New dictionary of foreign words. - by EdwART,, 2009 .
Conversion
conversions, g. [ Latin conversio – turnover, transformation] (econ.). Changing the terms of a government loan in the interests of the debtor state (by lowering interest, deferring payment, etc.). Loan conversion.
Large dictionary of foreign words. - Publishing House "IDDK", 2007 .
Conversion And, and. (German Conversion fr. conversion lat. conversio conversion, transformation; translation).
1.
Finnish Exchange, transformation, recalculation. TO. currencies (exchange one currency to another). TO. loan(replacement of a previously issued loan with a new one in order to change its terms and the amount of borrowed interest).
2.
eq. Transfer of industrial enterprises from the production of one product to the production of qualitatively new products. TO. defense industry factories.
||
Wed. reconversion
3.
physical Departure electron from atom when transferring excess energy of the atomic nucleus to it.
4.
linguistic A method of forming a word by changing its grammatical characteristics, without joining affixes (eg, English to work to work - work work).
Conversion- related to conversion 1-4.
Explanatory dictionary of foreign words by L. P. Krysin. - M: Russian language, 1998 .
Synonyms:
See what "CONVERSION" is in other dictionaries:
- (from Latin conversio CONVERSION transformation) a significant transformation, change in conditions, replacement of some production objects with others or some securities with others. Main types of conversion: Conversion of currencies and securities - exchange of one currency for... ... Economic dictionary
Renewal of an agreement on payment terms for a previously granted loan. renewal of any obligation. exchange of convertible liabilities for shares. revaluation of securities from one currency to another. possibility of exchanging one currency for... ... Financial Dictionary
Conversion- (from Latin conversio transformation, change; English conversion) 1) exchange, transformation, revolution; 2) transfer of industry from military production to civilian production or vice versa (see also Conversion of shares; Conversion of currency; Conversion ... ... Encyclopedia of Law
Conversion- Loan conversion - replacement of previously issued government loans with new ones. Business conversion is the exchange of shares or bonds of one type for securities of another type, but issued by the same company. Currency conversion exchange... ... Librarian's terminological dictionary on socio-economic topics
conversion- (in psycholinguistics) (from Latin conversio change, transformation) the formation of a new meaning of a word either when it moves into a new paradigm of inflection (for example, “oven” in a hut, “bake” bread), or when it is used in a context that is different... ... Great psychological encyclopedia
CONVERSION, conversions, female. (lat. conversio turnover, transformation) (econ.). Changing the terms of a government loan in the interests of the debtor state (by lowering interest, deferring payment, etc.). Loan conversion. Dictionary… … Ushakov's Explanatory Dictionary
CONVERSION, and, female. 1. see convert. 2. conversion of military production; transfer of enterprises of the military industrial complex to the production of consumer goods. Ozhegov's explanatory dictionary. S.I. Ozhegov, N.Yu. Shvedova. 1949 1992 … Ozhegov's Explanatory Dictionary
- (from Latin conversio transformation, change) the policy of fundamental changes in the military, militarized structure of society. Conversion covers the widest spheres of public life. These include political, economic,... Political science. Dictionary.
Transformation, transformation, translation, recalculation; change, processing, securitization, exchange, bioconversion Dictionary of Russian synonyms. conversion noun, number of synonyms: 7 bioconversion (1) ... Synonym dictionary
conversion- and, f. conversion f., German Conversion, lat. conversio turnover, transformation. obsolete, military Turning, entering, changing front. Squadrons generally lose their conversion angle, which is very bad. 1788. Potemkin to Suvorov. // RS 1875 5 33. 1.… … Historical Dictionary of Gallicisms of the Russian Language
Books
- Conversion. How to Convert Leads into Sales by Smith K. This is a proven step-by-step plan to attract potential customers online and turn them into actual buyers. The book is dedicated to purposeful...
The sales funnel is the customer’s path from the moment he learned about your offer until the moment of purchase. The funnel consists of several stages that you set yourself and through which your potential client moves towards completing the transaction.
Sales conversion: how to build a funnel
To track sales conversion, you need to build a funnel correctly. A funnel reflects the stages of a business process. Therefore, the first thing you need to do is describe your business process. The second is to track it using the employee’s working day card. Third, optimize the business process if necessary. Fourth, move it to .
You'll end up with something like:
- Cold call/request from the website
- Sending a commercial proposal
- Follow-up call/meeting/presentation
- Signing the contract and issuing an invoice
- Payment
In this funnel, it is important to control not only the conversion rate, but also the input - the number of leads, the output results - the number of successful transactions, the intermediate conversion between stages, the length of the transaction - the number of days spent on; the length of each stage is the number of days spent on intermediate actions.
Sales conversion: calculation formula
Conversion is the very first indicator that is important to be able to calculate and analyze in order to set up sales control. Let's look at an example of how to calculate the conversion rate of a sales funnel:
Conversion = Positively Closed Trades / (Positively Closed Trades + Negatively Closed Trades) * 100%
In our example, despite the different number of new customers in each month, the conversion rate remained virtually unchanged. And this is a reason to think about what happens at different stages of the sales funnel, where you lose customers.
Conversion in the funnel allows you to see the real situation in sales. Positively closed transactions can only be divided into transactions for which a clear decision was made to buy or refuse. Probable clients do not influence this indicator in any way.
Please note that in this case, there are 8 closed transactions in January, 14 in February, and 24 in March. The remaining clients, who are classified as “new”, move to the next month. That is, 17 January transactions moved to February, in February the manager has 72 transactions in progress: 55 February and 17 January. From 72 transactions, we subtract 14 closed ones, and we get 58 transactions that moved to March. In March, the manager already had 158 transactions in his work, and the sales result has not changed at all. This means it’s time to analyze at what stage your clients get stuck.
Sales Conversion: Sales Channel Report
We analyze the sales funnel in terms of channels for attracting new customers. Let's say we calculated that the conversion rate for one sales channel is 8%, and for another - 38%.
Now you need to make the right management decision that will affect sales growth. It is worth considering that both channels are run by the same specialists, warm leads are processed by the same sales managers.
The only difference is the sources of attraction. Let's say you compare funnel sections for cold calling and Yandex.Direct.
The right solution for sales would be to strengthen the channel in which the conversion is higher. There is no need to invest effort where the result is worse. We need to improve what already works well. That is, you need to develop a channel with a conversion of 38% and abandon a channel with a conversion of 8%.
This is why it is necessary to measure sales conversion in the funnel. Then you will be able to improve your results not by recruiting more managers, but by making smart management decisions.
Sales Conversion: Reference Manager
We analyze the sales funnel in terms of the work of managers.
Based on the data, this salesperson has a worse sales conversion rate than managers with the results shown on the previous two slides.
What conclusion can be drawn from this example? First of all, we see that this manager is qualifying leads strangely. He believes that almost all clients are not targeted. Judging by the conversion rate of the funnel, only 8% of them move on to the next stage of the funnel. For the manager from previous sections of the funnel, this conversion rate is 57% and 80%.
Every owner of a retail outlet, website and marketing enterprise dreams of all his potential clients being real. A person entering a store or an Internet user wandering in search of the product he needs is a priori interested in purchasing.
However, it often happens that he does not perform any action. The decisive role in such situations is played by the quality of service - the professionalism of employees, design, product range and pricing policy, product quality and much more.
For information on conversion and the sales funnel, watch the following video:
The procedure for calculating this indicator
In the vast majority of cases, sales conversion determined as a percentage.
To calculate this indicator, it is enough to use the following formula:
quantity of goods sold*100/total number of visitors
For example, a bookstore sold 20 books per day. During this period of time, 500 people visited the outlet. In this situation we have: 20*100/500=4%.
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Analyzing the sales conversion rate
Sales conversion rate allows you to determine the effectiveness of the organization’s marketing policy: how much efforts to attract clients, visitors and fill the Internet resource with content contribute to sales.
Conversion success is always defined differently. For example, at a retail outlet, the main indicator is the customer making a purchase; for the owner of a portal on the Internet, it is the use of hosted software, subscribing to a mailing list or registering on a website, and for an advertiser, it is the number of people who contacted.
Enhancement Methods
The higher the sales conversion, the better. With high values of this indicator, the effectiveness of the marketing policy is at a decent level, the number of active clients allows you to receive a solid profit.
However, sales conversion is often far from ideal, which raises a number of questions: “Can the situation be corrected? What ways are there for this?”
Currently exists several enhancement methods sales conversion level.
First, let's look at the situation with a retail outlet. In this case, you will need to purchase a customer counter and place it in front of the store entrance.
To increase the level of sales conversion, you must follow several rules:
- The first rule of increasing conversion is constant visibility of sellers to potential clients. They should come to the rescue at his first request, and if the outlet sells a technically complex product, for example, computer or household appliances, then they should be the first to offer advice on the issue of choice.
- Each product has a price tag and a detailed description. The information must be completely true.
- All products are equipped with correctly readable barcodes. Particular attention should be paid to this by the owners of large shopping centers; in this case, price tags are often lost and a potential buyer should always be able to find out the cost of the goods using a special device.
- The use of transparent and mirrored display cases, well-thought-out navigation of the hall, where a person can easily find the product he needs.
- Mastering the technique of completing a deal, allowing you to turn every potential buyer into a real one.
- Organization of several cash desks to reduce queues (no more than 5 people).
- Constant control of goods on shelves.
Now let's stop on the online store. The decisive factors here are:
The list presented is not exhaustive. There are many other effective ways for online stores to increase sales conversion, but these are the most basic. Don’t forget also about the role of site optimization and promotion, and then sales will break all records, and you will make a solid profit.
How to increase the number of sales using the example of a window business is described in this video:
Conversion is an indicator that characterizes the success of any commercial and non-commercial project. Typically, this term refers to the number of visitors who performed a certain action.
Conversion concept
Store conversion is the ratio of people who made a purchase, i.e., who became customers of the store, to the total number of visitors.
For online commerce - this number is expressed as the ratio of people who visited the site to the number of people who took the required action. For example, a person who visited an advertiser’s resource made a call to a consultant, went to the desired page, subscribed to the newsletter, made a purchase, and so on.
For non-commercial projects, as in the case of commercial projects, conversion is the ratio of visitors who performed a certain action to their total number.
E-commerce conversion
We can conclude that website conversion is one of the most important indicators of the success of any Internet business. It is also a kind of indicator of the quality of the Internet resource and all stages of work with the client.
To increase it, it is necessary to work not only on the number of people who visited the site, but also on tools that allow you to turn a visitor into a client. That is, both qualitative and quantitative characteristics should improve.
In this case, the goal will be to identify site flaws, sources of non-target traffic, poor usability, and so on. Based on conversion data, identified deficiencies should be addressed.
Sales conversion - what is it?
The optimal conversion level is considered to be 2-3%, which means 20-30 achievements of set goals for every 1000 site visitors. However, depending on the type of business, this indicator may differ significantly. In any case, having statistical data, you can carry out very effective measures aimed at increasing impact and increasing conversion.
The goal of increasing conversion is to improve efficiency and impact. If every 1000 of your visitors brings you 2 sales, then this is an extremely low figure. An acceptable average level is considered to be 2-3%, i.e. 20-30 sales for every 1000 visitors. However, this indicator may vary significantly for different lines of business.
E-commerce efficiency
For e-commerce sites, there are several factors that significantly affect sales efficiency:
Visitor behavior on the site
Search and advertising traffic
- Keyword analysis. To increase conversion, you need to find out which queries people are responding to with the highest number of refusals. If there are a lot of them, it is quite possible that the semantic core of the site is composed incorrectly or is not sufficiently developed.
- Contextual advertising and transitions from search engines. Just as in the previous paragraph, it is necessary to identify the most effective key queries. And also work on the content of ads in contextual advertising.
Of course, these are not all the characteristics, and this list can be continued for quite a long time. You just have to understand: website conversion is a value that depends on many conditions. And it is necessary to obtain as much statistical data as possible and use it to improve efficiency.
Other concepts of conversion
This concept is also applied in foreign exchange transactions. Currency conversion is the exchange of one currency for another at the current exchange rate at the time of exchange.
The term is also applicable to the military industry. In this area, conversion is the transition of a plant that produces products for the military complex, for example, tanks, to products for the civilian sector, for example, tractors.
By the way, most machine-building plants built during the USSR were designed for the possibility of rapid reorientation of production.
This term is also used in chemistry and linguistics. In fact, conversion is the transition of one substance or concept to another. Of course, the concept of conversion has gained the greatest popularity in commerce. Because it allows you to reflect the most important indicator of the effectiveness of various activities aimed at attracting new customers.
Conversion example
In conclusion, we can say that achieving a high conversion rate should not become an end in itself. The following example can be given as an illustration. Let's say there is a website for a commercial organization. 100 people visit it per day, 5 of them place an order. In this case, the conversion rate will be 5%.
And there is another organization, it also has a website. Its daily attendance is 1000 people. Of these, 30 visitors achieve their goal. In this case, the conversion will be 3%.
From this simple example, you can understand that high conversion in trading is not an indicator of the success of the project. This is a parameter that needs to be constantly analyzed and, based on the findings obtained, increase both the number of visitors and the number of customers received. Moreover, there are many ways to increase these indicators.