Sales Conversion Rate

What is the Sales Conversion Rate?

The Sales Conversion Rate measures how effectively your team or company is able to convert leads to sales, expressed as a percentage. It’s the number of won deals in a given period, divided by the total number of opportunities from the same period. The usefulness of Sales Conversion Rate extends beyond sales, however: the same formula can be applied to other desired customer actions than sales, such as ebook downloads and newsletter signups.

Sales Conversion Rate is an important KPI for your sales and marketing teams to monitor.

Why it’s worth measuring the Sales Conversion Rate

Sales Conversion Rate is important because it allows your sales and marketing teams to evaluate the effectiveness of your company’s customer acquisition strategy.

A high Sales Conversion Rate indicates your sales and marketing teams’ efforts are in tandem: your product or service is well-suited to its market niche and priced appropriately; your marketing efforts are strong; and your sales team’s outreach is up to par. A low Sales Conversion Rate, however, could indicate that...

• your product might be not entirely suited to its market niche,
• your product might be overpriced, or
• your sales and marketing efforts are insufficient.

Sales Conversion Rate must be contextualized to be properly understood. With this in mind, the industry standard for sales conversion in B2B is 2.23%. Meanwhile, the industry standard for sales conversion in B2C is 1.7%.

How to calculate your Sales Conversion Rate

How to increase your Sales Conversion Rate

If you’re dissatisfied with your Sales Conversion Rate – for example, you want to increase your rate from 15 to 20 percent – it’s vital to know your ICP, or ideal customer profile, so you can make decisions tailored to the types of customers you’re trying to attract.

Understanding your target customer

Your ideal customer profile is, in short, the person or company you want to purchase your product or service. You determine your ICP based on what your product or service is, and the research you’ve done to determine its demographic market niche. In other words, who is your product or service for? Once you can answer that question – and back it up with data – you have your ICP.

To increase your Sales Conversion Rate, it’s best to optimize your efforts to target your ICP. Bear in mind that as your product or service develops and evolves, your ICP might also evolve. Needless to say, targeting your sales and marketing efforts on an outdated demographic that no longer aligns with your product / service’s intended audience will result in disappointment.

So it’s important to ask – based on your product or service in its current form, is your ICP still accurate, or has it evolved? Do you have specially targeted sales and marketing strategies to reach your ICP, or are you shooting in the dark?

Questions to ask about Sales Conversion Rate

Another way to increase your Sales Conversion Rate is to ensure your product or service is optimized for the market to begin with. With your ICP in mind, does your product or service fill its intended niche? Or does it have a more popular appeal? Is it overpriced? Does it have a high churn rate? These are all questions to ask yourself about your product’s market viability and consumer appeal. Answering these questions and capitalizing on these findings will help you increase your Sales Conversion Rate to a desired level.

Other KPIs similar to Sales Conversion Rate include:

• Weighted Pipeline Value
• Customer Acquisition Cost