Let’s face it: if you’re not converting in-person or online visitors into customers, you won’t be in business for long. Sales drive revenue, which powers everything you do.
Lead conversion is the ultimate goal of your marketing. To be successful, your lead generation campaigns and marketing efforts must convert leads into business opportunities and sales.
Lead conversion is a significant challenge for many marketing professionals. This issue is made worse because many business owners and marketers don’t know their lead conversion rate, so they don’t know how well or poorly they are converting.
It’s important to understand lead conversion and how to measure it. You can then develop strategies to improve your lead conversion rates and get more value from your lead generation activities.
What is Lead Conversion?
Lead conversion is the point at which a visitor performs an action that turns them into a lead. Anytime a prospect transitions from one stage to another in the lead generation process can also be considered as lead conversion (e.g., a lead converting into a paying customer).
Lead conversion involves using a combination of strategies to convert visitors into leads. It can involve a different set of strategies to convert qualified leads into customers.
Leads follow several steps on the way to becoming customers. This is not what we do at Chili Piper, but the traditional conversion process involves nurturing:
- Visitors to become leads
- Leads to become marketing qualified leads (MQLs)
- MQLs to become sales-qualified leads (SQLs)
- SQLs to become customers
At each step, you must create opportunities for the lead to take some action to move to the next step. Every business follows a different process, but the ultimate goal of lead conversion is the same: to convert leads into customers.
Lead Conversion Metrics
Lead conversion metrics help you to objectively measure the success of the marketing and sales teams to generate leads, convert them into customers, and do it efficiently. Two of the most common metrics are lead conversion rate and lead-to-sale conversion rate.
Lead Conversion Rate
The lead conversion rate is the ratio of the number of leads to the total number of visitors. It measures the effectiveness of your ability to convert visitors to your website into leads.
To find the lead conversion rate, you must calculate the ratio of leads within a period against the total number of visitors in that period. Use the following formula:
Lead conversion rate = (Number of leads / Total number of visitors) x 100%
You take the number of leads divided by the total number of website visitors and then multiply it by 100%.
Example: A company generates 200 visitors to its landing page. Of those 200 visitors, 15 fill out the lead capture form and become a lead. The lead conversion rate is: (15 / 200) x 100% = 7.5%
Lead-to-Sale Conversion Rate
The lead-to-sale conversion rate measures your company’s effectiveness in converting a lead into a customer. This metric focuses on how many leads turn into sales and drive revenue.
To find the lead-to-sale conversion rate, you must calculate the ratio of the number of converted leads to total lead volume. Use the following formula:
Lead-to-sale conversion rate = (Converted leads / Total lead volume) x 100%
You take the number of converted leads divided by the total lead volume and then multiply it by 100%.
Example: A company generates 500 total leads through its lead capture forms. Fifteen of those leads convert into customers. The lead-to-sale conversion rate is:
(15 / 500) x 100% = 3%
Relationship Between Rates
There is a direct relationship between lead conversion rate and lead-to-sale conversion rate. The quality of the leads will affect the conversion rate.
So, if you convert a lower ratio of visitors into leads, but the leads are properly qualified, then your lead-to-sale conversion rate will be higher. Therefore, rather than focusing on the number of leads, you should focus on the number of qualified leads.
For example, one way to improve your lead-to-sale conversion rate is to use Chili Piper’s Concierge. You can double the number of inbound leads by instantly qualifying, routing, and booking meetings with sales reps.
Other Lead Conversion Metrics
You can use other metrics to measure the effectiveness of your lead conversion activities. Use the following lead conversion metrics to dig deeper into your lead conversion rates.
Lead to Opportunity Conversion Rate
Lead to opportunity conversion rate is how many of your leads convert to opportunities, shown as a percentage. It’s a really important metric you should be constantly optimizing.
Cost per conversion
Cost per conversion is how much it costs to acquire a customer. To calculate cost per conversion, you divide the total advertising and marketing cost by the number of conversions.
Conversion ROI is the return on investment per conversion. To calculate conversion ROI, you subtract the cost from the lead value and divide that by cost.
Lead value is the value of the leads to the success of your business. To calculate lead value, you take the total sales value and divide it by the total number of leads.
Time to Conversion
Time to conversion is how long it takes a visitor to become a lead. To calculate time to conversion, you take the total time spent by website visitors and divide it by the total number of leads.
How to Increase Lead Conversion
According to Unbounce, the median conversion rate for landing pages for businesses involved in the SaaS industry is 3%, with most pages ranging from 2% to 12%.
The top performers have a conversion rate benchmark of up to 25%.
The form conversion rate for businesses involved in SaaS is 2.4%. Compare this to the click conversion rate, which is 10.1%.
Consider the following tips and strategies for improving your lead conversion and lead-to-sale conversion rates. These lead conversion strategies will help to turn more visitors into leads and turn more qualified leads into customers.
1. Optimize Your Lead Capture
Before you can convert a lead into a customer, a visitor must become a lead. That means qualifying the lead and capturing their information.
The key to lead capture—and to improving lead conversion—is to capture the right information. Beyond their name and email address, you’ll want to consider what you need to know (and how much you should ask for) to properly qualify a visitor before they become a lead.
There are many ways to capture visitors’ information for the purposes of qualification and eventual lead conversion. Some methods include:
Once you’ve selected a method for capturing leads, you should then focus on optimizing that method to convert more visitors into leads. Optimization should include lead qualification, which will improve the quality of the leads you capture and increase your lead-to-sale conversion rate.
Some strategies for optimizing lead capture can include:
- Customizing the lead capture method for specific campaigns
- Ensuring the lead capture method maintains your marketing promise
- Tailoring the call to action (CTA) to the message and method
- Including a valuable offer that matters to visitors
2. Improve Lead Qualification
Quantity is not better than quality, especially when it comes to dealing with leads. Lead-to-sale conversion improves when you have better quality leads.
Spend more time upfront to qualify leads before spending time to convert them. This requires getting sales and marketing on the same page for what’s required to qualify leads.
Set a clear framework for the sales funnel and the buyer’s journey. Answer the following questions:
- How do you differentiate between MQLs and SQLs?
- What is required for an SAL (sales-accepted lead) to become an SQL?
- What actions and criteria indicate that a lead is sales-ready (i.e., showing sufficient interest and intent to buy)?
- Who is responsible for verifying the quality of the leads?
Being able to instantly qualify leads from your lead capture form will result in more qualified held meetings (QHMs). This also means less time spent on leads that are less likely to convert into customers and better lead-to-sale conversion rates.
For example, you can install Chili Piper’s Concierge on your lead capture form to instantly qualify leads.
3. Nurture Your Leads
Once a visitor becomes a lead, it takes some work to convert them into customers. That involves nurturing the lead along the path you want them to follow.
Lead nurturing is an effective way to convert qualified leads into customers. It involves segmenting the leads into groups and using targeted content to market to leads within those groups to engage and lead them toward a decision to purchase.
Once you’ve captured the lead through your landing page, lead capture form, or other methods, the nurturing process begins. It involves:
- Following up with relevant messaging
- Grouping the lead according to their interest and behavior
- Using triggers to send email marketing messages based on specific actions and responses
- Forwarding the leads to sales when they’re ready to buy
4. Increase Speed to Lead
Did you know that a lead is 21x more likely to convert if you call within five minutes than if you called after half an hour?
Speed to lead is an effective strategy for converting leads into customers. The faster you can make contact with a lead, the more likely the lead is to convert.
One way to reduce the time to connect with a lead is to instantly qualify them through your web form. You can add an appointment scheduling app that enables leads to book a time to speak with a sales rep.
For example, adding Concierge to a lead capture form enables the lead to immediately arrange a telephone call or make an appointment with a sales rep. This reduces the speed to lead to its minimum, as the lead will be reaching out as soon as they are ready to meet.
The Bottom Line
It’s important to know your lead conversion and lead-to-sale conversion rates so you can measure the effectiveness of your lead management process. You can then apply lead conversion strategies to improve your results, turning more visitors into customers in the process.