Ever heard of something called "conversion rate". You may have but are you measuring it all the time, or are you just guessing what it might be?
If you don't know what conversion rate means you're missing out on the most powerful strategy there is in the world to increase sales, without spending a cent. Plus, by increasing your conversion rate your net profits always go up!
So what is conversion rate?
Conversion rate is the difference between how many call, walk in or contact your business and then how many of them end up buying. For example, if you had 10 phone calls to your business and you took their name and phone over time you simply track how many of them actually spent money with you. So if you have 3 people buy from you your conversion rate would be 30% or 3 out of 10.
This simple measurement is life changing for business owners when they see the power of it. If you don't know your conversion rate and "guess" it’s about 50% I guarantee you're wrong! Almost everyone thinks their conversion rate it higher than it actually is. The reason being is that the people you talk to that say they'll come back and buy later or that sound like they are very interested in buying often don't. But you don't know that if you don't measure all inquiries because you assume they have bought.
When you measure your conversion rate be prepared for a shock. I've worked with retailers who thought it was 75% and found it was 38%. I've worked with service businesses that thought it was 50% and we found it to be 13%.
They get a bit depressed when they realise its only 13%, but I get excited! That's because it’s impossible to double 50% conversion rate, but with 13% you can triple it and still have room for improvement!
Did you know that increasing your conversion rate proportionally increases turnover and net profit? That means if you increase your conversion rate by 50% (e.g. from 24% to 36%) you have just increased your turnover by 50% as well! That's because you get 50% more paying customers than you have right now. And you can increase your conversion rate, turnover and profit without spending a cent on advertising or promotion.
So how do you measure it? First of all you need 2 to 3 bits of information on every person who contacts your business. Things like their name, phone number and what their inquiry was about.
This then gives you information to refer back; to see how many people actually ended up buying that contacted your business. With your business it may take days before you can tally inquiries to customers. For some service businesses you may need to wait a month from the inquiry date to purchase due to the time it takes people to make a decision.
You'll notice your conversion rate will be different for each of your staff. Why is that? Good question. But when you realise the difference you can do something about it, but until you have measured it how can you do anything about it?
So now, onto the magic question, How To Improve Your Conversion Rate!
There are at least 80 ways! Want to know the best ones? Here they are...
1. Learn DISC profiles. DISC profiling has to be the most unknown method of understanding people there is, yet in business it’s the most powerful tool you can learn and use. DISC is an insight into 4 major differences in people's behaviour. When you learn DISC profiles you understand some people want to be friends with the person they buy from, while others find friendly sales people annoying and don't buy from them. Some people (about 50%) make all sales decisions very quickly, usually on the spot. While 50% of people always want to think about it, usually over a day or two. DISC is something I teach to all my clients and all who learn it from me increase their sales (turnover and profit) by 20%-300% in weeks!
2. Offer guarantees in writing. Everyone has some level of apprehension about parting with money, so a guarantee helps to overcome that apprehension and helps people to make confident decisions. What can you guarantee in writing that you have not be offering now? What about not to leave a mess if you're in a service business? What about being completely happy with your purchase of you will gladly allow refunds? Retailers often don't want to refund so they scare away dozens of potential customers for the sake of a very few possibly wanting refunds. (To learn more about DISC see the article 'How to Build Rapport in 7 Seconds' by Tim Stokes at www.ezinearticles.com)
3. Make your business appear unique. This again is a powerful tool as when you "appear" unique or different you stop losing sales to price shoppers. It's not hard to do, in fact when you use guarantees like those above it makes you very unique!
4. Learn body language. Body language is responsible for 55% of what you communicate before you open your mouth! Everyone has heard of it but how many people use it? Almost none! Go read a book on it and try it. Body language is a form of flattery and people buy from people they like or relate to.
5. Try different words you use to greet people face to face or on the phone. Retailers are notorious for saying things that elicit "no thanks just looking". That's because they set up that response by what they say. Try saying different phrases on greeting and see what happens. Its the same on the phone, if you finish off your greeting with "name speaking" you often get people who think you're a dummy and respond with, "I'd like to talk to someone about..." In other words you can't help me so can you get me someone who can. Try not using speaking and see what happens.
Are you starting to get the picture there are dozens of ways you to improve what you're doing now with your conversion rate? First you have to measure it, before you can improve it. Collate it over a day, then a week then a month. When you do you will have a powerful Key Performance Indicator.
Working with business owner’s conversion rates I have had dozens and dozens of fantastic profit improvements in weeks and months. My record is a blind manufacturing company that had a conversion rate of 3.5% and then 6 months later we took it to 75% and that was with a 35% increase in prices along the way! What percentage increase it that in profit? I don't know, but it’s massive!
I did the same with a retailer. They had a conversion rate of 68% and using a sales system I wrote with them they hit 100% conversion rate the week we started using it. It never dropped under 82% again.
If you don't increase your conversion rate your marketing will rarely make you a good profit return, or enough to pay for itself with profit from the sales from the promotion. When you double conversion rates you double your turnover and advertising responses, so you can run your ads half as much saving you profit as well.
I'll leave you with this thought... You can't improve something if you haven't measured it. Measuring is the secret to all of your success in business.
