Metric of the week #3: Lead-to-conversion-rate

The conversion rate is a valuable metric that tells you how many potential customers you need to connect with on average before you close an additional sale. This metric helps you decide which customer groups and marketing and acquisition channels to prioritise so that every cent spent on marketing and sales brings the highest return.

A conversion rate that is below your industry benchmark gives you an indication that either your marketing and sales strategy can be improved or your product or service needs to be made more attractive to the market.

How do you calculate your conversion rate and what types of conversion rates are there?

Simply put: You add up all newly acquired customers and divide this value by the sum of all leads. This is the simplest conversion rate, also known as the overall conversion rate. While it is relatively easy to determine and add up your new customers, it becomes more difficult to determine the actual number of leads. For example, should you consider every visitor to your company's website as a lead or only when you or one of your employees is in contact with a potential customer? This question can only be answered in the context of your marketing and distribution strategy.

Depending on your business and distribution model, you can calculate the conversion rates of the individual channels. If you also do this for different periods of time, you will not only get the conversion rate, but also its development on an annual, monthly, weekly, daily or even hourly basis. This way you can measure the impact of your business decisions very well.

Let us know what you think and contact us if you want to get more valuable information from your operational and financial data.