Do you know the values of your sales funnel? This is important for you and your business if you want to achieve business growth.
You know that the sales funnel is one of the most important business elements that can increase the overall potential energy of your business. Previously, I wrote two posts about the sales funnel. The first is an explanation of the sales funnel. The second is about sales funnel improvements.
This post is a third post related to the most important sales funnel metrics, with which you can easily implement improvements in the sales process. If you want to learn more about what to include, read about how Amazon uses its sales process.
If you know the numbers, you will know the values and elements that need to be improved to increase the potential energy of your sales process business and your overall business. Moreover, these values are the basis for knowing the right amount of potential energy of the business that you have stored in the sale process as one of the business elements with potential energy.
Let’s see what are the most important values of the sales funnel.
Sales channel metrics no. 1: entry point or entry value
This is the number of potential customers or potential customers entering the sales funnel in a given period of time. Simply, these values of the sales funnel are expressed in terms of numbers. In addition, the entry can be expressed in terms of forecast numbers if you make projections of your sales funnel.
Do you measure where your sales channel starts?
If you want to find real numbers, you must first define the edges of your sales funnel. This means that you need to know when the sales funnel starts. These boundaries may be customer visits to your sales store or management who contact your sales department, or those who are contacted by your sales department, or potential customers who visit your website or subscribe to your newsletter, etc.
But this is not an easy task, because the beginning of sales channels can be defined from various business efforts mentioned above. If you want to know the actual numbers at the entry points of your sales funnel, you need to define all your business efforts that bring results in the sales funnel. When you know this, you can start measuring real numbers over a period of time.
For example, you want to find values for sales funnels about tickets within a month. Then you can do just simple math by collecting numbers from different efforts that bring potential customers inside your funnel. The table below provides this simple math:
|Business effort||Input number|
|Contacts made from a sales department||1000|
|Opportunities that have been contacted by your sales department||2000|
|Subscribe to the newsletter||1000|
Sales channel value 2: conversion rates
I want to differentiate between two types of conversion rates in your sales funnel:
- Overall conversion rate
- Conversion rate in process
Overall conversion rate
The overall conversion rate is the ratio of potential customers that the sales funnel turns into buyers at the end of the sales funnel and potential customers who become part of the funnel. This measurement is expressed as a percentage of inputs.
For example, the total conversion rate of 50% means that 50% of the people in your sales funnels bought something from your company. The overall conversion rate depends on the following types of conversion rates.
Conversion rate in process
Your sales funnel has different elements. These elements can be awareness, interest, desire and purchase. For example, when the sales team contacts the potential customer, only some of them will be aware of your products or services. This is the first conversion rate in the process.
After that, a small portion of potential customers with awareness will have an interest in your products and services. This is the second conversion rate in the process.
Next, the small part of the opportunities with interest will have the desire to buy something and that is it the third conversion rate in the process. And in the end, the part of potential customers will want to buy something. In this sales funnel with such items, we can have 4 different conversion rates in the process:
- The conversion rate that turns operators into customers who are aware of your business, products, and services (CA).
- The conversion rate that converts leads to awareness of interest rate (CI) factors.
- The conversion rate that turns interest benefits into customers with desire (CD).
- The conversion rate that turns the desired advantages into buyers (CB).
How is the total conversion rate calculated?
With these four conversion rates in the process, you can calculate the total conversion rate (C). You can do the calculation with a simple multiplication of all conversion rates in the process:
(C) = (CA) X (CI) X (CD) X (CB)
An example is given in the table below:
|entry||To become aware||They are interested||They have a desire||Purchase|
|(CA) = 25%||(CI) = 50%||(CD) = 70%||(CB) = 80%|
So the overall conversion rate will be:
(C) = 25% x 50% x 70% x 80% = 7%
If you know the actual input number and conversion rates in the process, you’ll find overall conversion rates for your sales funnel. In addition, you can play with numbers to find possible ways to improve your overall sales process.
The second way to calculate the total conversion rate of the sales channel
There is another way to calculate the overall conversion rate that you can use when you know the number of buyers at the end of the funnel. For example, if you have 4,000 entries and at the end of the funnel 280 of them buy something from you, then (C) will be:
(C) = (280 : 4000) x 100 = 7%
The process of finding conversion rates in the process is more difficult than capturing customers at the end of the funnel to split the number of entries. However, you can also use (CB) to find conversion rates in the process. My recommendation is to know the conversion rates in the process. It is important because they will show you the possible areas for improving the sales funnel.
Sales Channel Metric # 3: Average Sales
The average sale is the value expressed in the currency generated at the end of the sales funnel. This measure is the average dollar expense from a customer.
This is an important measure in every sales funnel. With this value, you can see the value of your sales funnel. On the other hand, this value will give you ideas for improving the sales process.
For example, if you find that this number is too small, you can do a market research. Next, you can find the target market that will spend more money at the end of the funnel.
You can calculate this value when you divide the total revenue for the specific time period by the number of customers generated by your sales funnel. For example, if you generate $ 28,000.00 from 280 buyers, the average sale will be $ 100 from a buyer.
Sales channel metrics no. 4: the duration of the sales channel process
This is the last value of the important sales funnel in the sales process. The length of the sales process is the period that a potential customer consumes to become a buyer. This is an important measure that measures the quality of your sales funnel. If this time is much longer than the quality is lower. You can find these values by measuring how long the potential customer enters your sales funnel. Next, you need to subtract this date from the moment that customer makes a decision to buy something.
Here I also recommend finding the unique duration of each element of the sales funnel. If you know how long the sales funnel is for potential customers to go through all the elements in the process, you will find the elements you need to improve.