Do you know the number of leads you need to generate to reach your income goals? As simple as this question might be, I’ve found very few people actually have this number in the top of their minds.

When answering this question, there are two considerations.  The first is your costs.  You should make sure to have an online accounting program advanced enough to help you analyze your costs and how they relate to your profitability. 

Second, you need to know how well you are able to turn your prospects into sales (conversion rate).  If you are successful at lead conversion, you will see a significant improvement to your bottom line. 

Let’s take a look at the process more closely:

The first step is to determine your monthly sales goal. For our example, let’s say you want to make $100,000 in sales a month.

The next step is to work out what your conversion rates are. Let’s suppose that all of your leads are generated through you website in order to keep this example simple. 

Suppose you convert 2 and a half out of 1000 visitors into paying customers. Your conversion rate is .25%.

Here is a formula to calculate the number of visitors your would need to meet your monthly sales goals.  To keep this example simple, we will assume every “conversion” described above will ultimately purchase from you.

(Desired Sales / Sale Price / Conversion Rate) X 100

So, if you want $100,000 in sales and your average sale price is $20, with a conversion rate of .25%, the formula would look like this:

($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.

Wow!  That’s a bunch of visitors!  Now, there are a few things you can do to change things.  You can change your price. Your can improve your conversion rate or you can multiply visitors.

Most find the easiest fix is to improve conversion rate. If you test a bit, it’s actually quite easy to bring a .25% conversion rate into the 1.5% or even 2% range.

Let’s look at the difference that would make using the formula:

($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.

I could live with that change! 

If you want to decrease the number of visitors you need even more, try increasing average sales to $47:

($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal. 

Today, it’s all about working smarter, not harder.  Hopefully these examples drive home the importance of planning the leads you will need to reach your sales goals, and testing the factors you can change to become more efficient. 

Get more small business success strategies and claim your free white paper: “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year”  to learn about an online accounting program that makes it simple to track your conversion rates.