What is Conversion Rate?

LPForecast

Conversion rate” can refer to any of four different meanings, depending on the context of the marketing or sales conversation.  As a marketing director, manager, or CMO, you deal with each of these. 

Landing Page Conversion Rate

This is the fraction of unique visitors who reach our landing page and then successfully fill out a lead form or take some other conversion action.  If you have 1,000 unique visitors on your campaign’s landing page, and 100 fill out a form with valid contact information, then you have a 10% conversion rate on your landing page.  You should always be working on improvements to your offer, to your call to action and with other page elements to improve this conversion rate.  A/B testing is a good tool to improve landing page conversion rates, although other tools such as departure detection can be used. 

Leads Pipeline Stage to Stage Conversion Rate

We calculate stage to stage conversion rate in the leads pipeline, like from lead to qualified, as the fraction of the first stage that survives to the next.  If we receive 100 leads and 45 are qualified, the lead to qualified conversion rate is 45%. 

Lead to Opportunity Conversion Rate

This is hard-core sales and marketing stuff.  In every lead generation meeting that you attend, you will need to discuss your lead to opportunity conversion rate.  If it is too low, you are spending too much money to buy leads that cannot be converted to legitimate opportunities.  If your conversion rate is too high, you may be over-targeting and limiting the scope of your campaign to too narrow of an audience.  This can yield too few qualified leads. 

End to End Conversion Rate

This is the conversion rate that is best recognized by your VP of Sales, CSO, COO, or CEO.   This is defined as fraction of all leads that become closed-won opportunities.  If 100 leads result in 32 sales, then our end to end conversion rate is 32% for the cohort of leads examined. 

Leads Pipeline Stage to Stage Conversion Rate

There is a conversion rate from each stage of a leads pipeline to the next.

These conversion rates can be easy to analyze if you have Salesforce or a similar tool that will let you count how many leads from  your original cohort have reached each stage.

Here, as an example, we have tracked a cohort or our leads and calculated the totals shown here.  We enter these example leads into the amber-shaded column.  Our stage-to-stage conversion rates are shown in the light blue-shaded column.

You can see that our conversion rate from opportunity to closed-won (sold) is 35.2%, as an example.

Jan - May 2020Calculated ValueValue
Leads27079--
Reviewed23531Lead to Reviewed0.8690
Qualified16084Reviewed to Qualified0.6835
Converted to Opportunity14697Qualified to Converted0.9138
Won5173Converted Won0.3520
Total Dollar Sales$4,385,232.00Average Deal Size$847.72

We have also calculated our average deal size at $847.72 by dividing our total dollar sales by the number of deals closed. 

Get the Free Model

You can get an example leads pipeline model referenced here, and a PDF copy of “Guide to Leads Pipelines for the CMO”, by downloading the model (in Excel spreadsheet form) and guide from the landing page at here.

With the Excel spreadsheet, you can follow the example data shown here.  You can also plug in your own data to build your own pipeline model and forecast your sales in any future month. 

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