Only 12% of businesses are satisfied with their lead conversion abilities (Convince&Convert).
And it shouldn’t come as a surprise. Converting leads into paying customers is hard.
Poor data, wasted resources, and ineffective strategies often complicate the process.
This article explains lead conversion and provides 10 most effective steps for increasing your sales.
What is lead conversion?
Lead conversion is when you turn a lead into a customer.
Lead conversion is crucial for revenue and growth. When inbound and outbound leads turn into paying customers, the business earns money.
More customers mean more sales, which directly boosts revenue.
It’s a very important metric in sales and marketing because it shows how effective your strategies are in turning prospects into revenue.
For example, if a business has 100 leads and converts 20 into customers, it gains 20 new sources of income. If each customer spends $100, that’s $2,000 in revenue. If the conversion rate improves to 40 out of 100, the revenue doubles to $4,000.
Why is lead conversion so important?
Converting leads to customers brings these benefits:
1. Supports steady growth. High conversion rates often lead to faster growth. Satisfied customers will recommend your business to others, creating a cycle of continued growth and increasing customer base.
2. Lower marketing costs. Efficient lead conversion can also lower marketing costs. By effectively converting leads, a business spends less on acquiring new leads for the same revenue, improving profit margins.
3. Understand your ICP better. Lead conversion also helps businesses better understand their target audience. By analyzing which leads convert and why, businesses can refine their marketing strategies.
For instance, if data shows that certain promotional campaigns lead to higher conversions, the business can focus its resources on boosting these campaigns further.
4. Enhanced customer loyalty (equals less churn). Improved lead conversion rates can enhance customer loyalty. When initial interactions with a business are positive and lead to conversion, customers are more likely to return.
This repeat business is often more cost-effective compared to acquiring new customers. Loyal customers also tend to spend more over time, further increasing revenue.
5. Accurate future forecasting. Moreover, consistent lead conversion helps forecast future growth. Predictable conversion rates allow businesses to plan for inventory, staffing, and resource allocation.
For example, if a store knows that 30% of its leads will convert in a given quarter, it can stock the right amount of inventory to meet demand without overstocking.
How to calculate the lead conversion rate?
To calculate your lead conversion rate (LCR) you:
1. Identify the number of leads.
This is the total number of potential customers captured over a period.
2. Count the number of converted leads.
This is the number of leads that turned into actual customers.
3. Use the lead conversion formula.
Number of Converted Leads ÷ Total Number of Leads × 100 = LCR
For example, if you have 200 leads and 50 become customers:
- Identify leads: 200 leads.
- Count conversions: 50 customers.
- Calculate: (50 ÷ 200) × 100 = 25%.
The lead conversion rate is 25%. This means that 25% of leads became paying customers.
Conversion Rate Calculator
What to do with your lead conversion rate?
Now that you have calculated the LCR, you can:
- Use it as a KPI (Key Performance Indicator). Measure the performance of your sales and marketing teams to determine how effective their strategies are.
- Use it as a benchmark. Compare your lead conversion performance to identify the exact areas that need improvement. Allocate your resources accordingly and invest in particular marketing channels for higher conversion rates.
- Use it as a long-term strategy. Regularly calculating your lead conversion rate is a long-term revenue strategy that focuses on constant improvement. Set the time frame for your lead conversion calculation and be consistent.
- Use it for lead segmentation. Calculating conversions is especially useful if you segment your leads by different criteria like channel, region, age, industry, and so on.
How to convert more leads? 10 most effective to boost your revenue:
1. Establish a lead tracking process.
You have to know what they’re doing to turn more prospects into paying customers.
In life, you ask someone what they’re up to, but in sales, you find that out by tracking your leads.
Lead tracking provides insights into potential customers' behaviors, pain points, and preferences. It helps businesses understand how leads interact with their website and content.
For example, tracking can show which product pages are visited most often and at what page exactly prospects convert.
With lead tracking, companies can personalize communication based on specific interests. If a lead frequently views a particular product, targeted messages or offers about that product can be sent. This personalization increases the likelihood of conversion.
2. Identify the reasons why your leads don’t convert.
Lead tracking also identifies hurdles in the conversion process.
If multiple leads exit at a similar stage, it signals a potential issue. Businesses can prioritize solving this problem and improve the conversion process immediately.
3. Know when to follow up.
Timing follow-ups effectively is crucial to making conversions. It reveals when leads are most active, allowing businesses to contact them at the right moment.
For instance, if a lead typically engages in the evening, scheduling contact during that time will enhance conversion chances.
4. Score your leads.
Converting your leads randomly is not going to work. In order to do your lead conversion right, you must know your sales team is converting the right prospects.
Lead scoring assigns your leads a numeric value of how likely they’re to convert based on their characteristics.
Lead scoring is part of the lead qualification procedure, which essentially qualifies your leads based on their current value.
5. Qualify your leads.
You want to focus your conversion efforts on the most qualified leads.
Ideally, a qualified lead checks these boxes:
- Does this lead have a use for your service?
- Is this lead genuinely interested in your service?
- Can this lead afford the service?
- Is this lead the decision-maker in the company?
- Is this the best time for a lead to buy your service?
If the responses to your lead qualifying questions indicate a negative outcome, it typically suggests that the lead may not be a current fit for your product or service.
However, it doesn’t mean there’s no action a sales rep can take.
6. Nurture your leads.
After lead qualification and scoring are done, the next step toward conversion is to nurture your leads.
Lead nurturing is building relationships with your prospects throughout an entire sales journey.
That’s where your sales reps need to use personalized sales strategies that vary from one lead to another.
Staying consistent to lead nurturing is key. It may be tempting to nurture a lead at the beginning of the sales pipeline and the end of it when you close a deal, but it’s a bad strategy.
The best part about lead nurturing is that it works very well. Lead nurturing generates up to 50% more SQL conversions at 33% lower costs (Marketo study).
7. Engage with your leads.
Engaging with your leads throughout a buyer’s journey, which covers all stages of your sales pipeline, is key. It’s extremely effective in pushing leads to convert because it shows that you actually care about them.
Lead engagement can be done as part of your lead nurturing process, and you can add personalized messages to your nurturing campaigns.
Nurturing leads ends in way higher purchases.
Nurtured leads make 47% larger purchases than non-nurtured leads (The Annuitas Group).
Nurtured and engaged leads have an incredible effect on your revenue, so it’s definitely worth spending time and effort on:
- sending out valuable personalized emails with a human touch with lemlist.
- producing valuable content for your leads,
- investing in content marketing and knowledge base (educational materials)
- engaging with your leads regularly,
- employing cross-channel nurturing (social media, website, blog, etc).
8. Invest in tools.
As you scale and get more incoming leads to nurture, it becomes impossible to do everything manually on your own.
You won’t have time, and the lead data will be prone to errors, which will lead to missed sales opportunities.
Our advice is to invest in these tools:
- a lead management software
- a sales engagement platform
- a lead tracking software
They will allow you to get consolidated leads data, inform you about the actual action to take when converting, remind you about the follow-ups, and run multichannel sequences in your nurturing campaigns.
No successful sales reps are converting leads without any of these tools.
9. Automate the process.
Choosing a tool to do your lead nurturing with is one thing, but automating your workflows is another.
To automate lead nurturing, select a marketing automation platform and segment your leads based on characteristics and behaviors, as discussed previously.
Develop automated workflows that trigger actions based on lead behavior or demographics.
This can include sending a welcome email after a lead subscribes or a reminder email if they download a specific resource.
Map out a sequence of emails and interactions that naturally guide the lead toward conversion.
Develop tailored content and design workflows that automatically trigger actions like sending personalized emails based on your lead activity.
10. Close the sale.
Closing the sale is the final step in converting leads into customers. It’s also the cherry on top where things can go against your plan.
At this stage, your sales reps must make a much-needed last push to convert a lead into a paying customer.
To make sure you successfully close a sale and finish your lead conversion process, you have to:
- negotiate with your lead,
- assure your lead,
- address your lead’s last-minute concerns,
- provide money-back guarantees,
- create a sense of urgency,
- demonstrate value and ROI (use real examples like testimonials and client success stories),
- be flexible.
What to do if your lead isn’t ready to convert?
Here are some of the most common scenarios when a lead isn’t able to convert at a given time. Here’s a list of actions to take to convert your lead:
1. Budget constraints:
- Lead scenario: The prospect does not have the funds to invest in your solution at this time.
- Conversion action: Offer different pricing plans, discuss financing options, or revisit them later when their budget might allow.
2. Lack of authority:
- Lead scenario: The person you're speaking with is not a decision-maker and cannot make purchasing decisions.
- Conversion action: Politely inquire who in their organization would be the right person to speak with and aim to connect with them.
3. No immediate need:
- Lead scenario: The lead does not have a pressing need for your solution or doesn't see its value.
- Conversion action: Educate them on potential benefits they might be overlooking or enter them into a nurturing campaign to maintain engagement until their needs change.
4. Mismatch of features:
- Lead scenario: Your solution does not meet the essential criteria the prospect is looking for.
- Conversion action: Identify whether any future developments or alternative solutions could meet their needs and maintain the relationship for when your offering evolves.
5. Competitor preference:
- Lead scenario: The lead is leaning towards a competitor's solution.
- Conversion action: Highlight your unique selling points or offer trials/demos to showcase the value of your product over competitors.
6. Undefined success criteria:
- Lead scenario: The lead doesn't have clear success metrics, which could suggest disinterest or lack of understanding.
- Conversion action: Collaboratively define success metrics with the lead and agree on goals to help them see the value.
What is a good lead conversion?
An average lead conversion rate is around 5-10%. If your company has a rate of more than 10%, you are sitting in a good position.
Other important rates that indicate your sales reps are doing well with their lead-targeted campaigns are:
Minimum Open rate > 50% → If not, you need to improve your email deliverability
Minimum Response rate > 5% → If not, you need to have better targeting
Minimum Meeting rate > 1% → If not, you need to improve your copywriting
Maximum Bounce rate < 2% → If not, you should verify your email list before running your campaign
Key takeaways
Lead conversion is so much more than just sales reps meeting their quotas.
It's about finding a sweet spot in between:
- qualified and highly scored leads,
- timely lead follow-ups,
- personalized lead engagement,
- consistently nurtured leads,
- tracked leads for data-driven action,
- collaboration between sales and marketing teams,
- deal negotiation.
The backbone of lead conversion is building a solid relationship that makes your prospect trust your sales rep and the service or product you offer.
There's also an element of urgency that makes your offer irresistible and gives that invisible push for your lead to convert into a paying customer.
Frequently Asked Questions
What is a converted lead?
A converted lead is a prospect who:
- made a purchase,
- signed a contract,
- subscribed to a service,
and became a paying customer.
