Why you need to discover and optimize your sales funnel ratios

Business owners need to get more and more people buying from them.

That is partly achieved by ramping up your marketing efforts to get more people into your sales funnel, but it is also partly achieved by getting more of the people in your sales funnel to buy from you.

See the difference? The first one (more people in your sales funnel) is a straight numerical increase, the second one (more people in your sales funnel to buy from you) is a proportional increase.

Although putting more people in your sales funnel is good because it increases revenue, getting proportionally more people buying from you is good because it increase revenue AND profitability. (Hint: Once you optimize your sales funnel to get of the people in your sales funnel to buy from you, you can always add more leads into your sales funnel later. I call this “the double whammy”, although that’s not a technical term).

To get more people who are already in your sales funnel to buy from you, you first need to…

DISCOVER YOUR SALES FUNNEL RATIOS

Your sales funnel ratios are a way to state the proportion of people who advance from one stage in your sales funnel to the next.

Here’s a simple example: Let’s say you have 1,000 leads. And of those leads, 100 turn into prospects. And of those prospects, 10 turn into customers. (The rest either stall out or disappear or are kidnapped by aliens).

We can express this number like this:

1,000:100:10

Since it’s a ratio, math wizards will remind us that you can simplify a ratio even further (since these numbers are all divisible by 10), so your ratio is:

100:10:1

That means, for every 100 leads, 10 will turn into prospects and one will become a customer.

Knowing this number will give you an unbelievable edge because there are all kinds of things you can do with this number!

Ultimately, you can create a more profitable business when you…

OPTIMIZE YOUR SALES FUNNEL RATIOS

Once you know what your sales funnel ratios are, you can then optimize them to grow your business.

Here’s an example: Let’s say you make some changes to your sales technique and instead of turning 1 in 10 prospects into a customer, you turn 2 in ten prospects. The ratio now looks like this:

100:10:2

… which means for every 100 leads, you get 10 prospects, and from those 10 prospects you get 2 customers (instead of one).

Once you’ve got this new 100:10:2 ratio, you might want to start working on how well you turn leads into prospects. Let’s say that you change some of your marketing efforts and suddenly you start getting 15 people to turn from leads into prospects instead of 10.

Guess that that does. It trickles down your sales funnel so your sales funnel ratio now looks like this:

100:15:3

(Yes, 3 because you had a 10:2 ratio before. So by adding 5 more people to your prospects, you close one more customer).

In an upcoming blog, I’ll give you some ways to discover your sales funnel ratios… and later, I’ll show you how you can optimize them.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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