True Inbound Close Rate Is Actually The Percentage Of Website Visitors Who Become Customers
Inbound marketing and inbound sales are on a collision course. The revenue department is going to become the de facto approach to sales and marketing. Along with the changing structure and approach, the metrics are also changing dramatically. Close rate is NOT the percentage of people who sign your proposal docs, but rather the percentage of visitors to your website who become new customers.
As you drive up your visitor numbers through inbound marketing, you should see improvements in actual revenue and new customers at the very bottom of the funnel. You can also add value to each stage of the funnel and increase conversion rates up and down the funnel, which will impact new customers by a factor of 10. This is how you convert leads into new revenue.
Here's how to look at your sales and marketing funnel analytics monthly.
The very top of your funnel is the number of people who visit your website every month. This is where marketing starts, it's where “click to close” gets its energy and it's where you must start telling your story. The more people who come to your website, the more opportunities you should get to add leads into your sales process.
Website visitors is a metric you want to watch daily, but one you need to make sure increases month over month. Set a goal for a 10% improvement month over month. If you’ve invested enough in your top-of-the-funnel inbound marketing, this should be an improvement that is reasonable.
Another top-of-the-funnel metric is marketing-qualified leads (MQLs). These are the people who visit your website and decided that what you had to say resonated with them. As a result, they turned from an anonymous visitor into a new contact in your contact database. Since you haven’t had a chance to talk to them yet, we call them a marketing-qualified lead.
Again, this is something you should be tracking daily and looking at performance monthly. A 10% month-over-month improvement in MQLs generated should also be a metric you set as a goal and one that you track, review and talk about monthly.
Finally, the relationship between website visitors and MQLs is called site-wide conversion rate. When you divide total traffic by total leads, you get a conversion rate number. Typically, this is between 1% and 3%, but it can be higher in a well-designed inbound marketing site. This is a number that warrants review only monthly. To look at it more frequently and to attempt to move it more frequently might result in unnecessary cycles.
Most of your prospects are going to continue to reside in the top of the funnel until they take further action and move down into the funnel. Prospects move down when they provide you with additional information beyond the basics like their email address. They also move down into the funnel when they spend more time on your website. For example, when a prospect or MQL signs up to attend a webinar, they provide much more detail and signal that they’re ready to invest more time and energy to learn about your company, products or services.
The real fun starts when prospects move down into the bottom of the funnel and request to speak with you or someone on your sales team. The request to speak with a live person represents the move from marketing-qualified lead (MQL) to sales-qualified lead (SQL).
These are NOT sales opportunities, but they are opportunities for your sales team to speak with the prospect and qualify the lead based on YOUR criteria.
Both SQLs and sales opportunities are bottom of the funnel, so you’ll want to know what percentage of SQLs are sales opportunities. This is a key bottom-of-the-funnel metric. If something is a sales opportunity, it means it's qualified for all aspects of a real potential opportunity. That means you're talking to power, it’s a perfect fit for you and your company, and they have real pain that you can help them with. Usually, only about 10% of all SQLs are real sales opportunities.
Unfortunately, you’re not done yet. These sales opportunities are now the gold in the funnel that needs real nurturing. The next stage in the funnel is usually related to proposals, recommendations, agreements or contracts. The sales team’s job is to convert those sales opportunities into a recommendations document; not every sales opportunity will want or be qualified to get your recommendations. That conversion rate is also extremely interesting.
Finally, you need to close all those recommendations for qualified opportunities ONLY. Typically, you want to target a close rate on recommendations submitted in the 90% to 95% range. If you spend the time to take a prospect all the way through your process, they should close almost every time.
Full Funnel Analytics
Here’s where this gets interesting. Once you have all the data, metrics, goals and insights into your funnel, you can calculate the new customer conversion rate on total website visitors. If you get 2,000 visits a month and you turn those 2,000 visits into four new customers, you have a .2% close rate on website visitors. Increase that site traffic to 4,000 and you’ll double revenue and new customers without touching anything else in your entire sales and marketing process.
But if you double visitors, double the conversion rate on MQLs, double the conversion rate on SQLs, double the conversion rate on recommendation docs submitted and get that final conversion rate to 90%, you’ll deliver a 10x impact on revenue and new customers. You’ll have a sales and marketing machine that is repeatable, scalable and predictable, and you’ll be the star of your company’s sales and marketing.
This type of impact doesn’t come out of a box. It doesn’t happen overnight. It takes a lot of hard work and it’s going to take time. It’s going to take ongoing optimization with month-in and month-out adjustments to what you’re doing based on data, analysis and a methodology. It’s going to take a scientific approach. You’ll have to conduct a few experiments, but inbound marketing and inbound sales provide the undying methodology you need to produce this type of lift at your company.
Sales and marketing are both sciences. The days of thinking about both as art is over. Today, it’s all about the numbers, the metrics, the conversion rates and all the opportunities to impact those numbers and improve performance.
If you want to see the impact that treating sales and marketing as a science can have on your business, the first step is to look at your funnel from an analytical perspective. Top to bottom, each stage should be identified, measured and then diagnosed based on metrics. Almost immediately, you’ll see steps you can take to impact those numbers not next month, but tomorrow.
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