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What is lead conversion rate and how do you calculate it?

August 25, 2020

Door-to-door sales might be considered the most rudimentary way of selling. But, ask any travelling salesperson for some tips, and they’ll have an answer: “Avoid X street, they don’t buy anything.”

This is the most basic form of sales data there is. These people don’t buy our stuff, let’s not talk to them.

Sales data has come a long way since then. Today, the top 24% of sales teams are 1.5 times more likely to base forecasts on data-driven insights.

Breaking down your sales strategy into measurable chunks will make it easier to review and optimise your processes, and improve as a result.

Michael Hanson, the Founder of Growth Genie, knows this better than anyone. While scaling CloudTask from 5 to 200 employees in just 3 years, Michael realised that without proper management and provision of the right information, SDRs couldn’t unlock their full potential.

Since then, Michael created Growth Genie.

“Growth Genie helps companies build repeatable, scalable outbound processes. We provide teams with playbooks and cadences - such as our infamous 30 touch outbound cadence - and offer hands-on training and coaching. Our long term involvement in the implementation of robust sales processes makes us more like consultants than standard training providers.”

- Michael Hanson

We spoke to Michael to get his insights into the world of B2B data and process optimisation.

To hear what he had to say, scroll down! 👇

What is a lead conversion rate?

There are many types of conversion rates. Their value varies from company to company.

“Lead conversion rate can mean a lot of things. It depends on what you’re trying to measure. You can measure the rate at which website visitors convert to MQLs (marketing qualified leads), MQLs to SQLs (sales qualified leads), SQLs to closed deals, or even the whole thing, cold leads to closed deals.”

The different types of performance metrics give companies the flexibility to find one which works for them. Growth Genie helps B2B sales teams to find the right ones and implement them.

“Each company will define lead conversion rate differently and focus on different areas. You can even get really granular with the conversion rate you measure. The deeper you go, the more nuanced the performance metrics can get.”

Why is it important to measure your lead conversion rate?

Data is the most reliable source of performance feedback. It doesn’t lie. It doesn’t care about your feelings. Implement it into every aspect of your outbound sales process and you will have a newfound understanding of your strengths and weaknesses. It’s not always pretty, but it helps you improve.

“It’s a good way to measure your performance: marketing, sales or the alignment between the two. SDRs could just look at the number of meetings they book each month, but this won’t show them the full picture. If you book 100 meetings and none of them convert to closed won, it’s kind of irrelevant. You need to look at the SQL volume as well as the conversion rate.”

And this isn’t the only use.

“Measuring performance also shows you where the gaps are. You can see which stage of the sales funnel isn’t functioning well, and you can focus on fixing it.”

How does measuring the lead conversion rate help B2B sales teams?

Understanding your conversion rate will help you to identify the areas of your B2B lead generation process that need improvement. The next step is using this data to optimise your processes.

“The lead conversion rate is just a metric. Metrics are important, but too many sales leaders focus on metrics alone. The problem with metrics is that they tell you what, but they don’t tell you why. You still have to do your own research to improve your processes.”

This is also the case when you want to find out what is working well. All too often teams prioritise fixing faults over identifying strengths.

“Once you’ve calculated a conversion rate, you need to work backwards to identify the cause. If you spot a decrease or increase in performance at a particular stage of the sales funnel, investigate your calls, messages and replies to either fix something which isn’t working, or double down on something that is.”

How to calculate the conversion rate

The great thing about modern technology is that you don’t really need to calculate anything; you just need to find and interpret it.

“Adopt different types of technologies. CRM technology can help at the bottom of the funnel. Sales engagement tools can help at the top. I’d recommend either outsourcing a sales operations consultant or hiring one internally - someone who can review all of the conversion rates and turn them into actionable insights. This is particularly important as you grow and things start slipping under the radar.”

To see some of our favourite sales technologies, check out our ultimate B2B sales tech stack.

Get more sales insights

Many thanks to Michael Hanson for sharing his expertise with us, we hope you enjoyed it as much as we did! Need help training your B2B sales team? Schedule a consultation with Growth Genie here.

Understanding your lead conversion rate will help you to segment and optimise your sales process, but what comes next?

We've published The Outbound Prospecting Playbook, our new sales eBook. It contains plenty of tips, tricks and valuable insights to steal! Inside, you’ll find information on:

  • Identifying your TAM and calculating it,
  • How to cold call like a pro!
  • The art of the outbound email.
  • Social selling advice for LinkedIn.
  • Templates for cadences that convert.
  • And much, much more!

Featuring some of the brightest minds in sales, this guide is a must-have for every developing salesperson. 

Click 👇 to get your copy!

Cognism Outbound Prospecting Playbook