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Monday, Dec. 31, 2007 at 10:04 am

Why Your Conversion Rate Matters More Tomorrow

By Bryan Eisenberg
December 31st, 2007

Roy Williams, the Wizard of Ads, shares a brilliant insight from one of his fastest growing retail clients today in his Monday Morning Memo:

I asked, “How is traffic trending? Are we ahead of last year?”

“Roy, I don’t measure traffic.”

“You’re kidding.”

“Last week one of my salespeople made 63 sales presentations and closed only 24 of them. That tells me 39 people bought somewhere else. And right now they’re telling all their friends why they bought where they did. They’re showing off their purchases and explaining why they didn’t buy from us.”

“Good point.”

“That salesperson is no longer with us.”

“You’re really serious about this.”

Today’s close rate is the most reliable indicator of tomorrow’s traffic. When close rate is high, traffic increases. When close rate begins to slide, traffic soon begins to slide as well.”

The same applies online.

When a visitor comes to your website prepared to buy — not everyone will buy right away, of course — and isn’t converted by your sales process, they are likely to buy from one of your competitors. When they brag to their friends about what they bought and who they bought it from, it won’t be you they rave about. It’s the customer experience that matters.

Can you tell me why they shouldn’t have bought it from you?

(Do you need help figuring out why they don’t buy from you? We can help you increase your conversion rates and understand your customers better.)

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Comments (12)

  1. Whoa! Remind me to not apply for a sales job with Roy’s customer if that’s the way he does sales math. 63-24=39 only works in high school math when no variables are introduced into the equation. Sales math has never worked without variables.

    To begin with, 20% of the original 63 aren’t going to buy from anyone even funneling down to the presentation stage. It’s just not going to happen. Another 10% were looking for justification to buy from their brother-in-law (at their wife’s insistence, leaving a much smaller number of people that actually parted with their money.

    If the salesman sold twenty-four people out of the true possible spenders, I’d say he selling at the national average.

    And right now they’re telling all their friends why they bought where they did.

    Statistics have never shown 100% of the people telling others about their good experiences with buying products. If asked, they might mentions something about it, but it’s the height of arrogance to believe most people care that much.

    If I were him, I’d worry about the experience of the 24 who bought. If they have a bad experience, statistically, they will tell everyone they know.

    They’re showing off their purchases and explaining why they didn’t buy from us.”

    Again, statistics I’ve read over the years don’t bear this out. The last time I asked someone about a purchase, they did not spend any time explaining to me about the places they didn’t buy from, unless the customer service was beyond belief. Maybe that’s what HIS 39 lost customers felt.

    From my experience, (and from my reading) a successful salesman averages a close ratio of 33-40%, even in high pressure, “slam” selling because of the above variables. If my math is right, the fired salesman was at 38%. He won’t have any trouble finding another sales job.

    Of course, that company can use any math or methods they want. It’s their business.

  2. Larry,

    You missed the forest for the trees. We can argue about the numbers or the particulars of a business you don’t know about but I’m not sure sure how useful it will be. The point is that people who don’t buy, don’t buy for a reason and they won’t be recommending you. Don’t you think it’s worth knowing why? Might it be worthwhile to do something about it?

  3. Good article, but it didn’t explain the link between covnersion rate and traffic. Why will traffic slow down? If all your traffic comes through PPC, then in theory no matter how bad your conversion rate, your traffic won’t necessarily decrease. A poor conversion rate isn;t optimal, obviously, but saying that it’s a given that your traffic will dry up is a bit of a stretch. The conversions also don’t take into account the “backend” marketing that shouldnt / will take place if you capture your visitors contact information.

  4. I think it comes down to perspective, in determining who is right. The situation in this article is highly contextual and will work for a specific type of business with a specific type of customer.

    In a broader sense, traffic to the site is an independent and a trustworthy measure of your acquisition marketing efforts. Of course, just as you cant predict good or bad weather by just one variable, you need multiple factors (converions, ROI, etc) to measure good or bad traffic (good and bad leads); and hence conversion/retention marketing efforts.

    As always, the answers are more complicated than what is out here. The authors point is well taken, and all things remaining equal, increasing conversion would lead to more traffic.

  5. While I agree w/ Larry that the “math” and conclusion that less than a 100% close ratio seemingly inevitably should lead to the dismissal of a salesperson, I also agree w/ Jeffrey– it’s the bigger issue of understanding WHAT is happening to the 39 “lost sheep” that is important.

    If indeed they were not in buying mode, etc., well, it would be good to know that. And whatever other reasons they may have had to not purchase.

    In my primary marketing research, almost without exception the most valuable interviews/surveys are those with prospects that DIDN’T do business with us. And they are often more than happy to explain why. Sometimes it’s just because of where they are on the educational spectrum towards a purchasing decision. Sometimes it’s because of other personal issues (brother-in-law scenario) that may be beyond my control. But SOMETIMES it truly IS because of problems w/ my offering, customer experience, etc.

    Are there 39 of them? Probably less. ZERO of them? Probably more. Now THOSE are the ones I don’t want to lose, and the ones I want to listen to when figuring out how to improve and expand market share and penetration.

    —–

    Also, the actual story from Roy as referenced in the Monday Morning Memo today has a little more context than Bryan was really able to share in his post. And in fact, Roy himself says that what was most interesting to him was that the client actually KNEW the close ratios of each of his salespersons.

    Again, the power of “knowing.”

  6. This post resonates with me. Our best source of new business is satisfied customers and word-of-mouth recommendations. If a non-referred lead chooses to buy someone else’s services, they won’t be recommending Accepted, whether satisfied or dissatisfied with our competitor. It boils down to the long-term value of a customer.

  7. Jeffrey,

    In your answer to Larry, whom I tend to mostly agree with, you said ” Don’t you think it’s worth knowing why? Might it be worthwhile to do something about it? ”

    I don’t see how firing the salesman will do anything to help this.

    Finding out why people don’t buy isn’t a terribly hard exercise. Getting a butthead like the owner in the story to actually fix the problem would be a monumental task.

    How can I say this ? I read the story. If he can somehow equate the non-buying of his product to the salesman needing to be fired, he’s as clueless as he can be.

    The guys making 9 prsentations a day. Obviously he’s being force fed people to sell to. Targeted people ? Probably not.

    If you sat me down in front of the 200 of the worlds greatest salesmen tomorrow, yet I wasn’t really looking for a solution to any problems, there’s no way I’d buy.

    Do those salesmen need to be fired. Nope.

    The marketing the company does needs to narrow down those they ‘present’ to a helluva lot more than they do now and then the sales force could complete more sales.

    Then give the guy time to digest what just happened and try to learn from each experience, not launch right into another canned ‘presentation’.

    Doing so would also allow the sales force to not worry about getting canned for no good reason and would foster a more tolerable environment, which would lead to a more relaxed sales force, which would lead to them not transferring that ‘needy, scared’ feeling to those being presented to, which would lead to more sales being completed.

    I could go on, but it won’t change this guys perception and he will just continue to chew up good sales people and spit them out.

    I do agree with you about needing to find out why people don’t buy from your site. A simple exit survey will give you a great start and then you can improve it from there.

    Don’t be fooled, though, into believing that people spend their days and nights talking about why they did or didn’t buy from a site or a ‘brick and mortar’ store.

    People tend to talk about bad experiences with products they actually bought, not one’s they didn’t buy.

    Don’t believe it. Read a blog or two ;-)

    Posts that gripe and moan about bad products outnumber those where people talk about a bad buying experience about 107,342:1.

    Want more completed sales ? Make an exceptional product.

  8. Ouch! Quite an alarming story about that owner (whose name I’d love to know so I can be sure NOT to do business with him… how you treat your employees is a significant element in building your brand). Nonetheless, I think what’s important is keeping apples and oranges separate here.

    Hard sales on a face-to-face level are much different than escorting a visitor through your site towards the cart. Hard sales are apples; online conversions are oranges.

    The Web is not the right environment for a Glengarry Glen Ross approach to sales. It’s not sell, sell, sell. It’s help, help, help, sell. *Even if* the user comes to your site ready to buy. And if your conversions are low, a simple online survey or some more complex analytics will help illustrate why people are not buying online and why they are.

    The second half of this post is good (albeit short), Bryan; but prefacing it with this horrible story about a man who’s operating the sales side of his business under embarrassingly dated assumptions left a bad taste in my mouth.

    Today’s approach to selling is based on building relationships. How does disposing of employees impact conversions, I wonder?

  9. Without betraying confidences personal, professional and legal it’s really difficult to respond credibly. However, the most important part of this post is that the owner did know every variable that affects conversion and that is why almost 100 other of his salespeople convert at staggeringly high rates. He works hard every day at improving everything about his product, service and presentation.

    The conflict this created is regrettable, but more dangerous is the misunderstanding that “a simple online survey or some more complex analytics will help illustrate why people are not buying online and why they are.” They will NOT and can NOT.

    That’s another reason that conversion rates online remain so low: People keep wanting to believe that the supply of new traffic is endless and that people who don’t convert are just browsers; some are, but far less than you think.

  10. That’s interesting. I’m sure you’d know better than I would about converting so-called browsers into paying customers——-didn’t mean to simplify.

    Cheers.

  11. [...] Why Your Conversion Rate Matters More Tomorrow – This is reputation management at it’s finest… [...]

  12. The conversion rates online remain so low due to the following: People keep wanting to believe that the supply of new traffic is endless and that people who don’t convert are just browsers

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Bryan Eisenberg, founder of FutureNow, is a professional marketing speaker and the co-author of New York Times and Wall Street Journal bestselling books Call to Action and Waiting For Your Cat to Bark and Always Be Testing. You can friend him on Facebook or Twitter.

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