The strongest marketing and sales campaigns are data-driven. What does that mean? It means your marketing and sales are at their peak when you base them on valuable metrics like click-through rate (CTR) and lead close rate.
Different metrics are useful for different things, but they all reveal something about your marketing. One metric you might use is lead close rate. But what is lead close rate? It’s a metric that describes what percentage of your leads you succeed at turning into customers.
Of course, you may still have questions—for instance, why do you need lead rate? Why does it matter? Keep reading to find out the answer.
What is lead close rate?
Lead close rate, also called lead-to-close ratio, is a sales metric that measures how many sales you make relative to the number of leads you have.
A close rate simply describes what percentage of your sales attempts are successful. Lead close rate measures that percentage relative to the number of leads you earn. So, to find your lead close rate for a given month, you’d simply compare how many leads you generated that month to how many new sales you closed.
Lead close rate vs. conversion rate
You might be thinking that lead close rate sounds kind of similar to conversion rate. And you’d be right—they are similar. That said, they’re not the same thing.
Conversion rate is a metric that measures how many conversion actions you drive in a given time span. But while all sales are conversions, not all conversions are sales. So, conversion rate could apply to sales, but it could also apply to something like email signups.
Furthermore, even when it does refer to sales, conversion rate is typically used in paid ad campaigns. It’s measured relative to clicks, not leads. Lead close rate, meanwhile, looks at how many sales your sales team is closing.
So, both metrics can relate to sales, but they measure those sales in two different contexts.
How to calculate your lead-to-close ratio
At this point, you’re probably wondering how to calculate your lead close rate. Thankfully, it’s very easy to do. All you have to do is divide your total number of closed sales by your total number of leads and then multiply by 100. Written as a formula, it looks like this:
Total number of closed sales / total number of leads x 100 = lead close rate
So, let’s say that within a given timeframe, you generate 50 new leads and attempt to convert them into customers. Within that same timeframe, you successfully close 10 sales. Dividing 10 by 50 and multiplying by 100, you end up with a lead close rate of 20%.
Why does lead close rate matter?
The reason it’s useful to know lead close rate is that it can help you figure out how effective your sales efforts are. If you’re driving tons of leads, that means your marketing is doing great—but if your sales team is only able to convert a minuscule fraction of those leads, it may be worth rethinking your sales process.
Lead close rate is also useful because it can be used at different scales. You can see what your team’s overall lead close rate is, but you can also check out the close rate of your individual sales team reps. You’d probably expect to see a higher lead close rate among your more experienced reps.
You can even evaluate your lead close rate by doing some research to see what the average close rate is in your industry. Different fields experience different success rates, so it’s worth taking the time to see how you compare to the rest of your industry.
How to improve your lead-to-close ratio
Your lead close rate is one of those metrics that you want to be as high as possible. The higher it is, the more revenue you’re driving. But what if it’s not as high as you’d like it to be? How can you improve it?
Here are a few tactics to try!
1. Reoptimize your sales process
If you’re not managing to turn many of your leads into customers, the most obvious cause is that your sales process needs work. After all, your marketing efforts clearly aren’t the issue—you’ve got plenty of leads. But you’re not successfully convincing those leads to buy from you.
Take the time to reassess your sales process and look for weak points. Check to see if there’s a consistent point in the process where the majority of your leads are jumping ship. Look at existing customer data to see if there are pain points you could do a better job of addressing.
2. Drive higher-quality leads
Another option for boosting your lead close rate is to simply generate better leads.
The thing is, sometimes your sales team isn’t the problem. They might be doing the best they can, but if the leads you’re sending them aren’t very high-quality, there’s not much they can do.
What do we mean by “high-quality” in this instance? Basically, your leads should be highly qualified and ready to buy. If they’re not, you need to reevaluate which leads get sent to your sales team.
Start by making sure you’re targeting the right people. Is your marketing reaching the audience that’s most likely to be interested in your services? If not, try targeting a different group.
Then, once you know you’re targeting the right people, make sure you don’t pass them on to the sales team until they’re truly ready to consider buying. If you send them over too early, they won’t respond well to your sales efforts.
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3. Earn more reviews and testimonials
Finally, you can consider seeking out more reviews and testimonials from your existing customers. Why? Because there’s no one your leads will trust more than people who have already bought from you.
Of course, you’re going to talk up your own company—your leads will be skeptical of that. But if a ton of existing customers talk about how great you are, it’ll make a much deeper impression on your leads and cause you to have a much easier time converting them.
Nutshell can help you generate better leads
Your marketing and sales efforts will perform much more effectively if they’re backed by customer data. That data can help you learn how to address pain points and target the right audience with your marketing.
That’s why you need a customer relationship management (CRM) platform like Nutshell. Nutshell can help you store, organize, and analyze all your customer data to gain more valuable insights about your leads and customers. That, in turn, helps you drive more revenue.