Most businesses view their marketing plan as a roadmap to get new customers. In doing so, they spend the majority of their time considering different promotional tactics to reach new customers. These promotional tactics include radio advertising, trade show marketing, public relations, online advertising, and direct mail among many others.
However, in most cases, you need to focus on your “conversion strategy” before focusing on your promotions strategy. Because, while your promotions strategy will result in many new customer prospects, it doesn’t ensure you will convert these prospects into paying customers.
Consider the case in which you convert 15% of prospective customers into paying customers. If a new promotional tactic brings in 100 prospective customers, you’ll on average get 15 paying customers. And it may be profitable for you. But, if you first focused on your conversion strategy, and increased your conversions from 15% to 30%, every time you did a new promotion you would get double the results and achieve more profits.
Your conversion strategy is the techniques you use to turn prospective customers into paying customers. The first step to improving your conversions is to map out the conversion funnel.
For example, in many sales organizations, the conversion funnel is as follows:
- Salesperson makes A number of outbound calls
- Salesperson speaks to B number of prospects
- Salesperson schedules C number of proposals
- Salesperson conducts D number of proposals
- Salesperson closes E number of proposals
- Salesperson’s average sales price is F
As you can imagine, by increasing the Salesperson’s performance on each of these conversion variables, total performance can improve dramatically. For example, perhaps a new script used by the Salesperson in their outbound calls doubles the number of proposals given. And perhaps a change to the proposal format doubles the proposal close rate. These two improvements alone would quadruple the performance of your salespeople.
Importantly, improving your conversion funnel will dramatically open up new promotional opportunities. For instance, perhaps previously every new prospective customer was worth $20 to your business. Now, after improving your conversions, these prospects are worth $50. Because of this, promotional tactics that you couldn’t use before (perhaps they resulted in new prospects that cost $30 each) would now be economical for you. And if your competitors haven’t improved their conversions, you’d be able to advertise in these media with no direct competition.
While you should always be adding new promotional tactics to your marketing mix, be sure to put the cart before the horse, and first improve your conversion funnel. You will quickly start generating more revenues and profits per prospect, which will open up many new promotional avenues. And your sales and profits will quickly rise.
What are your thoughts? Please leave your comments below.