What's a good lead conversion rate? It seems like a straightforward question that should have a simple answer, but the short answer is that it depends. Your lead conversion rate is likely higher than you think -- and depending on the industry you're in, it could be much higher.
Marketing efforts can generate record-level engagement, but if you have a low lead conversion rate, all the engagement in the world won't bring in more revenue. First, it's critical to understand the lead conversion target your business needs to reach in order to meet revenue goals.
Second, you must take steps to achieve the highest rate possible. This article explores initial benchmarks for this vital metric and actionable steps you can take now to optimize your lead conversion funnel.
What Is Lead Conversion?
Lead conversion is when a lead becomes a paying customer. This is generally done by first attracting a lead and then nurturing it to the point when they decide they are ready to buy, and they purchase from your business. For many businesses, this process is a joint effort between marketing and sales.
To calculate the lead conversion rate, divide the number of sales by the number of leads you generated in a given period, then multiply by 100. For example, if your business brought in 124 leads last month and 20 of those leads became paying customers, your lead conversion rate is 16%.
Lead Conversion Example: 124 / 20 = .1612 * 100 = 16%
Note, your lead conversion rate should not to be confused with lead generation, which is also sometimes referred to as a conversion. Lead generation or conversion is when a website visitor or someone unknown to the business shares their contact information in exchange for something of value like a free demo, case study, or report.
What Is a Good Lead Conversion Rate?
Looking across industries, the average lead conversion rate is around 2.4%. If yours is around 1 to 3% you might be thinking you're doing well enough, but what if you can do better?
Any business that has invested in lead conversion optimization should have a much higher conversion rate. The top 25% of companies that make up the industry average rate have a lead conversion rate of over 5%. And as companies optimize, the lead conversion rate can be much higher -- 10% or more.
In order to get more lead conversions, start by attracting the right audience from the start. Leverage social proof and provide helpful content to build instant trust. These are the things that will guide leads smoothly through the buyer's journey.
How to Improve Your Lead Conversion Rate
1. Provide a Helpful and Informative Experience
Think of your lead generation funnel like maintaining city streets. If you don't maintain the roads, people avoid your path and find another route that ends at your competitors' door.
Draw people in with helpful content and guide their information journey. Educate them and provide them with the tools they need to feel confident your solution is the one for them. And if they get distracted or stray, use tools like remarketing campaigns to bring them back.
2. Leverage Your Online Reputation to Build Trust
It's nice to get good reviews and today they are an integral part of the buying process for both B2B and B2C customers. Positive reviews can boost your lead conversion rate as well as impact many other digital marketing metrics like shortening the sales cycle and improving retention.
91% of Millennial and Gen Z customers trust reviews. And 82% specifically seek out the worst reviews. Why they do this might surprise you.
Savvy consumers are suspicious of overwhelmingly positive reviews because these days fake reviews are a known problem. Customers who interact with negative reviews are actually 85% more likely to convert.
So don't be afraid to ask for reviews even when you're a fearful of the outcome. If you're trying to do right by your customers, it will help conversions more than it will harm them.
3. Think Engagement First
Today, people have thousands of options they can select. With information available to them 24/7 and on their own timeline, they don't have to sit through your sales pitch to learn about your product or service.
Consumers have the power to guide their journey in ways that weren't previously possible. But you can still influence this experience by giving them a reason to interact with you online. Whether this is by building a community of interested parties on your social media channels, or hosting virtual or in-person events to bring people together, your prospects can learn a lot about your business and your brand that they can't otherwise find on your website.
Using inbound marketing practices, you can also present content that consumers can engage with. Inbound marketing focuses on generating helpful, engaging content that attracts your ideal customers with the right message at the right time. It establishes a clearly-defined lead generation and lead conversion process. It aligns marketing and sales, so they work together seamlessly to increase the percentage of leads who become paying customers.
If you need help figuring out your ideal lead conversion rate or you're interested in building a plan that will help you reach your target rate, contact us for a website assessment today!