You know that sales funnel is one of the most important business elements that increase your overall business potential energy. Previously, I write two posts about sales funnel. First is explanation about sales funnel. The second is about sales funnel improvements. And this one as third is about the most important metrics of your sales funnel with which you can easily make improvements of the process.
If you know the numbers you will know the metrics and elements that must be improved for increasing business potential energy of your sales process and overall business. Furthermore, this metrics is the basis for knowing the amount of business potential energy into the sales as one of the business elements.
Let’s see the metrics:
Entrance
This is the number of leads that enter your sales funnel in a certain period of time. Simply, this metrics is expressed in terms of numbers. Furthermore, entrance can be expressed in terms of forecast numbers if you make projection of your sales funnel. If you want to find real numbers you must previously define the borders of your sales funnel. This means that you must know when the sales funnel starts. This can be entrances in your sales store, or leads that contact your sales department, or leads that is contacted from your sales department, or leads that come to your website, or leads that subscribe for your newsletter, and so on. But, this is a not simple job because the start of the sales funnels can be from different business efforts previously mentioned. If you want to know real number of entrances in your sales funnel you must define all business efforts that bring leads into the sales funnel and measure over a period of time what is the numbers. For example, you want to find metrics about entrances in the one month period of time. Then you can make only simple math with collecting numbers from different efforts that bring leads. In the table bellow is given this simple math:
| Business Effort | Number of Entrance |
| Contacts made from a sales department | 1000 |
| Leads that were contacted from your sales department | 2000 |
| Newsletter subscribers | 1000 |
| Total Entrance | 4000 |
Conversion Rates
I want to differentiate two types of the conversion rates of the sales funnel:
- Overall Conversion Rate
- In-process conversion rates
The overall conversion rate is the ratio of the leads that was transformed into the buyers at the end of the sales funnel. This metrics is expressed by percents of entrances. For example, 50% overall conversion rate means that 50% people that were entered into your sales funnel to buy something from your business. The overall conversion rate depends on In-process conversion rates. Sales funnel has different elements as awareness, interest, desire and buying. For example, when the sales team contact the leads a part of them will be aware of your products or services. That is first in-process conversion rate. After that, the part of leads with awareness will have interest about your products and services. That is second in-process conversion rate. The part of the leads with interest will receive desire to buy something and here is third in-process conversion rate. And at the end the part of leads with desire will buy something. In these sales funnel, we have 4 different in-process conversion rates:
- Conversion rate that converts entrants into the lead that are aware of your products and services (CA).
- Conversion rate that converts leads with awareness into the leads with interest (CI).
- Conversion rate that converts the leads with interest into leads with desire (CD).
- Conversion rate that converts the leads with desire into buyers (CB).
With these 4 in-process conversion rates, you can calculate overall conversion rate (C). You can make the calculation with simple multiplying all in-process conversion rates:
(C) = (CA) X (CI) X (CD) X (CB)
In the table below is an example:
| Entrance | Become Aware | Have Interest | Have Desire | Buying |
| 4000 | 1000 | 500 | 350 | 280 |
| (CA) = 25% | (CI) = 50% | (CD) = 70% | (CB) = 80% |
And overall conversion rate will be:
(C) = 25% x 50% x 70% x 80% = 7%
If you know entrance number and in-process conversion rates you will find overall conversion rates. Furthermore, you can play with numbers to find the ways for improvement of the overall sales funnel process.
Another way of calculating overall conversion rate you can perform when you know the number of buyers at the end of the period. For example, if you have 4000 entrances and at the end buying 280 individuals than the (C) will be:
(C) = (280/4000) x 100 = 7%
The process of finding in-process conversion rates is more difficult than to capture buyers and divide with the number of entrances. However, you can also use the (CB) to find the in-process conversion rates. My recommendation is to know the in-process conversion rates because they will show you the possible areas of improvement of the sales funnel.
Average Sale
Average sale is value expressed in money at the end of the sales funnel. These are average dollars spend from one buyer. This is important metrics in each sale funnel because with this metric you can see the value of your sales funnel, and that value will give you ideas for improvement of the process. For example, If you find that this number is too small you can make market research and find the target market that will spend more money.
You can calculate this metric when you divide overall income from the period of time with the number of buyers. For example, if you generate $28,000.00 from 280 buyers than the average sale will be $100 from one buyer.
Duration of the sales funnel process
This is the last metric of the sales funnel process. Duration of the sales process is time that is needed one lead to become buyer. This is important metrics that measures quality of the sales funnel. If this time is very long than the quality is in the lower level. You can find this metrics if you measure the time when the leads enter the sales funnel and the time when that leads make decision of buying.
Here I also recommend to find the single duration of every element of the sales funnel. If you know what time is needed one lead to become aware of your business and other in-process metrics you will find exactly elements that need improvement.
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