The term is self-explanatory and is self-defined. The conversion of a prospect to lead and lead to a customer is termed as Sales Conversion. To understand it, we need to understand a few terms :
Components of Sales Conversion
1) Prospects
A prospect is a possible future customer who is interested in knowing your product or service. Prospect may or may not convert to a lead and if not pursued properly, the prospect may be lost or converted to competition. Prospects are the first stage of the Sales and they should be relentlessly pursued. However, the communication that is kept for prospects should be introductory and mild rather than constant bombarding. The subtle communication doesn’t scare away the prospect and as time goes, the prospect converts to a lead.
2) Leads
A lead is a positive prospect. The one who has agreed to be a potential buyer can be termed as lead. However, it is up to the salesperson to time-bound the lead and generate the sale. A lead is to be communicated effectively and the sales calls are to be done with the objective of addressing the needs and wants of the customer. An aggressive perusal of lead is critical so as to convert it to a customer.
3) New customer
A new customer is one who has not purchased the services or products of the company ever. If the customer is using competitor products and then decides to go with your products, he would be termed as competitor conversion. It may also be possible that the customer is entirely new and has not used the competition ever but is starting with your products. In that case, some term them as Fresh Customer.
4) Competitor conversion
When a customer is using competition products or services and converts to your products, it would be termed as competitor conversion. You need to keep a strict watch on how many of competitors sales activities are giving conversions and also competitors sales conversions rates.
5) Customer upgrade
When a customer switches from basic products of a company to premium products of the same company, it will be known as customer upgrade or higher conversion. Some companies may consider this as fresh conversion or new customer for that particular product.
The Sales conversion may be new or existing who upgrades to high-value segment or a competitor sales conversion. In either of the cases, the customer is to be followed up right from the initial stage of prospect till conversion. There is a process for conversion of sale which is known as Sales Funnel.
Process of Sales Conversion
Sales Funnel is an excellent tool to study the process of Sales conversion. It is the process of converting a prospect to a customer by sifting through the entire population and by following the process. Following are the steps for Sales conversion:
- Awareness: As the terms suggest, the population should be made aware of the products that the seller has. It can be through any type of media that awareness can be done but without awareness, the population will not be able to know about the offerings and until they know, they will not buy. Hence making customers aware by ads or any other communication methods is important.
- Interest: The second stage of Sales Conversion is interesting. The ones that become interested after an awareness campaign express their interest. In some industries, the salesperson has to generate interest in the minds of the customer by asking proper closed-ended questions. It is very important that at this stage, there should be the use of closed-ended questions rather than open-ended questions because this stage decides if the prospect is to be followed up or not. Asking a closed-ended question during a sales call or in interest form will let the intentions of the customer clearly to the seller.
- Decision making: Here comes into the picture the skills of the salesperson. A proper opening of the Sales call, having proper objectives in hand, time-bound actions to mitigate any doubts in the minds of customer and giving product demos are to be done properly and efficiently by the salesperson. Convincing skills are of crucial importance at this stage since if the lead is not convinced, the company would lose a potential customer.
- Action: Once the decision is positive, the sale will happen and if the decision is negative, the lead will be lost or cold lead. The action stage is where the decision is put into action.
Example of Sales Conversion
To illustrate this process lets take an example. While browsing through social media, you stumble upon an ad of a new iPad Pro 12.9 inch. You click the ad, watch it but close it later saying the product is too expensive. At the end of an ad, there is a survey form about the ad which you fill and which also asks your contact details.
Later you get a call from Apple store asking if you have recently browsed through their ad, to which you reply positively. This is where you become a prospect. The apple store invites you to come down at a specified time to discuss more the offers to which you agree. This is the interest stage. You go down the store and talk to the Sales expert who explains you the features, benefits and finally gives you a flexible financing option thereby removing your hurdle.
This is the decision making a stage where you agree. Now as a part of the action, you pay the first cheque and the sale is closed. If you were using a Microsoft surface and have switched to iPad, it would be competitor conversion and if you have never used a tablet, it would be a new sales conversion. By pursuing these stages, one can convert the prospects and bring them down the sales funnel to achieve sales conversion.
Advantages of Sales Conversion :
- Higher revenue generation for the company owing to increased and new sales.
- Increased product depth and then breadth. For example, an initial user of Tide detergent starts using other Proctor and Gamble products.
- Increased sales lead to higher market share.
- Following the sales funnel, the company can keep a track of the present status of the prospective customers and leads and design marketing strategies accordingly.
Disadvantages of Sales Conversion :
- Sales conversion funnel can be made as accurate as possible but customer switches cannot be prevented. There may be times when a customer switch at the final stage that is the action stage and the funnel renders useless.
- At times a prospect may suddenly turn into customer and doesn’t pass through the sales funnel stage by stage.
