Conversion Rate

Conversion Rate is a key indicator that shows how much of a company's leads or potential customers end up in closed sales. It is a key measurement method in sales and marketing because it clarifies how effective an organization is at translating interest into real revenue.

How is the conversion rate calculated?

Conversion Rate is calculated by taking the number of closed sales and dividing it by the number of leads in the same period. The result is multiplied by 100 to get a percentage.

Formula:
Conversion Rate = (Number of closed sales/Number of leads) x 100

If a company has 100 leads and 25 of them end up as customers, the conversion rate is 25 percent.

Why is conversion rate important?

• It shows how effective the sales process is, from first contact to closed trade.
• It helps to identify weak points in the process, for example, if many leads drop out at the meeting booking or contract stage.
• It is used to assess the quality of the leads that marketing delivers to sales.
• It creates the basis for optimizing both resource consumption and incentive models.

Example of use

A team can measure that their conversion rate is 15 percent in telephone meetings and 35 percent in personal meetings. This insight allows you to prioritize the activities that yield the highest returns, while setting realistic goals for commissions and bonuses.

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