As we’ve highlighted on this blog, lead generation is not enough for reliably successful digital marketing. You also need to make sure that a good portion of your leads become qualified – and eventually turn into customers.
Of course, that goal is difficult to accomplish if you don’t know whether your efforts to turn sales qualified leads (SQLs) into customers are actually successful. That’s where benchmarking comes into play.
Through the below 3 step process, you can measure your current sales qualified lead conversion rates and evaluate your success. That, in turn, allows you to turn to one of the many strategies designed to help you improve your conversion rates and maximize the impact of your lead generation and nurturing efforts.
Put simply, benchmarking your conversion rates comes down to three simple steps: taking stock of your current rates, comparing them against industry averages, and setting a goal for improvement. Let’s break each of these steps down in a bit more detail.
Step 1: Examine Your Current SQL Conversion Rates
Naturally, any benchmarking process has to begin with understanding exactly what your current SQL conversion rates are. In other words, how many of your sales qualified leads turn into customers?
In examining and tracking this metrics, be sure to set specific time parameters. Depending on the length of your buyer’s journey, a SQL that only earned that status a few weeks ago may not yet have converted – but that doesn’t make it a lost opportunity. Set a time frame for your current rates that encompasses the entire process needed for your leads to make the decision to buy.
Step 2: Research and Understand Industry Averages
Once you know your own conversion rates, it’s time to compare them against averages from your and similar industries. Across industries, a Marketo study found that just above 22% of SQLs actually become customers. Of course, depending on industry and a firm’s individual efforts, that rate can rise far higher.
In the software industry, for example, the average conversion rate from SQL to customer/subscriber hovers around 27%. A study by the Aberdeen Group, on the other hand, found that only 33% of SQLs turn into sales opportunities and only 29% of these opportunities turn into customers, meaning that only 10% of your SQLs become customers.
The reason for this discrepancy is simple: there is no universal definition of a sales qualified lead. It’s up to you to decide when to call a lead qualified for sales outreach, and the earlier in the process you decide to do it, the lower your conversion rates will be.
It’s crucial to understand industry averages. But ultimately, they should not be your only benchmark in looking to optimize your SQL conversion rates. That’s an important note to keep in mind as you move to the final step of the benchmarking process.
Step 3: Set a Goal for Improvement
Finally, it’s time to compare your current conversion rates to industry averages, and set a goal that helps you meet and exceed these averages. Your SQL conversion strategy should always aim to go higher than the majority of your competition.
Your conversion rate goals should be at once challenging and attainable. No one is helped by an unreachable goal of 50%. But at the same time, hoping to improve from 15% to 17% over the course of the year means not challenging your company enough to improve.
And that’s ultimately what it comes down to: improvement. Because of the above-mentioned unreliability of industry averages, they are informative as a guide post – but should not be seen as the definite measuring stick. Instead, look to set a goal that improves your conversion rate over time, meeting and exceeding these averages as an added bonus in the process.
How to Improve SQL Conversion Rates for Lasting Success
All this talk about benchmarking and improving your SQL conversion rates brings up a simple question: how do you do it? We’ve covered some strategies for success in a previous post; here are some quick notes on what you can do to maximize your success.
- Ensure a smooth marketing-sales transition. Consistency is key at this stage. Rather than employing a different sales strategy once your leads are qualified for sales outreach, be sure your messaging matches perfectly with your marketing strategy prior to this stage.
- Offer incentives to act now. When a lead becomes sales qualified, they are probably ready to make a decision – they just may not know it yet. Incentivize them by offering unique value for signing up, such as a discount for your product or a bonus.
- Allow opportunities to connect with peers. Help your current customers and clients make the sales pitch. Connect prospects with your most vocal brand loyalists, and share case studies that relate to your leads’ business challenges and needs.
- Continue to offer value. Even if a SQL does not immediately make the decision to become a customer, don’t forget about them. Continue to offer valuable content, and periodically reach out to see if they’re ready to add to your revenue.
Understanding your sales qualified lead conversion rate is the first step to improving your effort and maximizing the potential of every contact in your sales funnel. Once you understand where you stand, you can set a goal for improvement and engage in targeted outreach to meet that goal.