This blog post explains the lead conversion metrics you should be tracking in Salesforce.
Why are these metrics important?
They’re crucial because your business puts a lot of effort into generating converted Leads.
However, are they worth their salt?
Do the leads passed from Marketing to Sales contribute much revenue?
In most businesses, it is only possible to answer these questions using anecdotal evidence.
Indeed often, I find businesses are poor at tracking lead conversion metrics. Sometimes they know how many leads convert to opportunities, but that’s pretty much it.
Unfortunately, this means they are unable to figure out how to optimize revenue from converted leads. In short, they don’t know what is working and what is not.
It also means they do not realize when marketing and sales time waste time on non-productive leads.
However, to do this analysis, you need to monitor more than just the number of converted leads.
Fortunately, the lead conversion metrics I explain are easy to implement. And these metrics give you deep insights into how well converted leads are performing.
You might be wondering:
What’s the easiest way to build lead conversion metrics in Salesforce?
Install the free GSP Lead Conversion Metrics Dashboard from the AppExchange. It includes all the charts and metrics I describe in this post.
Lead Conversion Process
The metrics assume you have a valid lead conversion process in place.
This process includes an effective hand-off process from marketing to sales that ensures leads do not fall between the cracks.
Use this blog post for advice on implementing a robust lead conversion process in Salesforce.
What is a Converted Lead?
Let us be clear about the definition of a converted lead.
Lead conversion occurs when one person (usually in Marketing or Sales) ‘converts’ an existing lead into an Account, Contact, and Opportunity.
The Sales team pick up the Opportunity and drive it through the sales process.
In many businesses, converted leads are the source of most opportunities for new customers (compared to opportunities for existing customers).
For example, a potential customer downloads an eBook. The prospect receives emails over time containing useful material that educates the buyer. The relationship deepens.
The prospect eventually receives a qualification call. If the lead is ‘qualified’ then it converts. The resulting opportunity passes to a salesperson.
Contrast this with opportunities for existing customers. In these cases, the salesperson often creates an Opportunity directly on the Account record.
No lead is involved. The opportunity links to an existing customer or prospect Account.
Of course, the number of opportunities resulting from converted leads compared to the number of opportunities created on existing Accounts is one metric we want to track. We also want to monitor the win rate on both sets of opportunities.
For information on opportunity conversion rates, see this blog post:
Lead Conversion Metrics
Here are the seven converted lead metrics I recommend. They call all be measured using Salesforce reports and dashboards.
1 – Revenue Contribution of Converted Leads.
2 – Opportunity Win Rates from Converted Leads.
3 – Average Opportunity Size from Converted Leads.
4 – Win Rates by Opportunity Owner.
5 – Opportunity Win Rates by Lead Owner.
6 – Opportunity Win Rates by Lead Source.
7 – Opportunity Win Rates by Campaign.
Here’s how each lead conversion metric delivers insight that helps to increase revenue.
1 – Revenue Contribution of Converted Leads
The Revenue Contribution of Converted Leads metric measures the dollar contribution of converted leads.
It measures the $ value of opportunities from converted leads. The metric compares this with opportunities that did not come from converted leads.
The green column in the dashboard chart shows the $ revenue contribution of opportunities created from converted leads.
The blue column is the revenue from opportunities created directly on existing Accounts.
As we can see, converted leads contribute around one-third of revenue; although this varies month to month.
Here’s the essential thing about this lead conversion report and chart: it gives you context for the other lead conversion metrics that follow.
For example, whether the figure of one-third is good or bad depends upon the context of your business.
If you are a new start-up company, you might expect the contribution from converted leads to be high.
In a well-established, mature company with lots of existing customers, the figure may be lower. That’s because a significant proportion of revenue comes from repeat business.
Remember, like all the charts you can adjust the report to analyze the numbers further. For example, there may be significant variations by geographical territory or industry.
Use the Revenue Contribution of Converted Leads report and dashboard chart to identify the ratio in your business. Think about whether the percentage and $ contribution figures are right, given the sales growth strategy in your company.
Use the following lead conversion metrics to investigate further.
2 – Opportunity Win Rates from Converted Leads
In this metric, we are comparing the win rate of opportunities that came from converted leads versus those opportunities created on existing Accounts.
Remember, a converted lead will usually result in a new Account.
An existing customer and some prospects will already exist as Accounts.
The report compares opportunities that started life as a lead, with those opportunities that the salesperson linked to an existing customer or prospect Account.
The win rate is the ratio of opportunities won versus opportunities lost in a given period. In this case, it’s the current Financial Year.
We have two lead conversion metrics here.
Win Rate by Count. Compares the number of deals won and lost.
Win Rate by Amount. Compares the value of deals won and lost.
The chart shows that on both metrics, the win rate for converted leads is lower than the win rate for direct opportunities.
That probably makes sense.
In most businesses, it’s easier to win deals with existing customers than it is with new prospects.
However, to grow the company, you can’t just rely on existing clients. You also need new customers. And often, those new customers come from converted leads.
The chart also shows that for converted leads, the win rate by Amount is higher than the win rate by Count. Consequently, successful opportunities had a higher than average deal value.
The reverse is true for opportunities created directly on Accounts. These opportunities did not come from converted leads.
For these opportunities, the opportunities successfully won had a lower than average value. We can see this because the win rate by Count is larger than the win rate by Amount.
We might expect this in many businesses.
Many deals with existing customers may be for add-ons, repeat purchases, or other regular orders that have a lower value than first-time opportunities.
On the other hand, does a low win rate on opportunities from converted leads indicate that leads are not properly qualified? Alternatively, are salespeople focusing too much on existing customers, where we naturally expect the win rate to be higher?
Think about the questions this lead conversion metrics prompts you to ask in the context of your business.
3 – Average Opportunity Size from Converted Leads
The previous lead conversion metric tells us about the win rate of opportunities from converted leads versus opportunities created directly on an Account.
The lead metric of Average Opportunity Size compares the average value of deals that came from converted leads with deals created directly on the Account.
On the chart, “Yes” means the opportunity came from a converted lead. “No” indicates it did not; it was created directly on the Account.
In this example, the average deal size from opportunities created on an Account is higher than for converted leads.
Should you expect this is your business? Or is the position reversed?
Sometimes we expect the average deal size of opportunities from converted leads to be higher. That’s true when a significant proportion of opportunities on existing Accounts are smaller, repeat business deals.
Alternatively, in other businesses, the reverse applies.
For example, if your approach is ‘land-and-expand,’ then new customer deals may be smaller. Or they may be trials and prototypes.
Again, it’s essential to interpret the numbers in the context of your business. If appropriate, customize the report to examine this lead conversion metric by sales team or territory.
GSP Lead Conversion Dashboard
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4 – Win Rates by Opportunity Owner
The lead conversion metric compares the win rate for different salespeople. In other words, by opportunity owner.
Again, we are comparing the win rate by number (record count) and value ($ Amount).
In our example, Nick has a significantly higher win rate on converted leads compared to opportunities created directly on an Account.
We can see this because the green bar (converted leads) is bigger than the blue bar (opportunities not from converted leads).
In contrast, Shaun is more successful at winning deals that did not come from converted leads.
How do we explain this?
Does Nick follow up more proactively on converted leads? Is he receiving higher quality converted leads? Is Shaun farming his existing customer base more successfully for new revenue?
Like other lead conversion metrics, the numbers tell us what questions to ask rather than giving us the answer.
It’s the answer to our questions that enables us to decide the right action.
For extra reading on win rates follow the recommendations in this blog:
5 – Opportunity Win Rates by Lead Owner
The previous lead conversion metrics shows the win rate for converted lead and direct opportunities by opportunity owner.
Let’s look from a different perspective.
Many businesses have an inside sales team or SDR team responsible for making qualification calls to leads.
These teams aim to create meetings for the sales rep, whether internally or field based.
Therefore, we need to understand how capable different inside sales reps are at creating high-quality opportunities.
This metric examines opportunity win rates by lead owner. In other words, the person that converted the lead.
In our example, we can see that a higher proportion of the opportunities that came from leads owned by Dave successfully closed. The win rate is much higher than the opportunity win rate for leads owned by Bruce, for example.
Does this mean Dave is doing a better job of warming-up these leads as part of the qualification process? Is Bruce converting too many, low-quality leads? Is Perhaps Dave is handing his leads to salespeople that respond more quickly?
Alternatively, can Dave increase sales by lowering his ‘qualification threshold’ and increasing the number of leads he converts?
Again, we do not explicitly know the answer. However, we do now know the questions to ask.
6 – Opportunity Win Rates by Lead Source
Assessing win rates by Lead Source (lead conversion metric #6) and Campaign (metric #7) are the final two measures.
A recap on Lead Source.
Lead Source is a standard picklist field on the Lead. It records the originating source or channel of the Lead.
Examples of Lead Source picklist values are Web, Trade Show, Purchased List, Phone Enquiry, and so on.
When a lead converts, the Lead Source carries through to the equivalent field on the opportunity. Consequently, we can analyze opportunity outcomes by Lead Source.
Remember, the chart and report are not showing the number of leads created by lead source. Instead, they show the outcome of opportunities from converted leads by each lead source.
In our example, some Leads Sources perform better. For example, leads that came from a Partner Referral have a higher conversion rate; at least, as measured by the number of Leads.
However, these leads are smaller in terms of opportunity size. We know that because the win rate by amount is lower than the win rate by record count.
The information means we can examine the effort that goes into generating leads from different sources and review that in the context of the number of converted leads generated and the opportunity win rate.
7 – Converted Leads by Campaign
The previous lead conversion metric tracks the outcome of converted leads by lead source.
We can get another perspective by measuring the outcome of converted leads by Campaign.
This lead conversion metric provides valuable insight into the value for money of different campaigns.
In our example, leads from the Tech Meeting perform significantly higher than other Campaigns. All other things being equal, running more of these campaigns is a worthwhile investment in time and money.
For help on using Campaigns review this blog, The Best Advice You Can Get on Salesforce Campaigns.
And don’t forget, you can get all the metrics and reports described in this blog post by installing free the Lead Conversion Dashboard From GSP from the AppExchange.
Assessing any aspect of sales and marketing performance means coming at the situation from multiple angles.
Understanding the contribution of converted leads is no exception.
The lead conversion metrics described in this blog post give you the tools to do that.
Start by quantifying the contribution of converted leads to revenue. That gives you a starting point and context.
Then review each lead conversion metric. Ask questions about metric.
And use the answers to drive revenue.
Lead Conversion Metrics Webinar Recording
Watch this video with myself and Dan Bailey to see the lead conversion metrics in action. Dan and I also discuss best practices for converting leads and methods for getting feedback from sales to improve alignment with marketing.
GSP Lead Conversion Dashboard
To implement the dashboard charts and underlying reports described in this video and the webinar recording, install the free Lead Conversion Dashboard from the AppExchange.
There are some simple actions to activate the dashboard after you have installed it. Follow the step-by-step instructions in one of these videos to get this powerful dashboard working for you in your business:
And, of course, if you have any questions or need advice, then Get In Touch. We’ll help you out.
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