In most businesses, when sales are slow or low, the first reaction is to spend more on marketing. Create better adverts, more adverts; direct sales letters is the cry. But is this always the right solution?

Let’s take a step back and examine the issue more closely.

The first thing is to examine the numbers to see what they reveal. The critical ratio we need to look at is the conversion rate from lead / enquiry to sale. This will show us immediately where our emphasis should be.

Let me explain…

The numbers tell us that you’re getting 100 enquiries per month and tracking shows 25 convert into customers. What we also see is that 75 don’t become customers. This is the group you need to focus on. Typically, some will never buy so we can eliminate another 25. That leaves 50 who are still in the market.

What happens to them? If they didn’t buy from you, where did they buy? No doubt a competitor. Depending on the market, it may be that your advert stimulated their interest, but because you didn’t connect with them and make the sale, they spent their money elsewhere.

In other words, your advertising generated sales for your competitor. So when he sees your next advert, he’s laughing all the way to the bank. Why should he advertise when you do it for him?

Suppose you decide to either improve your adverts; better headlines, copy, offers etc, or simply double your advertising expenditure. Now instead of 100 leads, you get 200. Only you still convert 25%. Make 50 sales, yes, BUT you’re now leaving 150 unsatisfied customers to spend elsewhere. If 50 never buy, there are now 100 buyers still out there.

Your competitor thinks this is hilarious. “Guys, we’re going to do well this month,” he tells his staff. “Fred is running more ads”.

Let’s take a better view of the situation. Instead of looking to the lead generation process, you teach your staff how to increase their conversion rate. You still get 100 leads but now you convert 45%. You’re making 45 sales instead of 25; 25 still don’t buy and instead of leaving 50 unsatisfied buyers for your competitors, you’re now only leaving 30.

Increase conversion to 50% or better and starve your competitor by reducing the number of unsatisfied buyers left in the marketplace.

Now look to your lead generation process. Stimulate more buyers and capture the lion’s share by converting more of your own leads into customers.

Is this hype or reality? Let me give you simple four real-life case studies so you can decide for yourself.

Docwise Information. A software company providing records management solutions. Needed to make more sales but in fact, couldn’t convert the leads they had. Went looking to create more effective advertising but the diagnosis was that the conversion rate was too low. Within six weeks of starting a training program, their sales had increased by $32,000 without a dollar spent on marketing.

Acorn Software. One day of training took a 10% conversion rate to 50%. Over a four-month period, sales increased by $100,000. Current conversion rate is around 50% resulting in regular $50,000 months. In less than 12 months sales have increased 10-fold.

AAA Action Hot Water. Distributors of Solar Hot Water systems. A simple review of their sales processes resulted in a staggering 100% increase in sales in 1 month. At the same time, advertising expenditure was reduced!

Phantom Screens Sthn Qld. Simple changes to their phone answering and sales processes and with no change in advertising content or expenditure, conversion rates increased by a staggering 250%.

Hype or reality? You be the judge. Albert Schweitzer once said, “Example is not the main thing in influencing others, it is the only thing.”

Does sales training come before marketing expenditure?

Categorically yes. There is absolutely no point in increasing the number of leads you generate if you can’t increase the conversion ratio. Learn how to do that first otherwise the sales explosion you create will be for your competitor.

About the author:

James Yuille is a sales and marketing consultant and trainer with over 32 years experience. He is based in Brisbane, Australia. His free weekly sales and marketing newsletter provides topical information for business owners and salespeople. Find out more at http://www.jamesyuille.com