You have a small business. You see people walk by your storefront, or you send out an e-mail to your e-mail list, or you have a whole bunch of followers on social media, or you send out a mailer to your whole neighborhood. But you are only seeing a small percentage increase in sales. Is this normal? Yes. When it comes to rates of converting your leads into sales, you are usually going to see small percentages.

One of the things to consider in your marketing efforts is the idea of “lead conversion rates.”

You can think of a lead as someone who you have directly touched with your marketing. In the examples above, this could be people who see your storefront, who receive your e-mail, who follow you on social media, who received your mailer. The fact is – in most industries – the chance of converting your leads to 100% paying customers is highly unlikely.

The chance of converting your leads to 100% paying customers is highly unlikely. #smallbiz #mktg Share on X

So, what are the average numbers? This varies based on a lot of factors: what industry you are in; cold leads (ones you have never reached before) vs. warm leads (ones you have reached before) vs. previous customers (people who have already bought from you at least once).

Average conversion rates may shock you, actually. In the retail or non-profit sectors, a 2-3% return is the standard. So, a non-profit that sends an appeal or a retail outfit that sends an offer – even to warm leads – may be looking at 2-3% of the recipients actually putting a check in the mail or redeeming the offer.

I have seen cold e-mail lists convert in the 0.5-1.0% range. Whereas, leads generated from referrals can be closer to 10% due to the built in trust-factor.

There are a lot of stats out there, but what do they mean for you?

It is a good idea to get a sense of the average numbers for your industry. If you have been in business for a while, you can look at your own business and start to evaluate what rate of return you are getting on your various marketing methods. Use this average to help dictate:

  1. What marketing methods are actually working the best for you in terms of bringing in new leads, in terms of warming them in your sales funnel, and in terms of converting your leads to ultimate sales.
  2. Does the amount of revenue you would be likely to generate from this marketing outreach justify the budget spent on hitting that many leads?

It can be a disappointing realization to think that a 3% return might be great for your industry.   However, when you know that type of information up front, you can plan for it and start working towards understanding the best practices to incrementally increase your conversion rate over time!

The best way to increase your conversion rate of new leads is to be intentional about your marketing funnel. For more information about what your marketing funnel is and how to use it, read here.