In part 1 of our series on calculating different forms of the return on investment (ROI) of writing skills development, we looked at how faster writing alone produces impressive ROI – 1,233% in our example. In part 2, we looked at how better writing can indirectly lead to more sales, which can also pay dividends. Today, we’re going to look at a different dimension of ROI: boosting conversion rates.
Here, we’re talking about the rate at which prospective customers (leads) turn into actual customers through a sales and marketing process. If you submit 10 different sales proposals or presentations, and you get one new sale, you have a 10% conversion rate.
Writing ability can make a pivotal difference here. Making more persuasive arguments, more succinctly conveying the core value proposition of your service or product offerings, and producing a more effective call-to-action can directly impact the ability of any sales and marketing content to turn leads into sales.
But how does that translate into the ROI of writing training? Let’s walk through the calculation.
- Step 1. Determine the cost of the training. First, we need to know the number of people to be trained. We’ll use the same numbers as previous ROI assessments: 10 sales staff or managers at an average annual training cost per employee of $1,252 (though this amount can vary tremendously).
- Step 2. Determine the value of a sale. We’ll use the same easy example as from Part 2: a business that sells box trucks for use in deliveries and junk hauling. If a new medium-duty Class 4 box truck costs between $35,000 and $50,000, we’ll say the average sale consists of two trucks and totals $80,000.
- Step 3. Determine your current conversion rate. According to one study, the average conversion rate in the automotive industry is 2%. Let’s say before they improved their conversion rate, each salesperson was fielding 600 leads annually (or about 50 leads a month). At a 2% conversion rate, that turns into 12 sales, or about one sale per month. At $80,000 per sale, each salesperson was bringing in an average of $960,000 annually. That’s our baseline.
Step 4. Determine your increased conversion rate. The degree to which improved writing will increase your conversion rates varies widely. For the sake of this example, we’ll say a 30% increase. We’re drawing this figure from a case study of a website that replaced a generically worded headline with a more dynamic, action-driven one and, with that change alone, increased conversions by 30%.
To be clear, a 30% increase does not mean going from a 2% (converting 2 out of every 100 leads) to 30% (converting 30 out of every 100 leads) conversion rate. It means increasing the 2% to 2.6%. Sounds like a pretty modest increase, right? Let’s see what happens with our numbers.
- Step 5. Calculate the value of the additional sales. At a 2.6% conversion rate, 600 leads turn into 15.6 sales on average per salesperson annually, so each is now bringing in $1,248,000 in annual revenue. Since we’re talking about a team of 10 people, that would increase annual sales from $9.6 million to about $12.5 million – or almost $2.9 million more on an annual basis.
- Step 6. Now let’s get at the direct ROI of more sales. If we’ve spent $12,520 to train those 10 salespeople to produce nearly $2.9 million in new sales, then we’ve generated 23,003% ROI over our initial investment. And that’s just from adding a humble 0.6% to the baseline 2% conversion rate because the team is now producing better sales content that leads to more conversions. Even a more conservative 10% increase in the conversion rate would still have produced a $960,000 increase in sales (the equivalent of an extra salesperson) for an ROI of 7,667.7%. Under the right circumstances, it can be that impactful.
Now it’s your turn: we did our best to use numbers drawn from realistic business situations, but your business is unique, so you’ll need to adapt the figures appropriately. If you’d like help figuring out the ROI, please reach out for more information – we can help you figure out the right numbers for your situation.