Know-How Exchange : Research/Metrics

From conversations with our CRM clients and our Sales Training clients, it would appear that the conversion ratios in the financial services industry have changed very little over the last 30 years, only the methods of securing prospects and converting them into customers have changed!

It might also be an indicator of the worth of internet click-through advertising that the highest rates paid to Google are for financial services where $10 per click through is not uncommon for loans, banking and insurance. Where discount houses fall in this, I can only guess. Before you go, “Oh whoopee – that must mean that they are successful”, remember that the PPC rates are driven not only by the success of the advertiser but also by the demand for associated key words and phrases from the competition. Financial service companies were in the habit of paying commissions which often equated to 80% of the first year value of a service, savings plan or investment, so $10 to get a lead from someone who is actually looking can appear good value for money, depending on those conversion rates.

A historic conversion rate of around 2% from prospecting via all channels fits in with Mansil’s research and is reflected by those I know in the industry, thus you might expect that out of 50 random enquiries you would achieve one sale. Click through, rather than cold prospecting or cold site visits would expect to yield a higher conversion ratio than, say, cold calling (Because they are actively looking) and though you do not mail, the response rate from financial mailings is dire – around 0.1-0.2% with a subsequent conversion rate of about 2-5%.

You conversion rate will in any case be dependent on whether you seek to close the sale through sales techniques or not. Again some of the old ratios hold true. Out of 10 people who express an interest in a financial product 1 will buy of their own volition (10%), whilst that increases to 25% if there as a follow up via a professional sales call.

Figures of 10% conversion from enquiries from a website are according my contacts in the realms of fantasy. What is in your favour is that anyone who visits your site and completes enough detail to get detailed information is at least looking for your products. They have around an 8% chance of buying something from someone, but not necessarily you. Once you are into a quotation situation and are involved in dialogue, that increases to a figure which can be as high as 20% and can be further boosted to 30% if you have suitably trained sales staff or attractive time limited incentives.

The bottom line is that you are unlikely to better a 2% conversion ratio when you consider your web leads from all avenues of enquiry, though the figures for click through enquiries may reach 8% if you have the means to close them.

I wondered if I was a typical statistic in this! (I rarely am) I recently needed to raise some capital for a project. I researched about 40 sites, logging on to get the detail only available to “Subscribers” I made enquiries of 8 and entered into serious negotiations with 4. I struck a deal with the one which made the most professional follow up call and expedited my business in a manner which I felt was both expedient and value for money. They weren’t necessarily the best or the cheapest – they just did everything subsequent to my original enquiry in a professional and timely manner. That makes my order from the original enquiries a 2.5% success for one company from the original sample of 40.

Seems to fit the bill!

Steve Alker
Unimax Solutions