Most of our B2B clients engage in a mix of inbound and outbound lead generation activities to fill their sales pipeline.
For instance, we may be doing inbound marketing, including creating offers, blogging, and SEO. At the same time, our clients have some outbound activities going on such as email marketing, and direct phone touches by either a business development or sales representative. With inbound marketing, we track metrics such as # of visitors, conversion rates, how many leads become marketing qualified leads (MQL), and how many of those become sales accepted leads (SAL).
But what about your outbound prospecting activities? What metrics do you need to answer questions such as:
- How many sales activities (calls, conversations, appointments, opportunities) does the sales team needs to make in order to meet their annual pipeline goals?
- What is the breakdown of each activity on a quarterly, monthly, weekly and daily basis to reach those goals?
- Do I have enough people on my team to meet those goals?
Often a client has a good idea of their revenue goals, and may know how many sales they need per month, but that’s where it ends. They don’t know how much of each activity is needed to meet their goals.
There’s an amazing amount of pushback on breaking down sales activities this way.
Sales reps don’t like being stuck with a call quota. The sheer numbers can look scary. (“I have to make HOW many calls per day?”) They’ll argue quality versus quantity – that they don’t need to make 15 calls a day if they can make the 1 or 2 calls that really represent the best chance of conversion. This is an argument to not measure performance. It’s an appeal to trust them but not to inspect. Can each sales rep really guarantee that they can make the one call that matters day in and day out?
* Incidentally, I suspect reps who squawk the loudest tend to be the ones not meeting their quotas.
The simple truth: If you’re not measuring activities, the message you are sending your business development and sales team is those activities are not important.
Goals that are set and measured are achieved. You need to get clarity around your outbound lead generation numbers.
“If you don’t know where you are going, you’ll end up someplace else.” – Yogi Berra
When it comes to your marketing and sales pipeline, “someplace else” probably isn’t a great place.
4 steps to setting your sales activity pipeline goals:
Start with basics: What’s your goal? How much new business revenue do you plan to generate in the next year? Set your goal.
What’s your historical conversion rates? In other words, if you have a conversion rate of 25%, you need to have four leads in your pipeline for every one that will close in order to make your numbers. Repeat this for each stage of your pipeline (Calls, conversations, appointments, opportunities). If you don’t know your historical conversion rates, give each a best guess, and then be ready to change it as the rate becomes more concrete.
What’s your average deal size? With this information, you’re ready to start calculating your goals. I’ve created a very basic spreadsheet below based on metrics we’ve been discussing. I’m assuming an annual revenue goal of $10 million. Using the 25% win rate, to meet a $10 million annual revenue goal, you need to have a pipeline of $40 million. Divide this by your average deal size, and you arrive at the total number of opportunities that you need to close annually: 800. I’ve included some very simple conversion rates for each stage of the pipeline on the right. From there, it’s pretty easy to work backwards (dividing the amount at each activity by the next conversion rate) and determine the number of appointments, conversations, and calls that need to be made annually to reach your revenue numbers.
Go further. Companies often stop at step three, but you can and should take your goal setting to the next level of detail. Use your Average Deal Size (ADS) and conversion rates to break down your funnel to quarterly, monthly and weekly goal numbers, determine how many sales reps to hire, and expand the list activities (demos, for instance).
Setting lead generation goals is only the first step. You’ll want to go back and review each of the averages, and your conversion rates to see if they are accurate or need to be revise to reflect reality. If you do this properly, you’ll have a very clear picture of what it will take for you to achieve your revenue goal and a solid understanding of whether or not you will be able to reach them.
Have you set lead generation goals in the past? Let me know your experiences!
Flickr Photo credit to stevenharris