It’s well past the start of the new year. You did your 2016 sales and marketing planning and now you’re generating leads to meet revenue goals, right? Or, are you still wondering how to figure out how many sales you need or leads you need in order to achieve your revenue objectives?, Are you generating sufficient leads to enable you to drive the conversions and convert sales? If you aren’t sure how to do this, the formula below will help you figure out your lead generation strategy.
Start by working backwards. The key to determining how many leads you need to meet a revenue goal starts by identifying the amount and moving backwards – not vice versa, as you might assume. If you start with a number of leads and hope to gain maximum revenue, how will you know whether you’re falling short? Instead, start with your revenue goal and work your way up the sales funnel.
Identify your revenue goals. Once you know to calculate backwards to determine the leads you want to generate for your 2016 sales and marketing plan, you need to put a realistic dollar value on your revenue goals. One way to identify your objective for the coming year is to compare your previous years. If you’ve consistently increased revenue 3% over the last two years, aim for 5% for 2016 – as long as it’s practical to assume you can get there.
Answer these questions. With your revenue goal in mind, you can now start moving backwards by responding to some basic questions.
- How many sales do you need to achieve your revenue objectives? Determine the total sales you need to close in order to earn the revenue you’ve established. Here, you’re looking at dollar value, not the number of products or services sold.
- How many sales calls and activities do your sales reps need to make the revenue numbers? Use historical information and current rep information to calculate the number outbound calls and activities and make sure you have the right number of reps to meet your 2016 revenue goals.
- How many sales do you close per customer? Some of your customers may make multiple purchases per year, so you may need fewer leads to generate the number of sales you must close to reach your revenue goals. Calculate how many of your customers purchase multiple sales to get your sales per customer ratio.
- How many leads do you need to convert one customer? Not all leads will turn into customers. Thus far, in working backwards up the funnel, you know you need a certain number of sales and customers to meet your revenue objectives. Now, you must determine how many leads will turn into one customer. At a lead-to-customer rate of 2%, you’ll need 2500 leads to gain 50 customers.
- How many website visitors do you need to generate one lead? Even further up the funnel, you should calculate how many page visitors you need to get one lead – that will hopefully turn into one customer. Your site metrics are valuable tools in determining this value, but you might be surprised at the figures. The common rate of 3% in determining visitor-to-lead conversion means you need 83,000 visitors to get your 2500 leads…to get your 50 customers.
Your 2016 Outlook
With this formula, you can plug in the necessary figures to get the prospects in your sales funnel flowing from top to bottom. The key is to make sure you work backwards instead of forwards – contrary to what you might think in developing your 2016 sales and marketing plan. The New Year is here, so the time to get started is now.