Sales Goals & Your Leads – How To Hit Your Target

Make It Rain

 

One of the most common questions I receive is “how many leads do I need to generate to meet my sales goal?”. This is a straightforward process of creating a mathematical model of your marketing that ties into your sales goal.

3 Easy Steps to Calculate the Number of Sales Leads That You Need:

1) Calculate the Sales for the Period
Assume that you need to generate 10 closed sales for the quarter. When companies do not have historical data to rely on we use average industry numbers. Assume a sales opportunity to closed sale conversion rate of 20% and a lead to opportunity conversion rate of 20%.

2) Calculate the Number of Opportunities
Take your sales number of 10 and divide by the opportunity conversion percentage of 20%. This indicates you need to provide 50 opportunities to your sales team to work to meet its goal. In essence one out of every 5 opportunities will convert to a sale.

3) Calculate the Number of Leads
Now we need to calculate the number of leads required to provide 50 opportunities. Take the opportunity quantity of 50 and divide by 20% (the lead to opportunity conversion) and you get a lead requirement number of 250.

While our model is meant to be simplistic it demonstrates the basic concept of revenue funnel engineering. Now in a real world scenario, your specific conversion rates will vary due to many factors such as vertical strategy, solution complexity, and competitive landscape. Once you have your model built you have visibility into cause and effect of making your sales numbers for each period of time.

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