Calculating your lead generation numbers
Calculating your lead generation numbers is a really important element of successfully achieving your annual sales quota. If you do not understand the total number of leads needed to achieve quota, then you are unlikely to achieve what has been set out for you at the start of the sales year.
In recent articles i have looked at managing sales performance and good pipeline management, So this blog should provide you with additional insight into what is needed for calculating your lead generation numbers.
Here’s a step-by-step process.
Before you can do the math, you need to master the B2B funnel. Our B2B funnel looks like this (from top to bottom):
A visitor fills out a form. Or you know the prospect, who’s returning to your site. Both have your permission to market to them.
Marketing Captured Lead (MCL)
Inquiry becomes MCL when you confirm a match with your ideal customer profile (ICP).
Marketing Qualified Lead (MQL)
MCL becomes MQL when a prospect meets a predetermined qualifier. Prospect shows the right level of interest online or with a lead development rep (LDR). MQLs warrant one-to-one nurturing.
Sales Qualified Lead (SQL)
MQL becomes SQL when he/she has agreed to a meeting with sales. The prospect also meets predetermined qualification criteria.
An SQL is turned over to sales.
Understanding your leads’ life cycle is half the battle.
Mastering the “Lead Waterfall”
To calculate meaningful lead generation goals, you’ll need to look at every stage of the funnel. Both quantity and conversion rate apply.
This example illustrates the “lead waterfall” concept.
Say your company’s revenue goal is £1 million. Marketing’s expected contribution is 25%, or £250,000. Divide £250,000 by average deal price, which is £10,000. The number of deals needed to meet this goal is 25.
Now here’s where the numbers really start to flow. At each stage of the funnel, apply this formula:
Required Marketing Contribution ÷ Average Conversion Rate = Number of [Lead Type] Needed
To close 25 deals, with sales averaging a 25% win rate, 100 opportunities are needed.
For 100 opportunities, with a 50% SQL-to-opportunity conversion rate, you’ll need 200 SQLs.
For 200 SQLs, with a 50% MQL to SQL conversion rate, you’ll need 400 MQLs.
For 400 MQLs, with a 50% MCL-to-MQL conversion rate, you’ll need 800 MCLs.
For 800 MCLs, with a 3% inquiry-to-MCL conversion rate, you’ll need 26,666
How a CRM can help with Calculating your lead generation numbers
A CRM system benefits an organisation through the visibility of its sales activities. This visibility is fundamental to managing sales performance and control of the sales process. This visibility enables management to understand why, when, who and how opportunities are being won, stalled, or being lost. If it cannot be monitored, it cannot be managed. The visibility offered within the CRM system also allows management to make educated business decisions based on hard data. A CRM system will enable structured data to be used to access performance. This assessment should indicate which sales person is out performing others.
ProAptivity are an independent CRM solutions provider. We focus on the implementation, training, and support of highly customised CRM software solutions. Our CRM software supported by our sales training provide customers with the tools needed to deliver successful sales process management.
Fundamentally, we help organisations embed CRM best practice throughout their organisation. This helps organisations become more competitive, customer focused and ultimately more profitable.
If you need help in understanding why my business needs CRM, maybe some of our eBooks could help! Alternatively visit Maximizer CRM for more information. Contact us today in Belfast on 028 9099 6388 or at our Bedford office on 01234 214004. Alternatively email us on firstname.lastname@example.org. Contact us today for a free CRM consultation that will assess if your business is CRM ready.