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How Many B2B Leads Do You Need to Hit Revenue Goals?

June 4, 2016

 

Every company has revenue goals that they strive towards on a monthly, quarterly and annual basis. Successful companies consistently meet these goals, but more importantly, they understand what is required to meet them.

Before any sales goal can be met, a business must have a sufficient amount of leads coming into the sales funnel. This is where many marketers and sales directors make a common mistake: failing to understand exactly how many leads are required to meet their goals.

 

Begin with new revenue

The first step in understanding how many leads you need is deciding how much new revenue you want to bring in. Existing customers who are already consistently giving you business shouldn't be included in a revenue growth plan.

For an easy example, say your business currently does $10,000 a month in revenue and you'd like to grow that by 25% up to $12,500 a month. $2,500 is your new revenue goal: this is the number you should focus on for revenue growth.

 

Assign an average value to every lead

There are lots of different ways to calculate the value of a B2B lead, so we won't go too in-depth into it –HubSpot recently published a good blog post on the matter. A basic formula for calculating the value of a B2B lead is:

Average customer value x Average close rate = B2B lead value

To continue our example above, imagine you are selling a subscription service for $100 month. If you believe your sales team can convert one out of every four qualified prospects, that gives you a lead value of $25 ($100 x 0.25 = $25). More sophisticated calculations will take into account your cost per lead (CPL), but this figure is difficult to quantify and varies greatly from business to business.

 

Understand how many leads come from each marketing channel

This is perhaps the most important part of calculating how many leads you'll need to hit your revenue goals. Business owners and sales and marketing directors will often throw money at the latest and greatest method for getting leads once they determine that it will work for them, without considering exactly how it will work for them.

 

What if I don't know how many leads will come from each channel?

This is a common challenge of modern marketing techniques like SEO and content marketing. How can you tell how many leads your SEO campaign will bring in each month? How do you know how many people will sign up for your e-mail list after reading your blog?

There's no easy answer to this question. Your best bet is to take historical data about a specific marketing method or channel and use it to estimate the number of leads you'll receive each month. If you are launching a brand new initiative, do some research and find out how it's worked for other businesses. If you are working with a marketing consultant or agency, ask them how many leads you can expect from each channel. Based on your business model and their experience with marketing, they should be able to at least estimate the number of leads you'll get from a digital marketing initiative.

 

The bottom line: use numbers to guide your sales efforts

It's easy to set an arbitrary figure or guideline for how many leads your sales activity needs to generate on a monthly or quarterly basis. Sadly, this approach is a formula for failure that too many companies are following. By breaking down the exact value of your leads and gaining a better understanding of how many you'll need to meet your goals, you can do a better job of planning the growth of your business.

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