B2B Lead Generation: How many Leads do you need?
Regardless of the kind of marketing campaign you’re conducting, a fundamental aspect of planning is predicting how many leads you need to generate to be successful.
Too many leads, and you’re wasting marketing resources and inundating sales with too much to work with. Too few, and you’ll risk missing your revenue targets while disappointing your sales personnel.
One way to help determine the number of leads a campaign needs to generate is to back your way into a figure by using your salespeople’s quotas. The four figures you’ll need are:
- The average revenue quota per rep over the period in question (e.g., per month or quarter)
- The average revenue per order (or deal closed)
- The percentage of quota that sales personnel generate “naturally” without the help of leads – such as from repeat sales, from referrals or from deeper penetration with existing customers
- The conversion rate from qualified leads to sales
You can obtain or derive these figures from sales manager discussions and/or historical observation.
Using the figures, start with the sales quota per person and deduct the percentage of revenue that a rep can generate without any leads from marketing.
Then divide the remaining revenue by the average order size to determine the number of closed deals each rep will need to complete to deliver on the sales quota.
Lastly, apply the lead-to-sales conversion rate to determine the number of leads the campaign will need to generate at the outset that will result in new sales.
This relatively simple exercise accomplishes two things. First, it helps “align” campaign costs with the anticipated return. And second, it gives you an “early warning indicator” if MarComm campaign costs look like they’re going to be out of sync … so that you can make appropriate adjustments.