Even in cases when I’ve seen well-operated sales pipelines, most companies don’t know the number of leads they need to meet new revenue goals. Let’s break this down…
Three contributors that will benefit from a reverse-engineered lead generation calculation. This approach allows you to calculate each of them separately, so each revenue strategy has its own lead volume target based on its own unique variables.
Next, for the sake of quick modeling, I’ll list the typical plug-and-play variables I incorporate into a custom designed sales pipeline calculator for my clients.
- Sales Process Stage-by-Stage Conversation Rates
- Sales Velocity by Product/Service Type
- Deal Size average by Product/Service Type
- Gross Margin average by Product/Service Type
- 1-year and 3-year Revenue Goal
- 1-year and 3-year Gross Profit Minimum
- Customer Lifetime in Years
When calculated properly, the mathematic output will yield the lead volume that needs to enter the client’s sales pipeline to achieve their desired 12-month revenue growth goal.
The aha moment that commonly occurs for a client upon the completion of this exercise is that the lead volume requirement is much higher than what was anticipated, and more than the current sales and marketing staff structure can reasonably generate
That’s when I guide my client through the next phase of preparing their sales organization for success. This typically includes developing a scalable lead generation plan and “right sized” staff structure. It also includes evaluating sales process conversion rates to identify if any of them aren’t aligned with best practice so a sales training program can be developed.
If you are not sure how to approach the next steps to prepare your sales organization for readiness to achieve your growth goal, I’m happy to help. Guiding small and mid-sized businesses on how to generate and close more volume through their sales pipeline is at the heart of my Fractional VP Sales specialization.