Can You Tell Me Exactly How Many Leads You Need To Hit Your Revenue Goals? No, Really; Exactly How Many Do You Need To Hit Your Goal In August?
We ask this question to prospects all the time and the answer is almost always, “We don’t know.” They know how much revenue they need, but generally they have no idea how many leads it takes to get to those revenue numbers.
This might be one of the inherent challenges with the massive amount of missed revenue targets happening in business today. Our research shows about 10% of companies are able to consistently hit revenue goals month over month and quarter over quarter.
HubSpot reports it at 23% and Salesforce at 43%. It’s possible that companies using these tools are outperforming companies still not using marketing automation and CRM systems, but the results remain horrible in any case.
When your CEO says the new revenue target for the quarter is $10 million, you have to know how many leads you need to exceed that number. Or when you’re the CEO and you tell your team the new revenue goal for the quarter is $10 million, you should expect your marketing leadership to come back and say, “Great, to hit that we need $100,000 in investment to generate 1,000 leads over the next three months.”
If you can’t have these very specific conversations, something is missing from your marketing strategy, marketing execution, marketing tactical plans, analytics package and/or how you’re applying technology.
Let’s dig into this and provide the help you need to start having these more specific conversations.
Build Out Your Current Revenue Cycle
To answer these critical questions you’ll need a revenue cycle. What’s a revenue cycle? This article will explain it in more detail, but in short, it’s a set of metrics that quantify exactly how your marketing and sales are performing right now.
It starts with the number of visitors to your website, calculates based on site-wide conversion rate the number of new contacts you get each month, then calculates the number of those that are actual marketing-qualified leads and finally tells you how many should be sales-qualified leads.
From there, the sales metrics pick up and you calculate the number of sales opportunities you expect from those sales-qualified leads. Then you can see how many of those opportunities end up getting proposals and what percent of proposals typically close and turn into new customer revenue.
Now you have your current revenue cycle. This tells you 100 leads will create one new customer worth $40,000. Obviously, your numbers will vary based on your actual revenue cycle, but you need to know all these numbers like the back of your hand.
In this example, if your annual new business revenue goal is $480,000, you’ll need 1,200 leads over the course of the year (100 leads a month).
When the CEO announces that the third quarter and fourth quarter revenue goal balloons from $240,000 to $500,000, you’ll know you need more than double the leads each month to hit it.
Building The Desired-State Revenue Cycle
Knowing how many leads you need is only half the battle. Going from 100 leads a month to 200 leads a month isn’t easy and won’t happen overnight.
First, since it will take time to ramp up, your monthly numbers are actually more aggressive. To illustrate that, you’ll need 1,200 leads over the course of the last six months of the year. But you’re starting at 100, so the ramp-up will look something like this — 110, 140, 180, 210, 250 and 310 is how you get to 1,200 additional leads over 12 months.
To go from 100 leads to 310 leads a month is going to take an investment in time, money and energy. Your CEO, who just reset the goals, needs to be on board.
What Marketing Tactics Do You Need?
Now that you know your numbers, you had better start thinking about what marketing tactics you need to 3x your lead generation in just a few months.
To be exact, you’ll need to know what you can squeeze out of your current tactics if you can open up some more money for those current tactics. But you’re also going to need a plan around what new channels and what new tactics you can add to the execution game plan to kick in more leads.
Here are some tactics we’d consider adding to drive up the lead numbers:
Video – Video works like a charm, and it has never been easier or as value-oriented as it is right now during the COVID-19 crisis. Today, home-shot videos with professional editing are getting done for less than $1,000. You could do one or two a month and drive lead generation with video on your website, social posts, email campaigns and more.
Chat – We see a lot of companies still not using chat, or if they are, they’re not using it correctly. This is a great way to instantly ratchet up the number of leads by letting serious people skip the form and start a conversation immediately.
Increased Optimization – This might not be as obvious, but by doubling down on optimization, you can double or even triple the leads from highly visited pages. Making some small adjustments over a short period of time regularly month over month can give your lead generation a major upgrade for very little effort.
Influencer – If you need more visitors and you don’t have time to wait for organic to ramp up, or if you don’t have the budget for paid search or paid social advertising, then consider reaching out to some influencers. Share content with their audiences and drive more targeted people back to your site.
Affiliate – This is another little-known tactic that has produced big numbers for our clients. Find an organization, association or group that caters to your prospects and then partner with a few other noncompetitive companies to do a gift giveaway. Each partner provides a content offer and the association promotes the package. For a limited investment this drives massive amounts of net new names and new leads in a short amount of time.
There is another way to get to your revenue goals without going all in on more leads.
Sales Execution Upgrades
With the new goals set out for you, we’d be remiss if we didn’t talk about other ways to get to those goals besides a 3X increase in leads over a short period of time.
Of course, the best way to get to those goals is to work at the back end of the sales process and focus on the close rate.
You could simply work to double your close rate, especially if it is low. Going from 20% to 40% is reasonable. If you’re already closing 80% of the proposals you submit, this might be a big lift, but we rarely see that. Most companies are in the 40% to 50% range, and some are actually around 10% to 20%.
Depending on your situation, by looking at what the reps are doing, you can make a big impact by helping them improve their close rate. For example, you could work to:
- Improve the final presentation deck to make sure it’s 99% about the prospect and just 1% about you
- Make sure reps aren’t submitting proposals too early and are asking questions late in the buyer journey that help you co-create the recommendations with the prospect’s feedback and guidance
- Give prospects more opportunities to hear from current satisfied customers in the form of reference reels, case studies, video testimonials and compelling stories
- Design a sales process that guides, advises and educates prospects quickly, efficiently and in an emotionally compelling way
Make these changes and you can directly relate the tactics in both sales and marketing to specific numbers. This will provide confidence so you know what you need to do, when and to what extent to produce the exact amount of leads, sales opportunities and new customers to drive your sales or revenue goals.
It just takes practice, discipline and this type of methodology.
Square 2 — Building The Agency You’ll LOVE!
Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.