Wednesday, January 27, 2010
Lead generation modeling made simple
- How many opportunities are required to get a sale?
- How many leads do you need to create a new opportunity?
Let's leave out sales cycle length for now, to keep things simple. Let's just look at leads-to-opportunities-to-sales.
To build the model, you need a handful of inputs:
- Average sales price of a closed deal
- % of leads that turn into a new sales opportunity
- % of new sales opportunities that convert into a sale
- Average cost per lead
If you don't know these figures explicitly, come up with a reasonable but somewhat conservative guess. With this input, you can build a model telling you:
- How many leads you need
- How many sales will result (and with what bookings output)
- How much those sales will cost via a paid lead generation campaign
And with that model, if the inputs are isolated and the lead/opportunity/sales figures are calculated with simple formulas, you can make adjustments to the inputs to see what the sales and/or revenue impact would be if you:
- Generated more leads
- Increased the average sales price
- Increased the % of leads you can close
- Increased the % of opportunities you can close
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