How Many Leads is Enough for Sales?

Conversion Rate Optimization Specialist

We?ve all heard the complaints from sales. ?We?d have no problem hitting quotas if we just had more leads.? Marketing often responds with, ?Well, the sales team isn?t actively following up the leads we give them.? And the debate goes on and on.? If you’re a business owner caught in the middle, you know the frustration that results from both sides of the argument.

The first step towards resolving the issue (and aligning your sales and marketing teams) is to?clearly define your terminology. A conversion rate optimization specialist would ask the following questions:

What exactly constitutes a lead?

How does this lead become a qualified lead?

While these two questions rely somewhat on your company?s specific criteria and sales?funnel as to?what constitutes a lead, a qualified lead, and where and how it was generated, the important question ? How many leads are enough ? can be answered with some pretty simple math.

Calculating How Many Leads Your Team Needs

Conversion Rate Optimization SpecialistThe truth is, enough leads is well?. enough. You kind of like to have a bit of a ?Goldilocks Complex? when determining how many leads you?ll need. Too few and your team will have difficulty meeting their quota. Too many and you run the risk of not being able to properly service them,?potentially damaging?your brand image.

A conversion rate optimization specialist would suggest that one of the best ways to narrow the number is through your historical data. Use your average sales reps? sales quota and back your way into the number by determining their close ratio and sales productivity per lead.? This approach gives you a starting point for conversations and is helpful when dealing with over enthusiastic sales reps that promise the moon, but only give you excuses when they miss the mark.

You?ll need to pull some historical data from sales. Let?s look at the numbers:

  • Average revenue quota per rep
  • Average revenue per order
  • Percentage of ?natural sales? ? without the help of leads, repeat customers or referrals
  • Sales close ratios ? how many leads actually convert into sales

Now let?s do the math?

  • Revenue per Sales Rep ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$300,000
  • Percentage self-generated ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ????????? 50%
  • Quota needing lead support??????????? ??????????????????????$150,000
  • Revenue per order ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$ 10,000
  • Converting leads required ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 15
  • Close Ratio ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 30%
  • Total qualified leads needed to reach quota ? 50 at a 30% close ratio

Other Considerations

The best policy is one that offers sales a slow, steady stream of leads. Remember Goldilocks?? Too hot and you’ll flood your sales team with leads they might not be able to service properly. Too cold and they’ll have difficulty meeting sales goals. Analyze your lead generation stats to plan around seasonally slow times. If you find that?your?landing pages and CTAs are generating fewer leads, consider working with a conversion rate optimization specialist?to examine your lead generation approach and make the necessary adjustments.

Include all departments in your planning meetings to give your entire team a sense of ownership. Sales and marketing especially need to be on the same page in terms of defining qualified leads and process. While marketing might not like being held accountable, a system of co-setting lead goals is easier than you might think. By including marketing in your planning, sales will come to have a better understanding of the work they?re doing to support the team. Sales will begin to see marketing as a valuable partner, helping them to achieve their goals for the good of the organization.

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