Lead generation modeling made simple

Matt Heinz

January 28, 2010

Too many marketers don’t model how many leads they actually need to hit their organization’s sales goal. Those who do model often overdo it.

But you’ve got to do the math. Most of the time it boils down to answering just two questions:

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

Start simple, but build this model and share it with your team. Discuss it with sales management. Get on the same page, and execute with more confidence that what you’re doing is leading directly to sales success.