The number of leads your business requires hinges on several key factors:
1. Sales Goals: Begin with the end in mind. What’s your revenue target? Understand this, and you’re off to a strong start.
2. Conversion Rates: Examine your sales funnel. What percentage of leads become paying customers? For instance, if you have a 5% conversion rate, you’ll need 20 leads to make a single sale.
3. Average Transaction Value: Know the average amount a customer spends when they make a purchase. If your average sale is $100 and you aim to make $10,000, you’d need 100 sales.
4. Lead to Sale Duration: How long does it typically take for a lead to become a sale? If it’s a month, you’ll need to plan your lead generation efforts a month in advance to meet your sales targets.
5. Seasonal Trends: Some businesses see a spike in sales during certain times of the year. Factor this in when determining your lead requirements.
Let’s crunch some numbers.
Suppose your goal is $10,000 in sales, your average transaction is $100, and you have a 5% conversion rate. First, figure out the number of sales needed: $10,000 ÷ $100 = 100 sales.
Given your conversion rate, you’d then require 2,000 leads to achieve your sales goal (100 sales ÷ 0.05 conversion rate).
Understanding these metrics and working with real data from your business will give you a clearer picture of the lead volume you should be targeting.