If you’re like most CMOs, you can identify with at least one of these:
- You’re not sure how to calculate the number of leads you need to generate.
- You rely on attribution models, which the sales team tends to distrust.
- You can only guess at how many campaigns to run. Your entire marketing budget is at risk.
Yes, there is a better way. It’s a proven formula for calculating lead generation goals that align with revenue goals. Only a select few CMOs have mastered it.
Here, we’ll give you a brief tour (followed by a few words of caution).
Calculating your lead generation numbers is simpler than you think. Here’s a step-by-step process.
Breaking Down the B2B Funnel
Before you can do the math, you need to master the B2B funnel. SBI has benchmarked leading sales funnel frameworks to come up with the best approach.
Our B2B funnel looks like this (from top to bottom):
A visitor fills out a form. Or you know the prospect, who’s returning to your site. Both have your permission to market to them.
Marketing Captured Lead (MCL)
Inquiry becomes MCL when you confirm a match with your ideal customer profile (ICP).
Marketing Qualified Lead (MQL)
MCL becomes MQL when a prospect meets a predetermined qualifier. Prospect shows the right level of interest online or with a lead development rep (LDR). MQLs warrant one-to-one nurturing.
Sales Qualified Lead (SQL)
MQL becomes SQL when he/she has agreed to a meeting with sales. The prospect also meets predetermined qualification criteria.
An SQL is turned over to sales.
Understanding your leads’ life cycle is half the battle. Now, you’re ready to dive into the lead gen calculator top CMOs use.
Mastering the “Lead Waterfall”
To calculate meaningful lead gen goals, you’ll need to look at every stage of the funnel. Both quantity and conversion rate apply.
This example illustrates the “lead waterfall” concept.
Say your company’s revenue goal is $10 million. Marketing’s expected contribution is 25%, or $2.5 million. Divide $2.5 million by average deal price, which is $100K.
The number of deals needed to meet your goal is 25.
Now here’s where the numbers really start to flow. At each stage of the funnel, apply this formula:
Required Marketing Contribution ÷ Average Conversion Rate = Number of Needed
- To close 25 deals, with sales averaging a 25% win rate, 100 opportunities are needed.
- For 100 opportunities, with a 50% SQL-to-opportunity conversion rate, you’ll need 200 SQLs.
- For 200 SQLs, with a 50% MQL to SQL conversion rate, you’ll need 400 MQLs.
- For 400 MQLs, with a 50% MCL-to-MQL conversion rate, you’ll need 800 MCLs.
- For 800 MCLs, with a 3% inquiry-to-MCL conversion rate, you’ll need 26,666 inquiries.
We built a Lead Generation Calculator that makes this process easy to do in just a few minutes. Use this tool to troubleshoot your lead funnel. We’ve also included some general benchmarks to assist with evaluating your numbers.
The process itself, however, is a bit more involved. Before you plug in your own numbers, keep reading.
Lead Generation Variables You Must Consider
We advise against a do-it-yourself approach. You’ll have a lot to think about, and contend with, along the way.
The Tyranny of Averages
Conversion rates vary widely by product, division, and industry vertical. Businesses that can report these averages are executing at a high level. If you compare yourself to the best of the best, it’s easy to get discouraged. Don’t.
You should view these benchmarks as something to strive for. Understand you’ll be all over the place in the beginning. Develop a baseline in your first six months. Then build goals off your baseline, and aim to improve it over time.
Click Rates vs. Click Paths
Your team has mastered click rates, which still matter greatly. But also focus on optimizing your click paths. You need good visibility as to how your leads are performing. You may discover that your costlier leads convert better.
The (Potentially) Long Road to Success
You’re building an entirely new muscle. You’ll need to bring your team on board. You face a protracted learning curve, and lots of trial and error.
If you go it alone, you’ll need two years to get up to speed. With the help of an experienced consultancy like SBI, you’re looking at six months.
SBI can provide a standardized funnel. Data plans for creating metrics. And industry benchmarks for calibrating performance. Our downloadable can help get you started.