How much does it cost your business to bring in a new business opportunity? How many leads do you need to reach your sales target? Calculating the lead acquisition cost is an age-old question, and its solution holds the key to the successful growth of every company.
Can you remember the last time when any of your lead generation campaigns showed a clear ROI (return on investment)? Too many businesses are put off by this calculation – not because it’s considered irrelevant, but rather because the process looks like a complex challenge.
Analyzing the cost of acquiring new leads does require you to know, inside out, certain key performance indicators (KPIs) within your company. And without access to such data, all you can do is guess. I am sure that you don’t want to guess when it comes to understanding how much your business is investing in bringing each new opportunity, and how much that represents out of your total marketing investment.
Continue reading to know the information you need to make an accurate calculation, as well as a link to our online tool (no email required).
The Information you Need so you can Calculate the Number of Leads you Require
What is your success rate for converting inquiries into opportunities? How about converting opportunities into sales? These numbers help you understand the number of leads that your company needs at each stage of the sales funnel.
Based on our experience at NicheMktg, the best practice is to segment your market not only for marketing purposes but also to understand your current performance and set up goals in that specific area.
To calculate the number of leads your business needs to reach the sales target, you need to consider the following information:
- Annual Sales Target: Understand the sales target you want to reach: what is your goal? Is this number for the whole company or for a specific line of product or services? Have a clear understanding of the sources of revenue you want to measure.
- Current Annual Sales: How much do you currently sell in this area? This is important information to consider when setting up the goals and defining promotional budgets.
- Average Sales Price: This is the average revenue contribution from each new sale in the selected market segment.
- Inquiry-to-lead Ratio: How many inquiries does your business need to produce one qualified lead?
- Qualified Lead-to-Opportunity Ratio: How many qualified leads are required to produce one opportunity?
- Opportunity-to-Sales Ratio: This is the percentage of opportunities that get converted into sales.
Online Calculators Make your Life Easier
To remove the “I guess…” from the equation, NicheMktg offers an online tool to calculate the real number of leads your business needs at each stage of the sales funnel, to reach the annual sales target for a specific solution that you sell.
(In order to get a more accurate calculation, we recommend focusing on a specific solution. Focus is crucial in B2B lead generation within niche markets.)
What can you Expect from your Marketing Investment?
When you are setting up a B2B marketing campaign for generating leads, you’ll need to map out the path from marketing investment to the expected (and achieved) increased revenue levels. Be aware of how much you will need to invest to ensure you are generating enough marketing qualified leads (MQLs), from the top of the funnel to the final stage of revenues from that particular campaign.
To maintain this cycle, the pipeline needs a continuous, steady flow of valuable prospects that will produce revenue at the end of each cycle.
Lead generation is key to any successful business. Without leads, your sales team cannot thrive, as expanding to new frontiers of potential consumers is the only way forward.
If your business is not hitting the required benchmarks for lead generation, you may need to go back to the drawing board and review your marketing strategy. Defining an effective marketing campaign will not only attract quality leads but also help your business to flourish. Use our Leads Acquisition Calculator as you start planning (we don’t ask for your email address!).
Identify and Reach your B2B Niche Market
When industrial manufacturing/technology/scientific companies focus on appropriate, targeted niche markets, they discover many advantages. Download our strategic guide that outlines 10 key questions to ask yourself, to help you draft your own successful strategy.
