Lead Generation Modeling Made Simple

Updated: January 28, 2010

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
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