To make your forecast for the new year, look at sales for the coming year in terms of units.
- How many units must be sold?
- Review the existing pipeline and your closing ratio.
- Now you have the number of units that will be sold in the coming months without lead generation.
This is the basis for projecting the number of leads needed to make the forecast from sales leads for the new year. For instance: If you have to sell 1,000 units this year and your pipeline says that you’ll close 250 units from the existing forecast, you need 750 new sales in the coming year.
Why it Matters
“Sales forecasts based on lead generation are predictable and repeatable as long as the marketing spend is consistent.”
If you are closing 25% of the prospects, you know that you will have to roughly quadruple the number of leads to make your number. Double that number again to hedge your bet, taking into account lack of sales lead follow-up, turnover, and the fact that some leads won’t convert until your next year.
Here’s How it Works
You will need 750 sales. Quadruple that based on your closing ratio (25%, so you now need 3,000 leads; mileage varies depending on your closing ratio). Because half of those sales will fall into next year (building next year’s pipeline), double it again. Now you need 6,000 total raw leads. If you have 40 sales reps, each needs 150 leads per year, or 12.5 per month to make your numbers. Personally, I would strive to increase the number of leads going to each salesperson month by month. Starting at 8 per month in January, I would attempt to add at least one more each month for 12 months until I deliver 18 in December. This increase supports the sales increase needed by most forecasts in 2018, and starts off the new year strongly with a solid pipeline for the coming year in 2019.
Of course, if you don’t have 100% follow-up of the leads, Marketing will need to spend more money to create more leads to make up for the salespeople who aren’t executing the follow-up and doing their full job. If they just can’t or won’t do it, turn to an outside company to qualify the leads and give the reps only sales-ready prospects.
Create the Plan
Now that you have the unit forecast, look at it in terms of lead generation sources. Create a spreadsheet of the sources and the number of leads that you will find. If you only count qualified leads, you will need 50 fewer than raw leads. Ask yourself:
- Is the lead count on the same upward tick to match the sales forecast?
- Are there any sales lead slumps (brownouts or blackouts)? If so, fill them in with a lead gen program to create a continuous influx of leads that predates the sales increase by at least three months, if possible.
It isn’t difficult to make the case for filling the pipeline at the same rate as the company expects an increase in sales.
Check the sales performance quarter by quarter over the past 3 to 5 years (easy to get from Finance). Then check if there was a corresponding decrease in marketing spend on lead generation in any quarters before the slump (may also be available in part from Finance). Bingo.
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Artwork: Purchased by James Obermayer at the SLMA from iStock
Topics: B2B Sales