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3 Steps to Calculate Your Leads-to-Revenue Ratio

By Wendy Covey | CEO and Co-Founder

Do you want to know how many web visits and leads you need to meet your revenue goals? Follow these three steps to create the math model for your lead generation strategy.

TREW Blog Featured Image Leads to Revenue 2019

At TREW, we understand engineers want to know what output comes from certain inputs. Up until recently, that’s been difficult. But with the transformation of inbound marketing, there is much more insight into the inputs along the buyer's journey including website visitors, the rate at which those visitors convert to leads, and how leads become sales opportunities.

So let’s go through the formula using hypothetical numbers to illustrate how it works.

Step 1: How many customers do you need to hit your inbound revenue goal?
Revenue Goal Divided by Average Sales Per Customer
First, you should agree on your revenue objective. In this example, let’s assume you want to generate $500,000 in new revenue. Next, determine how much an average customer spends with you, also known as your "average sales price" (ASP). Let’s assume your ASP is $10,000.

To determine the number of new customers you need to hit your revenue goal, divide the revenue objective of $500,000 by the ASP of $10,000. In doing this, you now know that you will need 50 new customers to reach your$500,000 revenue objective.

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Step 2: How many leads do you need to create one customer?
Web Traffic Divided by Lead Conversion
Rate
Now, taking one step up the funnel, you need to figure out how many leads it takes to create one new customer. For this example, let’s use a lead-to-customer conversion rate of 2% to calculate how many leads are necessary to create the 50 new customers you just determined you needed.

Divide the number of new customers (50) by the lead-to-customer conversion rate (2%). This shows that you will need 2,500 leads to create 50 customers.

trewblog_equation2

Step 3: How many visitors do you need to create one lead?
Lead Goal Divided by Visitor-to-Lead Conversion Rate
You now need to determine your web visitor-to-lead conversion rate. For this example, let's assume that 3% of visitors to your site become leads. With this in hand, you can now calculate the amount of web traffic needed to create your 2,500 leads.

Divide the number of desired leads (2,500) by the visitor-to-lead rate (3%). By dividing 2,500 leads by .03, you can see that you need more than 83,000 visitors to the website. Spread over a year, that’s approximately 7,000 web visits per month.

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With these three simple equations, you've converted your sales revenue goal into clear marketing objectives. We now know very specifically what we need to produce in marketing to support sales and the business, and we’re ready to go the CFO with a solid story and get the resources we need.

83,000 Web Visits-2

So what's next, and how do you get started generating the web visits to drive your leads, acquire new customers, and achieve your inbound revenue target? It's all about content strategy and creating a consistent cadence of educational, technical content to help your personas along their buyer's journey

Take the next step to successful lead acquisition and inbound revenue generation by watching our Content Best Practices Webinar.

content marketing webinar

 

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Wendy Covey

CEO and Co-Founder

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