How to Calculate Your Lead Generation Goals

To meet your sales goals, you need to know the exact number of leads you need to generate in your sales pipeline. You’re unlikely to achieve your sales targets if you don’t know this number. It’s crucial you establish a perfect lead-generation goal and evaluate your team’s performance. 

In this post, I’ll help you understand how to calculate the number of leads you need to generate, how to use a lead goal calculator, and share the benefits of using the Bottom-up approach in sales goal setting.

Let’s dive in.

What is a lead generation goal?

A lead generation goal refers to the total number of potential customers your team should generate in a given time frame, given that they have the necessary resources.

If you know the number of new leads your marketing team can generate and your average lead-to-customer conversion rate, you can easily predict your future sales.

Moreover, if you have closed-loop marketing, you can correctly track the sales generated from the leads using different channels. 

To establish your lead generation goal, you need to find out the following:

• Revenue needed by your marketing team
• The number of customers needed to meet the goal
• The number of leads needed to meet the goal

To set an effective lead generation goal to help you meet your businesses objectives, follow these simple steps:

• Find out if you want to measure quality, quantity or both.
• Track your lead source to establish the key lead-generating platforms. 

• Set and create lead-generation goals that align with your overall business goals.
• Communicate the new set of goals to your team and motivate them to achieve them.
• Track and measure the progress, probably through a waterfall graph. 

How many leads do you need to generate to meet your sales goals?

This is a prevalent question asked by marketers focusing on lead generation. The key to a successful lead generation process is calculating the right number of qualified leads that enter your sales funnel.

If you generate few qualified leads, you’ll miss your revenue targets. Conversely, you’ll be wasting your time and resources if you’re generating too many unqualified leads. 

To know how many leads you need to generate to meet your sales goals, you’ll need four numbers: 

• The average sales quota for the period, mostly monthly. 
• The average returns per closed deal or per order. 
• The percentage of the allocation that the sales representatives generate without the help of leads. This percentage could be drawn from repeat sales or referrals.
• The lead pipeline conversion rates. 

You’ll likely get the first three numbers from your sales management and finance team. 

For the last metric, your sales and marketing teams can help you. 

Steps to calculate your lead generation goal?

The secret to figuring out your lead generation goal is to go backward. Find out how much revenue your team needs and make simple calculations starting from the bottom of the funnel. Follow these steps to calculate your lead generation goal. 

Step 1: Find out what the expected revenue is

Talk to your sales team, including the sales management. Understand how much revenue they need and how much of it will come from inbound marketing. 

For example, let’s say you need to generate $150,000 of revenue, with 60% of this coming from an inbound marketing strategy. Therefore: 

$150,000 in goal revenue X 0.6 = $ 90,000 inbound marketing revenue

Step 2: Find out how many customers are required to achieve this goal

Estimate the number of customers needed to reach your goal. To do this, work your way up one step up the marketing funnel to find out how many leads you need.

To find out how many customers you need, divide the number you got from step one above by the average revenue generated by each customer, i.e., Revenue goal / average sales per customer. 

Using our example above, suppose each customer spends $15,000 with your company; the needed customers will be;

$90,000 / $15,000 = 6 customers

Therefore, you’ll need to close approximately six customers per month to reach your inbound revenue goal.

Step 3: Find out how many leads it will take to sign these many customers

In this step, you’ll need to calculate your lead conversion rates. Taking another step up the marketing funnel, find out the average lead-to-customer conversion rate. I.e., the percentage of leads that become paying customers. 

For example, assuming your lead conversion rate is 2%, divide the number of new customers from the previous step by this figure (2%). 

6 customers / 0.02 conversion rate = 300 leads

There you go. Now you have the lead generation goal for the month. 

Step 4: Adjust your goal, so it reflects the progress made in the previous months

This step is optional, but it helps you stay focused. Adjusting your goals depends on whether you hit your goals for the previous months.

If you’re not hitting your monthly goals, it can be demotivating to your team, and you’ll have a bad working environment for everyone. You need to be realistic and willing to try other metrics that are aligned with your business. 

For example, a well-structured content marketing strategy can generate thousands of leads, but it needs time to reach its potential. 

Step 5: Keep track of the results 

Monitoring and following your lead generation goal results closely helps you identify efforts with the best results and those with poor results that require improvement. 

To make it effective, integrate your lead generation goal data into a graph and distribute it to your team. 

Some marketing automation tools, such as HubSpot can provide you with automated charts while allowing comparison with previous months. 

Alternatively, you can create graphs in excel and manually update them before sending them to your team. 

How to use a lead goal calculator?

A lead calculator helps you find how many leads your inbound marketing strategy needs to drive each month to hit your sales target.

The lead goal calculator helps you calculate the following:

• Number of leads needed to hit your target.
• Number of marketing qualified leads needed based on quality leads.
• Number of sales qualified leads based on conversion rate.
• The value of your major lead sources.

With just a few quick inputs, such as a monthly revenue goal, the calculator does the math for you. 

The steps below will help you understand how to use a lead goal calculator. 

1. Work with your sales team to establish the monthly revenue target. Take your sales target per region per month and fill them in the correct Excel spreadsheet cells. If you adjust your goals at any point, update the spreadsheet too. 
2. Establish the value of your average deal size to know the number of deals you need to close to hit your sales numbers. To do this, use your marketing software and CRM tool to identify the average selling price for each person per region. Add the average sale value to each region’s top row (average sale price). The calculator will automatically give you the value of your leads based on the percentage close rates you added in step one above.
3. Establish the percentage of the revenue pipeline generated by sales and marketing. This value depends on the inbound and outbound of your business. 
4. Assess and analyze your sales closing rates, especially the percentage of the leads that become paying customers. Check the last six months’ sales data for all the channels used to generate marketing leads to establish your overall sales closing rates. 
5. The last section of the lead generation goal calculator tallies your numbers filled from the steps above. As you add data, the calculator automatically populates the total sections for each person and region. It sums up the overall monthly total and personal goals. Basically, your total monthly goal should be equivalent to the total potential revenue produced by each region or section per month.

You can adjust the spreadsheet to meet your personal needs. For example, you can split the revenues generated per person instead of per region. 

• Leads from social media in each region 
• Leads from website
• Performance against plan
• Leads from email

Wrapping it up

Learning how to calculate the number of leads you need to generate is necessary for building a profitable business. 

To run a successful business, you need to nurture your leads and establish a lead generation target that is realistic and aligned with your brand.

And, to get a more accurate lead generation goal calculation, focus on specific solutions. 

With the above tips, you don’t have to estimate your lead generation goals anymore. Using these simple scientific calculations will give you accurate projections so that you drive significant and measurable results. 

We hope that you’ll use these tips to calculate your next lead generation goal. So, what are you waiting for? Start calculating your lead generation goal today.