When it comes to lead generation, do you know how many leads you must generate in order to meet your goals?
Last time, we talked about how to use the Rule of 45 to determine the value of your portfolio of inquiries.
You can also use the Rule of 45 to determine how many inquiries you need to generate to meet your sales goals.
A quick note – “leads” and “inquiries” are often used interchangeably. I’ve been guilty of this myself. Inquiries are any requests for information. Leads are inquiries that have been qualified to some degree. If a competitor requests information from your website, that is an inquiry by not (in most cases) a lead.
Back to determining how many inquiries you need to generate to meet your sales goal. The formula is:
Sales Goal / Average Sales Price / 45% / Market Share Percent = Inquiries Needed
So if your
- Sales Goal = $100,000 in new sales
- Market Share Percent = 20%
- Average Sales Price = $1,500
Then your formula is:
100,000 / 1,500 / .45 / .20 / = 741 inquiries
But, that assumes that those inquiries were all generated at the beginning of the year. We know we will generate inquiries over the entire year – about 62 inquiries per month.
The Rule of 45 tells us that inquiries generated in one month take a full year to mature. That means some of the inquiries generated in Q2 of this year won’t turn into sales until Q1 of next year. That means we need to generate about 60% more inquiries to meet this year’s sales goal.
741 x 1.6 = 1186 total inquiries
1186 / 12 = 99 inquiries per month
This assumes that you are following up with 100% of your inquiries (see last post).
Now you can predict how many inquiries you need to generate to meet your sales goal.
View the formula above as a starting point. Measure your results and adjust the formula for your situation.
