lead generation source, lead flow, leads generating

Do you know the number of leads you need to generate to reach your income goals? While this may seem like an easy question, not a lot of people can come up with the number.

There are two things to consider regarding this question. First, there are your expenses. You should make sure to have an accounting program advanced enough to help you analyze your costs and how they relate to your profitability.

The second factor is your ability to convert leads to sales (conversion rate). The better you can convert your leads, the more profitability you are capable of achieving.

Let’s take a look at the process more closely:

First you need to settle on a sales goal for each month. For our purposes, let’s use $100,000 as your monthly sales goal.

The next step is to work out what your conversion rates are. In order to keep this example easy, suppose that all of your leads come from your website.

Suppose you convert 2 and a half out of 1000 visitors into paying customers. You have a .25% conversion rate.

Use this formula to figure out how many visitors you would need to your website to acquire enough leads to get the sales you want. To keep this example simple, we will assume every “conversion” described above will ultimately purchase from you.

(Desired Sales / Sale Price / Conversion Rate) X 100

The formula would look like this, if you want to achieve $100,000 a month in sales, you have a conversion rate of .25% and your average sales price is $20:

($100,000 / $20 / .25) X 100 = 2,000,000 visitors needed per month to achieve your sales goal.

Wow! That is a lot of visitation!

Luckily, there are a few adjustments you can make. You can increase the average sales price. Or, you can increase your visitors or the conversion rate.

Most find the easiest fix is to improve conversion rate. By testing various options and changes, it is possible to improve a .25% conversion to about 2%.

Look at how that will affect the calculation:

($100,000 / $20 / 2) X 100 = 250,000 visitors per month to achieve your sales goal.

I could live with that change!

If you want to decrease the number of visitors you need even more, try increasing average sales to $47:

($100,000 / $47 / 2) X 100 = 106,383 visitors per month to achieve your sales goal.

Everyone would rather work smarter than harder. Hopefully these examples drive home the importance of planning the leads you will need to reach your sales goals, and testing the factors you can change to become more efficient.

Marty Dickinson has been an entrepreneur and owner of HereNextYear.com for fifteen years, and loves to share small business success strategies with other business owners. Claim your free white paper: “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year” and learn about an online accounting program that makes it easy to track your conversion rates.

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