How many monthly leads does your business need to generate to achieve monthly revenue goals?
I highly encourage you to attempt to answer the question above. If you don’t have an exact numerical value as to the number of leads that need to be generated on a monthly basis to achieve revenue goals, you aren’t fulfilling the benefits of web analytics. Analytics should be consistently monitored to measure the success of marketing campaigns throughout the year. If goals aren’t being met, certain refinements should be made based on the analytics you’ve acquired and examined.
I urge you to work through the following steps as an exercise in understanding the importance of analytics during the goal setting process. I’ll be using an example company to illustrate the calculations that go into each step in the development of a monthly lead generation goal.
Monthly Revenue Goal
This should be a fairly simple step for you to complete. Every company should have monthly revenue goals established to ensure continuous success and growth. That way, if monthly revenue goals are not being met, the management team can make refinements to marketing initiatives in an effort to achieve the established goals. In particular, you should take into consideration monthly revenue goals associated with your online marketing efforts (your business may also have monthly revenue goals from referrals, recurring business, online orders, etc.).
Monthly Revenue Goal = $100,000
Average Revenue Generated per Customer
Next, calculate the average revenue generated per customer.
Avg. Revenue per Customer = $1,000
Monthly Customers Necessary to Achieve Revenue Goal
After establishing the average revenue per customer, you can calculate the amount of customers you will need to convert on a monthly basis (average) to achieve your monthly revenue goal. To do this, divide the monthly revenue goal by the average revenue obtained per customer.
Monthly Revenue Goal = $100,000
Avg. Revenue per Customer = $1,000
100,000 / 1,000 = 100
Therefore you know that you need an average of 100 customers per month to achieve your monthly revenue goal.
Average Conversion Rate (Leads to Customers)
This should be an important metric for all companies that leverage online channels to generate leads, as it is crucial to understand how many leads are converting into customers.
To calculate, divide the average number of leads generated each month for a given period by the average amount of leads that made a purchase (if possible, do a 6-month or 12-month look back and take the average)
Leads Generated (monthly average) = 400
Leads that Made Purchases (monthly average) = 80
Average lead-to-customer conversion rate = 400 / 80 = .20 = 20%
This calculation shows that the average lead-to-customer conversion rate for our example company is 20%.
Monthly Leads Necessary to Obtain Revenue Goal
Finally, the number we are seeking!
Take the average number of customers needed per month to achieve your revenue goals, and divide this number by the monthly average lead-to-customer conversion rate.
Monthly Customers Needed = 100
Monthly Conversion Rate (leads to customers) = 20%
Monthly Leads Needed: 100 / 20% or .20 = 500
After those simple calculations, you have determined that your company needs to generate, on average and with all other things being equal, 500 leads per month to achieve its monthly revenue goal. Not so hard to figure out, was it?
If your business derives all of its leads from online marketing, you can take things a step further. If you can figure out the average monthly conversion rate of unique web visitors to leads, you can determine the amount of monthly website traffic needed to achieve your revenue goal.
To do this, take the recently calculated amount of necessary monthly leads and divide it by your company’s website conversion rate (unique visitors to leads).
Example Company: Monthly Leads Needed = 500
Monthly Conversion Rate (visitors to leads) = 2%
Number of [Unique] Monthly Website Visitors Needed: 500 / 2% or .02 = 25,000
Implications of Analytics
I want to make sure to disclose that higher lead generation on a monthly basis will not automatically increase your monthly revenue from web leads. You may need to make other on-site refinements that your web analytics will root out. For example, if you are noticing a decrease in your monthly visitor-to-lead conversion rates, you may need to examine your call-to-action (CTA) buttons and landing pages to optimize for conversion. Or perhaps your landing pages are inadequately illustrating the benefits of your offering and failing to persuade web visitors to fill out the specific form and convert into a lead. Likewise, it could be that your CTAs aren’t effectively grabbing the attention of visitors to direct them to the corresponding landing page.
Similarly, if you are noticing a decrease in your monthly lead-to-customer conversion rates, you may need to direct your attention to the post-lead acquisition campaigns in circulation. How are you nurturing the leads you have generated? If leads are being routed to particular email nurturing campaigns after conversion, examine the analytics of the emails within those campaigns (opens, clicks, bounces, unsubscribes, etc.).
If a specific email is not performing well, examine all aspects of the email to determine how it could be improved.
When doing so, pay attention to:
The subject line (especially if you are experiencing low open rates).
The design of the email.
The offering within the email (especially if you are experiencing low click-through rates).
The copy surrounding the offering (low click-through rates as well).
Additionally, if your sales team is fielding the leads, it’s a good idea to obtain any feedback/objections they are receiving from the leads. For example, if leads are voicing similar objections during sales calls, you can develop tactics to overcome those objections and to provide the leads with the information they are seeking to make an informed purchase decision.
Want to see how it all comes together for our example company? Using the calculations outlined above, the marketing team knows it needs 25,000 unique visitors per month to convert 500 leads (2% conversion rate) in order to convert 100 customers (20% conversion rate), each spending $1,000 on average per customer, to achieve their monthly revenue goal of $100,000.
Keep in mind, this example merely scratches the service of what you can do with web analytics. There are so many more conclusions that can be drawn from a continuous measurement of your online marketing efforts. The important thing to understand here is how crucial it is to leverage the analytics you’ve likely already gathered when setting your marketing goals; you’ll be much happier with the results if you do.
For more information on the role web analytics plays in the integrated digital marketing strategic process, check out our IDM Blueprint: Measure and Refine.