How Many Visits and Leads Will Drive $500,000 in Revenue?
13th September 2012 · 0 Comments
We all would like to formulaically know how many visitors to our website it will take to convert the right number of leads to generate that incremental increase in revenue. Up to now, that has been difficult, but with HubSpot’s automated and highly analytical marketing tools, it gets a lot easier.
Mike Volpe, Chief Marketing Officer (CMO) of HubSpot, shared his process for calculating just this, using an example revenue goal of $500,000. He worked with his sales team to set up a Marketing Service Level Agreement (SLA) – agreeing that marketing would do their part in the form of visitors and leads to support this sales goal.
Now the calculating begins. First, he determines the average revenue per customer (ASP). In Mike’s example, it was $10,000/customer. From here, he then calculated his average lead-to-customer conversion rate – 2% in this example. Using this rate, he then divided his $500K revenue goal by the $10,000 ASP, and got the answer of 50 customers. Just 50 customers – that’s all he needs. That should be SO doable. But wait…how do we get those customers? That’s where marketing comes in.
So how many leads does Mike and his team need to get 50 customers? To arrive at this, he divided 50 customers by .02 (lead-to-customer conversion rate), to get the result of 2500 leads. So Mike needs 2500 leads in order to generate $500,000 in incremental new revenue.
But wait – where do we get those leads? More calculating…Mike then looked at his visitor to lead conversion rate, which in his example was 3%. So dividing 2500 leads by .03, he knows he needs over 83,000 visitors to the website. Not so easy, eh? Well, at least he knows what is expected of his team to achieve the SLA they made with.
This was the tip of the iceberg at this session – Mike went on to calculate conversion rates of different types of content (e.g., those who download white papers have a lower conversion rate than those who download a demo or request a consultation). Based on what actions a lead takes on the website, he then, in his HubSpot lead tools, can define which lead is a “marketing qualified lead” (MQL) versus a lead that needs more nurturing in the marketing funnel. Those leads designated MQL automatically get flagged in the CRM system so sales is alerted and can efficiently focus on those higher quality leads.
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