You’re generating leads, you’re holding sales calls, and you’re sending proposals; but how can you realistically estimate sales for the month? In a previous post, we offered a calculation for how many leads you must contact each month to meet a pre-defined sales goal. In this post, we’ll flip that: How can you use the variables you already know (# of MQLs, percentage of SQLs, etc.) to estimate the expected closed won sales for the month? While the last post’s calculation assumes you are trying to hit a specific number of sales, this calculation is meant to reveal how many sales you are likely to close based on how many leads you are generating and converting.
Step 1: How Many Leads are you Contacting Each Month?
And by “you” I actually mean marketing. The first touchpoint
for anyone connecting with your business is through marketing. Prospects are Googling
you, downloading your content, filling out your forms, attending your webinars,
Through their interactions with your brand, these
individuals are indicating their interest in what you have to offer. Each
business defines their criteria for marketing qualified leads (MQL) differently.
Do you know how many MQLs each month currently fit into your company’s
definition? This is one of the most important pieces of information you’ll need
to estimate your sales. Talk to your marketing team to get those MQL numbers!
Step 2: Calculate Your Conversion Rates
Let’s say your monthly MQL rate is 200 leads. The next pieces
of information you’ll need are the conversion rate percentages for those leads.
Specifically, you’ll need to know:
- The percentage of your monthly MQLs that are
converting to sales qualified leads (SQL) each month.
- The percentage of SQLs that are moving into the
next phase of the sales process (aka you’re presenting your solution or service
to them in an initial sales meeting).
- The percentage of those presentations that are
moving into the final stage of your sales process (aka they’ve seen what you
have to offer and you’re sending them a proposal to review).
- The percentage of leads that converted to closed
won deals after receiving a proposal.
In the example below, you can see what these calculations might look like for 200 monthly MQL leads. If 13% of those leads became sales qualified, 40% of the sales qualified leads receive a presentation, 50% of those receive a proposal, and half of those who received a proposal sign with your business, you could estimate about 3 new customers per month from your initial set of 200 leads. This calculation also lays out the number of MQLs, presentations, and proposals you’ll need to convert to get there.
Download our free calculator to plug-and-play using your own conversion percentages and marketing qualified leads. If you’re looking instead for the number of leads you require monthly to hit your existing sales goal, use the calculator from this blog post instead.