How to calculate the number of leads you need to fulfill your sales goal

Avatar Michèle Blockhuys

By Michèle Blockhuys

Header image
Understanding the magic number of leads needed to achieve your business targets isn't just about aspiration; it’s about strategic precision. More leads can seem like the path to more sales, but this overlooks the crucial step of ensuring those leads are the right fit and your process is efficient.

Setting your lead generation targets: a strategic approach

Setting hard-and-fast targets for B2B lead generation is more beneficial than an undefined goal of "as many as we can get." Precision in your lead targets allows for a clear strategic approach, improving decision-making for budgeting and marketing efforts. It encourages a focus on nurturing and converting leads effectively, rather than simply generating more.

Calculating your lead generation goal: step-by-step

1. Define sales goals and lead types

Set clear, measurable sales goals for a specified time period, say, a quarter or a year. Find out what makes a lead a Marketing Qualified Lead (MQL) or a Sales Qualified Lead (SQL) for your business. Not sure where to start? Read our guide on how to qualify your leads.

Make sure your sales and marketing teams agree on what these terms mean.

Example: Company X sets a quarterly sales goal of € 1 million. They define an MQL as a lead who've shown interest in their marketing efforts and an SQL as a lead who is ready for a direct sales pitch. They aim for 100 SQLs per month, acknowledging that not every MQL becomes an SQL.

To calculate your lead goals is to plan how to turn potential customers into profits, using numbers to achieve sales success.
2. Analyze historical conversion rates

Examine past performance data to find out the conversion rate from MQL to SQL, and then SQL to a closed sale. This helps estimate the funnel efficiency. Historical data is crucial for predictive forecasting. Recognize that these rates can fluctuate based on various factors, including market conditions and lead source. Adjust your expectations and plans accordingly if your data suggests a trend.

Example: Historically, Company X has experienced a conversion rate of 20% from MQL to SQL, and then a 25% conversion rate from SQL to a closed sale. If they look at their last quarter’s data, out of 500 MQLs generated, they ended up with 100 SQLs, of which 25 resulted in sales.

3. Determine average deal value

Calculate the average deal value by dividing the total revenue in a period by the number of deals closed in that period. This number is important to know how many sales you need to reach your revenue target. Remember, this average might change depending on the product, service, or type of customer. Keep updating this number to reflect any changes in prices or what you offer.

Example: Over the last quarter, Company X closed 50 sales amounting to € 500,000 in revenue. This means their average deal value is € 10,000. To reach their €1 million target, they need to close 100 deals in the next quarter.

4. Calculate lead requirements

Using the average deal value and the conversion rates, work backward to determine the number of SQLs and then MQLs needed to meet the sales goal. This reverse-engineering of your funnel provides clarity on the volume of leads your marketing efforts must generate. Remember, the key is not just quantity but also the quality of leads that align with your ideal customer profile.

Example: To close 100 deals, Company X needs 400 SQLs (given a 25% conversion rate from SQL to sale). With a 20% conversion rate from MQL to SQL, they must generate 2000 MQLs to end up with 400 SQLs.

Efficient lead generation transforms potential into performance, guiding businesses to not just meet their targets but to redefine the heights of their success.

5. Review and adjust

Keep checking your calculations to make sure they match the current business situation and market. Consider industry trends, changes in consumer behavior, and feedback from the sales team to refine your MQL and SQL definitions. Use this ongoing analysis to continually optimize your marketing and sales strategies for better alignment with your targets.

Example: After reviewing the quarter, Company X finds that the conversion rate from MQL to SQL has improved to 25% thanks to better content marketing. However, the SQL to sale conversion rate has dropped to 20%, likely due to more competitive pricing in the market. They adjust their targets to generate 2500 MQLs to account for the new conversion rates.

Calculating leads: your path to sales success

In wrapping up our journey through the numbers and strategies that form the backbone of your lead generation targets, it’s clear that knowing the quantity and quality of leads needed is not just insightful, it's essential for hitting your sales goals. The path from prospect to purchase should be paved with precision - a precise:

  • number of MQLs and SQLs

  • understanding of conversion rates

  • valuation of each deal

But knowing your numbers is only half the battle. The real magic happens when you take action on the insights you've gathered. It’s time to shift from questioning "How many leads do I need?" to declaring "I know how many leads I'll convert!"

Use our custom leadgen tool to check how well your lead process is working and get specific tips on how to take advantage of chances to convert leads.

Discover the power of precision in lead generation