It’s no surprise the businesses that enjoy the greatest sales growth are those that generate the most leads – as they give themselves more opportunities to tell their story to Buyers who are considering their options. And we all know that Sales is driven by having a healthy pipeline.
At any given point in time, some of your potential customers will be actively looking for a solution like yours; they will be engaging with potential suppliers, negotiating and going on to form a contractual relationship with their chosen new supplier.
However, unless you’re in a niche market, there is likely to be a healthy number of suppliers competing to win business from the same companies.
So, if you’re responsible for Sales or Marketing within your business, your job is to ensure that you’re one of the suppliers that these potential customers are speaking with.
How Much Do You Need to Invest in Your Sales Pipeline?
It’s unlikely that your ambition is the barrier to growth, but your budget might be.
As with many business decisions, it’s about striking a balance. If you don’t invest enough in Lead Generation, you’ll limit the number of opportunities you’ll get to win business from companies that are in the market for your solution. And if they’re not talking to you, they’re talking to the competition…
There are some simple calculations to help you understand your required Lead Generation budget:
- The top line growth that you want to achieve
The ultimate goal of generating leads is to achieve sales growth, so set a revenue target to aim at, e.g. £200k of annualised revenue growth.
- Define the £value of a new customer
A new customer may generate more in the first year of your relationship with them, particularly if there are initial project costs such as professional services or hardware. Conversely, your model might be to gain a foothold into a new account and grow your services and revenue by cross and upselling. Either way, it’s important to determine the true value of signing a new customer to your business, because for most businesses their customer relationships span many years.
- Now calculate the number of new customers you need to win
By looking at your target for annual growth alongside the typical value of a new customer, you’ll be able to work out how many new customers you need to win in a year in order to hit that target.
- This defines the number of leads you need to generate
Most B2B businesses convert 15-25% of leads into customers. Using these conversion rates and your average Customer Lifetime Value, you can work out the number of leads required to reach your growth target. The table below provides an illustration:
You’re now in a good position to set an accurate budget for Lead Generation, based on the number of new customers and therefore the number of qualified leads required to achieve your annual growth target.
What does ROI look like?
The case for investment in Sales and Marketing needs to factor in the ongoing value of each customer, especially if your customers have a high customer lifetime value.
Although it would be great to achieve a positive ROI within the first year, this isn’t always easy; so if you can achieve the metrics above, you’re likely to enjoy strong revenue growth over the coming years, as the revenue from new customers compounds.
The take-aways are:
- The #1 limiting factor in achieving growth is the number of leads generated and therefore the value of your pipeline
- Don’t get hung up on achieving ROI within 3 months, as the customer lifetime value for most B2B businesses is usually significant
- Be realistic about the cost of generating high quality leads. If the profit from winning a customer is £10,000 over 5 years, the cost of generating that lead is unlikely to be £100
Ultimately, Sales is a numbers game. The businesses that give themselves the most opportunities to talk to Buyers in their target market are usually the most successful. They won’t always have the best proposition, but they’re more likely to hit upon potential customers where the chemistry and solution works for both parties.
These opportunities don’t just happen by chance: they have a system in place for generating leads.
Beanstalk is a B2B Telemarketing and Lead Generation agency that delivers high performance sales-campaigns that generate qualified sales leads, video calls and face-to-face meetings with sales-ready Buyers.
Each and every campaign we deliver is built to the client’s individual objectives, budget and target market.
We integrate digital marketing with best-in-class telemarketing, through our unique pool of 15million B2B contacts and email marketing.
If you want to have more conversations with your potential customers, get in touch so we can put together a bespoke lead generation campaign to kick-start your sales.