There is no secret that lead generation is just as important as marketing and sales strategies for a business’s success. After all, without leads, there can be no sales at all.
Knowing this, modern B2C and B2B companies invest heavily in generating and converting leads. But the problem is that not all of them know precisely how many leads they need or how to measure their conversions the right way.
If that sounds like you, you’ve come to the right place! In this article, the Belkins team is going to guide you through this matter and answer the following questions:
- How many leads convert into deals?
- What is a good conversion rate for your business, and how many leads do you need?
- What are the formulas for leads and conversion rate calculation?
- What is conversion in sales?
- What key metrics are used to measure the success of your conversion lead generation efforts?
- What can you do to boost your sales lead conversion rate?
Read on to find the answers and learn how to use leads to the maximum benefit of your business!
What percentage of leads turn into sales?
Whether in B2C or B2B sales, every lead you generate has the potential to transform into a paying customer. Unfortunately, not all of them do. According to the latest studies, only 10% to 15% of sales leads make it to the bottom of the sales funnel and convert into deals. And only 5% of sales reps say that leads acquired through the company’s marketing efforts are high quality.
The lead-to-sale percentage can vary drastically from one business to another. This indicator depends on many factors, including the number of new business leads you drive into your funnel, how well you qualify leads, and how good your lead-nurturing strategy is.
What’s more, different businesses need a different percentage of converted leads. Thus, to know how many converted leads are suitable for your business, you must first understand how to calculate a conversion rate and calculate your leads.
How many sales leads do I need? Is there a special lead formula to calculate them?
Many people falsely believe that the more leads they get into their sales funnel, the better. On the one hand, not generating enough leads is clearly bad for your business because this means you are missing lots of potential business opportunities. This can suggest that generating more leads is generally better, but not everything is that clear-cut here.
On the other hand, if you capture leads in larger quantities, this can also hit your business. It can mean that you have more potential customers than you can handle. As a result, it can put a strain on your sales and marketing team and lead to a variety of issues, such as:
- Poor quality information in your CRM, which makes it more challenging to identify patterns in it.
- Quality compromised for quantity.
- Harder to qualify and nurture leads.
- Increased spending on marketing campaigns wasted on prospects that never convert.
- Wasted time and effort from your sales team on prospects that never convert.
- Increased load on marketers, sales managers, and salespeople that can lead to poor retention.
- Inability to attain your conversion goal.
- Significant difficulty calculating accurate return on investment (ROI).
Many other issues can arise if you get more leads than you can handle. As you can see, having too many leads doesn’t improve your business or sales but actually causes more harm. And that’s why knowing how to calculate your leads is so crucial.
How do you calculate your leads?
First of all, to know how many prospects you want to capture through your lead generation efforts, you have to identify clear revenue goals. The second number you have to know is your average sale price. These two indicators will help you define how many new customers you need to achieve your goals.
Here is a simple formula:
Revenue goal / Average sale price = A number of clients you need
Let’s say you want to make $1,000,000 in revenue this month, and your average sale price is $5,000. Following the formula above, you will need 200 customers to achieve your goal.
Now, at this point, it is crucial to remember that 200 customers do not equal 200 leads. As was mentioned earlier, not all leads convert. Some of them will take more than a month to turn into customers, and some may never convert at all. So how do you know how many leads you need to generate?
To get this right, you need to consider where your leads come from and what methods you use to get them. An easy way to calculate this metric is by using a reliable sales conversion rate calculator, but you can also do it on your own.
The basic lead formula looks like this:
Number of leads / Overall volume of visitors x 100 = Your conversion rate
Let’s say you acquire leads from the appointments set through your website. If your average website traffic is 10,000 a month with an average of 500 people who book an appointment, your conversion is 5%. But that’s not all.
In addition to knowing your conversion rate, you also need to know your lead-to-sale conversion rate. This is an indicator that demonstrates how many people from acquired leads actually make a deal.
Here is a formula:
Converted leads / Total number of leads generated x 100% = Lead-to-sale conversion
So if you had a total of 500 leads a month and 20 of them made a purchase within the same month, your lead-to-sale rate is 4%.
Using these three simple formulas, you should be able to calculate how many marketing captured leads your business needs to attain its revenue goals.
What is lead conversion?
So we’ve already told you about the importance of knowing how many leads your business needs and have shared with you a few simple formulas that will help you eliminate the guesswork. And we talked a lot about the importance of converting leads too.
But what is lead conversion in the first place?
Simply put, lead conversion is the name of the process where a regular visitor performs a specific action that transforms them into a lead. For example, a person who lands on your website is just a visitor at first. But when they book an appointment, request a demo, or subscribe to your newsletter, they convert into a lead.
Apart from this, the term “conversion” can also apply to other transitions made by a prospect. For example, when regular leads become marketing or sales-qualified leads, and when they eventually turn into paying customers, that’s also lead conversion.
Conversion rate and other lead conversion metrics
While the importance of lead conversion as a whole is clear, how do you use it to your benefit? With the help of conversion metrics!
There are a number of different metrics that enable you to measure the overall success of your marketing and sales teams in lead generation. The two most important metrics are:
- Lead conversion rate — the ratio of the total visitors to the number of generated leads.
- Lead-to-sale conversion rate — the ratio of the total leads generated to the number of leads who actually became paying customers.
Earlier in this guide when we told you how to calculate your leads, we covered these two metrics and shared a specific sales formula for each. But there are a few additional lead conversion metrics that you should be aware of:
Lead to opportunity
This metric enables you to calculate the percentage of leads that convert into sales opportunities. If you track it, it will provide you with needed insight for optimizing and improving your conversion efforts.
Cost per conversion
This metric is there to help you understand how much it costs your business to acquire every customer. The sales conversion rate formula for calculating this metric is simple: Add all marketing and advertising expenses and divide them by the number of converted leads.
Lead value is the metric that indicates the value of every generated lead to the success of your company. The formula looks like this: Divide the overall sales value by the overall number of leads.
This metric demonstrates the ROI you gain from every conversion. To calculate it, you need to subtract the cost from the lead value and divide everything by the cost.
Time to conversion
Finally, the last (but no less important) lead conversion metric is the time to conversion. Basically, it indicates the amount of time your visitors need to become leads. To calculate this metric, you need to divide the overall time visitors spent on your site by the overall number of leads.
These are all key metrics you should keep an eye on. These metrics enable you to go further than simple conversion rates and analyze the success of your lead conversion process in a deeper and more meaningful way. Thus, by tracking them, you can eliminate the guesswork and achieve better, faster results.
4 tips to improve your sales conversion strategy
Now that you know more about sales conversion, its role in your business, and the metrics that help you measure success, let’s move to the most exciting part.
So, how do you increase conversion rates?
1. Hone your lead capture
Before a lead can transform into a paying customer, you need to “capture” them. In other words, you have to make a visitor convert into a lead before they can then convert into a customer or client. Thus, the first thing you can do to improve your average lead conversion rate is to optimize your lead-capturestrategy.
The key to improving the way you capture leads is to focus on capturing the right information. Apart from the basics, such as a lead’s name and email address, you might also need other information that will help you qualify visitors more accurately.
Some of the most impactful ways to capture the needed information from your visitors are via:
- Lead-capture form.
- Website pop-ups.
- Lead-capture page.
- Appointment-scheduling app.
The right way to capture leads is based on your business type and goals. After determining this, you should look for ways to optimize the process. For example, you can tailor your lead-capture methods to each campaign. Also, you can customize the call to action (CTA) and include a valuable offer that will encourage more visitors to convert into leads.
2. Optimize lead qualification
As we explained earlier, more leads don’t always mean better results. Often, fewer high-quality leads are much better than lots of poor-quality ones. Therefore, the lead-qualification process plays a huge role in your conversion strategy.
By changing your approach to lead qualification, you can improve the quality of each particular lead and boost your lead-to-sale conversion. Simply put, better lead qualification will bring you more deals.
So what do you need to do? First of all, devote more time to qualifying leads before you start converting them. To do this right, you need to align your sales and marketing teams and ensure that they are on the same page about what it takes to turn a lead into a marketing qualified lead (MQL), sales qualified lead (SQL), etc. Set a clear framework of the customer lifecycle and define how you can get different types of qualified leads compared to each other.
This will help your sales team save time as they won’t have to spend lots of time trying to convert leads that are not ready to be converted.
3. Improve lead nurturing
The next tip for improving your sales lead conversion rate is to start nurturing leads better.
But what is the definition of lead nurturing?
In a nutshell, lead nurturing is the process of cultivating leads to grow their interest and make them sales-ready. Lead nurture is a powerful way to transform existing leads into customers, and it can involve the following tactics:
- Following up with the right message.
- Segmenting different leads based on their behaviors and interests.
- Leveraging email marketing with the right triggers to push leads toward the needed responses and actions.
- Forwarding sales-ready prospects to the sales team.
These and other nurturing activities will help you generate sales-ready prospects faster and easier.
4. Boost speed to lead
One more thing that matters in lead conversion is speed to lead, simply meaning the time you take to convert a lead into a customer.
According to experts, leads are 21 times more likely to become paying customers if you reach them within five minutes than if you connect with them after half an hour. This fact alone shows how much the speed of conversion matters. But how do you improve it?
First of all, to connect with your leads faster, you should find a way to qualify them instantly through your capture form. To do this, you can leverage a reliable speed-to-lead tool, such as a scheduling app. Such tools, for example, Concierge, enable your visitors to instantly book a time to speak with one of your sales reps. With such tools, you will be able to qualify leads the moment you capture them and go straight to lead nurturing.
As a result, you will be able to boost your speed to lead and get the most from your sales conversion strategy.
How many B2C sales leads do I need?
Lastly, in order to improve the outcomes of your lead generation campaigns, you have to see the difference between B2C and B2B lead generation and keep this difference in mind when planning your tactic, particularly when planning the number of leads you want to capture.
So what’s the difference?
All in all, B2C lead generation is more straightforward and simple. In B2C, marketers and sales don’t engage so much in lead research, qualification, and verification. Unlike B2B brands, B2Cs have simpler ideal customer personas and generally reach a larger audience of prospects with their digital marketing campaigns.
Another significant difference is that the process of generating B2C leads is an ongoing one. As was already mentioned, B2C businesses reach larger audiences of potential customers. Respectively, the number of their leads is more significant, and their business doesn’t depend that much on long-term deals. Thus, calculating the right number of leads for a B2C business is a little tricky.
The right number of B2C leads depends on a variety of factors, including your outreach, the sales channels you use, your industry, your product or service price, and your sales cycle length. Additionally, the number of leads you need will depend on your average cost per lead and the budget your target audience has.
According to experts, the optimal amount of leads a B2C business should generate per day is 150.
How many B2B sales leads do I need?
The number of B2B leads you have to generate in a month also depends on a lot of factors. First of all, you have to keep in mind the industry you operate in and the industry you sell to. According to HubSpot’s most recent Demand Generation Benchmarks & Trends overview, the biggest share of B2B companies generates 1-100 monthly leads — 41% across all industries and 36% in the software industry — and 17% (all industries) and 18% (software) get 101-500 leads per month. It also states 21% (all industries) and 26% (software) generate 501-2,500 monthly leads. And 21% of all B2B companies acquire 2,501+ monthly leads. As you can see, most companies focus on generating fewer leads. The focus here is put on quality over quantity.
Another big factor affecting the optimal number of leads is the size of the company. According to HubSpot, the needs of differently sized B2B brands look like this:
- 1-20 employees: 1-100 monthly leads
- 201-500 employees: 100-500 monthly leads
- 501-1,000 employees: 500-1,000 monthly leads
- 1,001-5,000 employees: 1,000-5,000 monthly leads
These numbers are just estimates. But the truth is that the number of monthly leads you need is indeed proportional to the size of your company.
Nevertheless, the role of lead generation in both B2C and B2B businesses keeps growing. Therefore, the number of leads every particular brand needs is likely to be higher than the estimates provided above. The core rule, though, is not to compromise the lead quality for quantity.
The bottom line
So at the end of the day, how many leads does your business need in order to attain its goals and prosper?
Now, after reading this guide, you should know that the number of leads a business needs to achieve its sales goals is different for every company and depends on a variety of factors. The right number of leads is calculated based on the brand’s industry, its average revenue, its sales process and goals, and also on whether it is a B2C or a B2B business.
You also now know how many leads convert into sales, what lead conversion is, the main formulas for calculating conversion rate and other lead conversion metrics, and the tips for boosting the number of conversions for your business.
As we near the end of this guide, we have one more tip for you: Generating, qualifying, and converting leads is not easy. Thus, it never hurts to get a bit of help. If you need to define the right number of leads for your business, the lead-research experts from Belkins are always here to lend you a helping hand. Our team will help you analyze your industry, business, and lead gen strategy to help you attain better results with ease. So don’t hesitate to entrust your lead generation matters to the pros from Belkins!