How many leads does your sales team need?
We run B2B lead generation campaigns for organizations exclusively using social media platforms like Linkedin. One area of discussion that often comes up is the ideal volume of leads a salesperson should have to meet her target.
Why is this number important?
Salespeople cannot meet their targets if they don’t have sufficient leads. This is understood by most organizations. Having too many leads though is also a problem. It invariably reduces the value per lead and sales people end up deprioritizing some leads which would have otherwise been worked upon.
To arrive at the ideal number of leads, one must look at three broad parameters
- Conversion in your sales funnel
- Bandwidth of your sales team
- Outbound effort from your sales team
1. Conversion in your sales funnel
We break down the conversion into two parts. We start looking at it backwards from the target: Conversion from demos to closures first and then from leads to demos.
Conversion from demos
The first step in evaluating the number of leads needed is to understand the conversion from demos or a product pitch. We insist on conversion from demos as this set of customers has had a chance to see or experience the product and is a reasonably good reflection of our product & pitch acceptability.
This number helps you arrive at the number of demos you need. If your conversion from demos is 40%, you’d need 2.5 times your target number in demos.
There are further nuances to consider like time taken from the demo to convert a deal, but we’ll leave that for now.
Conversion from leads to demos
Once you’ve got the number of demos required, you work up from there looking at the conversion from leads to demos. Again we look at the conversion from leads to demos. If your conversion is 20% you need 5 times the leads.
Let’s summarize using an example
- Target: INR 100,000 | 5 deals
- Conversion from demos: 40%
- Demos required: INR 250, 000 | ~ 13 demos
- Leads to demo conversion: 20%
- Leads required: INR 1,500,000 | ~65 leads
2. Bandwidth of your sales team
Along with analyzing the sales funnel, it is also important to understand the bandwidth of your team. Apart from conducting demos, they should also have sufficient bandwidth to nurture the leads post the demo. Typically this depends on the complexity of your sales process post demo as well as the number of deals in each stage. For example, if you have a complex/comprehensive contracting process you need to factor higher time for deals in the agreement stage.
A good thumb rule in such cases is that a salesperson should have ~2.5-3X their target value in the post demo stages. For a target of INR 100,000 , the person should have 250,000- 300,000 in stages beyond the demo.
For a new sales person with fewer deals in the pipeline one should look at an absolute number of 6-10 demos per week.
3. Outbound effort by your sales team
There is one more key factor you need to factor in : whether your sales team is expected to prospect on their own for new leads.
There are two schools of thought around this: Some people feel their sales team should only focus on working with active prospects and they have a separate SDR team for prospecting. Others feel their sales team should also be prospecting.
We won’t go into the merits & demerits of each approach, but if you belong to the second category where your sales team is also prospecting, you should factor for 20-40% leads coming through their own prospecting.
Quick tip: Don’t fret too much over having accurate data on conversions. Start with the ballpark numbers you have and iterate as you go along.
