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3 Steps to Forecasting Marketing Leads

3 Steps to Forecasting Marketing Leads

January 25, 2019 | Free Resources | By Deborah Warner

Knowing how to forecast marketing leads is both an art and science.The art of the game is in finding innovative digital marketing tactics that are not necessarily tried and true to generate new leads. The science comes in by forecasting leads accurately based on past history to predict revenues for the coming year. This is easier for companies that have been in business for a while because they have plenty of data to draw from. Companies succeed by analysing their past data wisely when creating their marketing strategy.  By determining your deal size,

First, look at your revenue history to determine how much revenue you want to generate in the next 12 months. In order to forecast the number of sales leads to target, determine how many deals need to happen, then allocate your spend for generating leads by choosing the marketing tactics that best align with your business goals. Writing down goals and then measuring the results is the surefire way to hit your sales targets.

1. Determine Average Deal Size

In the B2B world, in general no two deals are the same size so you find the average deal size. For instance, if a company closes 2 deals, one at $80k and another at $100k, the average deal size is $90k. Based on the average deal size, look at how many deals you need to close in order to hit your revenue targets.

In order to project revenue and track the health of your pipeline, companies need to understand this. If you have a new revenue target of $1MM and your average deal size is $100k, then you should target 100 deals per year. Based on the historical metrics, you can then back-calculate how many deals you need to have at each stage of the sales process (or funnel) and at what time. This allows you to forecast whether sales are on target or if you need to step up in a certain area of the marketing funnel.

If a company needs to close 100 or 120 deals a year, you need at least 10s deal a month. If historically, you can close 10 deal from 1000 Market Qualified Leads (MQLs) or 500 Sales Qualified Leads (SQLs), then you know how many leads you need to generate. On a chart, your progress may look like this:

 JanFebMarAprilMayJunJulyAugSepOctNovDec
Total Leads60010001000100010001000750750100010001000750
MQL300600600600600600500500500500500300
SQL300300300300300250250250250250150
Clients51212121010101010101010

2. Allocate Spend for Generating Leads

A very basic approach to forecasting is to apply historical rates of conversions between tracked metrics and sales or financial outcomes. The approach works similarly for other metrics such as website landing page visits as long as the conversion rates are fairly consistent over time.

As a marketing department, you calculate that you need to generate X amount of leads in a period of time. If you determine by past history you need 10,000 leads per year, and this will take 900 leads per month. The art is taking that number and allocating it to marketing tactics.

Determine how many Inbound leads you want to generate and the conversion rate of your current leads. You may be driving traffic, but if your landing page, website or app is not up to par, the visitors may not stay, or convert to sales leads.  In this case, you may need to take action to improve your conversion rate. Suddenly the lead forecast changes when a tactic ends up generating more leads. By calculating the rate of traffic conversion, you can determine how much you should pay for allowable Clicks Per Lead (CPL) for each tactic

3. Choose Marketing Tactics the Work

How do you allocate your marketing spend to your digital tactics? Try breaking it down on a Excel spreadsheet. Determine how much traffic you need to generate from marketing tactics like paid, owned and earned marketing tactics and how that converts into the number of leads generated. In other words, how many MQLs do you hope to generate? This will help you decide how much budget to allocate to each tactic.

Choose from the three marketing buckets:

  • Paid Search – Google ads, display ads, paid advertising, paid media
  • Organic Search – SEO, social
  • Earned – Content Marketing, email marketing

For instance, if you want to scale fast, allocate 30% to paid acquisition and divide 70% between organic and earned tactics. Organic and earned may take a while longer to build, but will have long-term staying power.

Paid is great if you want to scale fast to generate leads, but can get expensive. Organic and owned tactics are where it’s at for sustaining growth. Take each tactic and put them into separate buckets to break them down individually to see how much traffic each tactic generates.

Try your best to be scientific when you do your forecasting. Then employ a few marketing tactics, and do them really well. Marketing calls for the art of intuition, creativity and ingenuity. Experiment with new channels, then scientifically measure your results to find out which tactics work best for your business. If they fail, test them out and try again. That’s what marketing is about!

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