Predicting Sales Results from a Group of Inquiries


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James Obermayer

James Obermayer, Executive Director and CEO of the Sales Lead Management Association and President of Sales Leakage Consulting is a regular guest blogger with ViewPoint.

Last month we tackled the issue of How many inquiries does it take to make quota? We started with a sales figure of $7,500,000 that our example company needed to make quota. Then we took into account the sales that were expected from the existing pipeline ($2.5 MM), and projected the inquiries needed to make a quota of $5 MM, assuming 100% follow-up of the inquiries. As it turns out, 2,840 inquiries were needed for $5,000,000 in sales on a product that sells for $12,225, with a 32% closing rate (45% of all the inquirers are buyersi).

But most marketers who create demand usually want to predict the sales results from a projected number of inquiries. This is easy.

Let’s start with a campaign that brings in 2,840 inquiries from a single source on a single product within a sixty-day timeframe (we’re keeping the variables down to a minimum here). What will the sales results be?

If the product sells for $12,225, with a 32% closing rate, the answer will be about $5,000,000.

Here is the formula:

  • 2,840 inquiries x 45% (percentage of buyers in a given group of inquirers who buy within a year)
  • x 32% (closing rate)
  • x $12,225 (product average sales price)
  • x 100% follow-up = Total sales of this campaign: $4,999,536

If you only have a 50% follow-up rate on sales leads, cut the sales results to $2,499,768.

If your follow-up rate averages 25%, sales results will be $1,249,884.

If your follow-up rate drops to 10% (a common figure), sales results will be $499,953.

The Formula Points Out the Failure and the Risk

Without 100% follow-up, marketing return on investment is cut dramatically. Let’s say the campaign cost is $50 a lead (very low), and the campaign cost is $142,000.

  • With 100% follow-up, marketing will cost 2.8% of sales.
  • With 50% follow-up, the marketing cost will be 5.6% of sales.
  • With 25% follow-up, the marketing cost will be 11.36% of sales.
  • With 10% follow-up, the marketing cost will be 28% of sales.

Let’s see … Would you rather be the marketing manager reporting a 28% cost of marketing for the program you ran, or the manager who reports a 2.8% cost of marketing? And the only variable is follow-up. If you’re smart you can solve this problem. Right?

iObermayer, James, Managing Sales Leads, Turn Cold Prospects into Hot Customers, Thomson South-Western, 2007, pages 9, 10-14, 26

Republished with author's permission from original post.

Dan McDade
Dan McDade founded PointClear in 1997 with the mission to be the first and best company providing prospect development services to business-to-business companies with complex sales processes. He has been instrumental in developing the innovative strategies that drive revenue for PointClear clients nationwide.


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