A Bolt on Revenue System Sales Forecasting Formula For Small Businesses -

An over optimistic view to upcoming quarters, leads to unnecessary spending, which then puts a dent in a company’s treasury which then leads to the only action that is possible – Shut down services.

The sales forecasting formula outlined below is the mechanism you will use to realistically expect upcoming revenue predictions and generate leads accordingly.

These predictions will be based on data that you have already collected on your present deal closures.

So be prepared, take notes and pint these notes into an excel sheet or just simply use Kapture Sales CRM to get these insights.

Either way, imbibe a culture of forecasting into your sales strategy and predictions.

Ok?

Cool, I’m glad you’re with me, let’s go.

PREDICATIONS BASED ON LEAD VALUE

This method assigns a value to each of your lead platforms and then determines the total number of leads you would need to generate to hit your revenue goal.

So for example if – website leads and cold outreach were our two main sources of lead generation and we see that;

1 – Website leads – yield a sale of $2000 with a 10% conversion rate

2 – Cold outreach yields a $1500 sale with a 10% conversion rate.

We would then need to calculate the number of leads needed per platform to hit our revenue target.

THE FORMULA

This formula below can be used for each of your platforms to determine what your lead goals should look like.

Average Lead Value = Sales price* Conversion Rate from lead to customer

First let’s clarify our terms

Sales Price – Your average product price

Conversion Rate – Your conversion rate from lead to customer

Onward

So now let’s presume we are chasing a $50000 revenue target and based on our data we know that we have a 10% conversion rate. So the formula would now look like;

Average Lead Value = $2000 x 10% = $200 per lead

Leads required to hit revenue target

To ensure that we hit our $50000 target, we need to have a sufficient pool of leads, those that we will then then pitch our product to.

The formula you will use for this is

Leads Needed = Desired Revenue/ Average Lead Value

Desired revenue is our target – in this case $50000 and we have already calculated our average lead value above. So now to determine the number of leads needed to hit our target, our formula would look like this;

Leads needed = $50000 / 200 = 250 leads

We would need 250 Leads in our funnel to potentially hit our forecast of a $50000 revenue target.

CONCLUSION – ENSURE YOU KEEP SALES CYCLES IN CONSIDERATION

Depending on your average sales cycle you may need to begin your lead generation campaigns well in advance.

What do I mean by this?

So if you intend to hit a $50000 revenue target in July and you are in the month of Jan and you have observed that on average it takes four to eight weeks to convert a prospect.

Your lead generation campaigns for the month of July must begin by March or April – by which time you need to have 250 leads in your funnel.

Once you have your leads, you can begin selling and potentially hit your revenue targets.

A sales CRM would give you a done for you forecast. This means instead of calculating your forecasts for each quarter, Kapture’s Sales CRM will hand over reports to you with calculations done and dusted, telling you simply how many leads are required leaving you free to focus on you most important business growth metric – Sales.