This article is part 3 of a series. You'll find part one here. And part 2 here.
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In part 2 we looked at...
- You have a budget of X dollars
- You're looking to generate a return on that budget of Y percent
- You expect to earn Z dollars per sale
Number of sales required:
If our revenue target is £1,100, and we expect to make £100 per sale, we need to make 11 sales. That's...
£1,100 ÷ £100 = 11.Now we can take that figure, and estimate the number of appointments we'll need to achieve the desired return on investment.
Number of appointments needed:
Most of us probably have a rough idea of how many people we have to see to make one sale. If you don't know, start with a conservative ratio such as one in 10.
You can then adjust it as the results come in, and you get a better idea of how many appointments your company converts. In the case of our example, let's go with a conversion rate of 1 in 3. So we expect to make 1 sale per 3 appointments.
That means we need 33 appointments to reach our target ROI. Why? Because we need 11 sales, and we have to see 3 people to get 1 sale.
11 sales x 3 people = 33 appointments in total.The next step is to find the number of leads needed to generate 1 appointment...
Number of leeds needed:
We now know we need 33 appointments to achieve our desired ROI. Let's look at how many leads we need to generate, to reach the required 33 appointments.
If you don't know your current leads to appointment ratio, use a conservative one in 10.
For the purposes of our example, let's go with one in 3. That is, we need 3 leads to make one appointment.
This tells us we need 99 leads to reach our target ROI (3 leads x 33 appointments).
From this figure, we can work out how many visitors we need to send to the web site to achieve the desired ROI in your Internet Marketing campaign.
Number of visitors needed:
The next ratio we need to know is the number of visitors required to generate 1 lead.
If you don't know this ratio, use a conservative one in 100. For the purposes of our example, let's go with 1 in 20. That's 20 visitors to get 1 lead.
This tells us we need to send 1,980 visitors to the site to achieve our campaign target of £1,100 (99 leads x 20 visitors).
The Ratio Recap
Let's take a look at our objectives and ratios from scratch...
- We set a campaign budget of £1,000.
- Our target return on investment is 10%.
- Our campaign objective is to earn £1,100.
- Our average income per sale is £100.
- This means we have to make 11 sales to achieve the campaign objective of £1,100.
- We expect to convert 1 appointment in 3 into a sale. So we need 33 appointments to achieve the campaign objective.
- We expect to convert 1 lead in 3 into an appointment. So we need 99 appointments to achieve the campaign objective.
- We expect to convert 1 visitor in 20 into a lead. So we need to send 1,980 visitors to the site to achieve the campaign objective.
In the next part, we'll look at why this information is useful and what it can tell in advance of campaign (i.e. how it can save you money and eliminate mistakes).