Calculating How Much Website Traffic You Need to Hit Your Monthly Revenue Goals

by Pete Caputa

Date

April 30, 2010 at 7:00 AM

A little while ago, I published a free worksheet which helps marketers devise an inbound marketing strategy to support their revenue generation goals . A bunch of prospects, customers and partners have started using it. 

But, it's too complex for most to grasp. And involves a lot of work to complete. Our new marketing analytics tools makes it easier to get the data needed to run the model, but for non-customers who are new to the whole idea of actually predicting and measuring an ROI from inbound marketing , I realized I needed to simplify it. 

Here's my simpler stab at it...

1. Revenue Goals Determine Sales Goals
2. Sales Goals Determine Lead Goals
3. Lead Goals Determine Traffic Goals  

setting website traffic goals

If you want to undersand the math behind it, here's some suggesstions on how to gather the data and what formulas to use. 

Calculate the Number of New Customers Needed in a Month

Every company has monthly or quarterly revenue goals. If you're a small business owner or startup and you don't have some, you should set some. If you're in marketing and you don't know what the plans are, you should sit down with your CEO, CFO or VP Sales and ask, "How can I better support the monthly revenue targets?"

Either way, the formula is pretty simple: # of new customers per month = monthly revenue goal / average revenue per new customer

Calculate # of Leads Required to Hit New Customer Goal

The only way to calculate this number is to know your website lead to customer conversion rate. If you're still relying on cold calling, this is hard to do. But, even if you do old-school outbound stuff like cold calling and direct mail (or that crazy effective 1-2-3 direct-mail-cold-call-trade-show-punch), you should have a handle on your 'appointments set' to customer close ratio. Just assume that an 'appointment set' through direct-mail-cold-calling-trade-shows is like an inbound lead, only colder. Any well run sales organization should have a handle on their appointment set to customer conversion rate. If your organization doesn't have a handle on it, I'd recommend starting a free trial of salesforce.com

Formula: Lead Generation Goal = New Customer Goal / Lead to Customer Conversion Rate

Calculate the Traffic You Need to Generate the Number of Leads You Need

Okay. It's going to get a little harder for you to start calculating this stuff. We need you to estimate your visitor to lead conversion rate. Hopefully, you're keeping track of the number of leads you're getting from your website per month. If you are, you should be able to look at your analytics package and figure out the number of visitors you're getting. If you are pretty sophisticated and have some kind of lead tracking setup or closed loop reporting established, you should be able to get this number very quickly. 

If you have no clue what your visitor to lead conversion rate is, you should probably assume that it's in the 1-3% range. If you do online lead generation right, you might be able to achieve a 5-10% visitor to lead conversion rate.

Here's the formula: Visitors Needed = Leads Needed / Visitor to Lead Conversion Rate.

Now, the Big Question Becomes: How Do You Get the Traffic?

We'll save that one for another blog post, but if you want a head start on figuring it out, here's the Inbound Marketing Playbook

 

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