The order of the calculation
- Average monthly enquiries over the last three months.
- Current conversion from enquiry to payment.
- Average deal size by payments received.
- Multiply them: that is your plan with nothing changed.
- Compare it with the figure you want.
Three ways to close the gap
- Flow. More enquiries: that is a job for marketing and budget.
- Conversion. The same flow, more payments: that is a job for the sales team.
- Deal size. The same payments, more money: product mix and upselling.
It is worth costing each option separately: how many enquiries you would have to add, how many points you would have to lift conversion, what percentage you would have to add to deal size. Often one of the three turns out to be several times cheaper than the others.
An example from a measurement: 481 enquiries a month at 7.1% conversion gives 34 orders. The same number of enquiries at 10.6% gives 51. Seventeen extra orders with no additional advertising spend at all.
How to break it into weeks
- Look at how revenue was distributed across weeks in previous months.
- Split the plan in the same proportion rather than evenly into four.
- For each week, calculate the number of payments needed.
- Set daily numbers on the drivers rather than only on money.
Signs of an unrealistic plan
- missed for the third month running
- requires a conversion rate you have never had
- ignores seasonality
- was set with no calculation from flow