I recently posted the Product Launch Readiness checklist, a quick quiz that gives you an idea of how prepared you really are for your launch or campaign. There are some interesting patterns emerging in everyone’s responses. One of the common problem areas has to do with setting a revenue goal for the campaign- and this one’s a BIGGIE.
My dad once told me “if you want to get from A to B, you first have to know you want to go to point B, then you can figure out how to get there”. It seems simple enough. Set a goal, then chart the course. As it turns out, figuring out where you want to go in very specific terms is more challenging than one might think…
When it comes to their revenue goals, it’s very common, especially for entrepreneurs and online marketers, to say “I want to make as much as I can!” Of course you do – we all do. But as John Reese once said, “you can’t build a plan to do that.”
So how do we figure out what our revenue goal should be for a given campaign? Well, for me, it’s an iterative process. Let’s walk through it together with an example.
Let’s say you want your launch campaign (or other marketing campaign) to generate $1,000,000 – one million dollars (to keep the math easy in this example). First, let’s assume your average selling price (ASP) is $1,000 per sale (again, to keep the example simple).
We need to take this revenue goal and turn it into a “Unit Volume” number – how many sales we need to make to achieve our revenue goal. It’s simple math:
Unit Volume = Revenue Goal / Average Selling Price
For our example, Unit Volume is $1,000,000 divided by $1,000: 1,000 unit sales (use your own numbers in your case).
Next, we examine that Unit Volume number very carefully to determine just how realistic it is to actually achieve that level of sales. Let’s say we have in-house customer and prospect list assets totalling 50,000. And we have existing partners with lists and social network audiences amounting to another 50,000.
So we expect our market “canvassing” efforts can directly reach at least 100,000 people during the campaign period (see the Product Launch 3.0 Sales Process if you want to know more about canvassing).
So far this is what we know:
- We want to generate $1,000,000 from this launch campaign
- We need to sell 1,000 units to reach our revenue goal
- We can identify 100,000 potential prospects that we can directly reach through existing means
Next, we need to identify any “gaps” we may have in our ability to execute to reach our goal. So, now we have to make some additional estimates about traffic and conversion rates.
Since we are following a proper launch process, we are building a Launch List – sometimes known as a “sub-list”. This is a an auto-responder list which is specific to our campaign (whether it’s a mini-launch over 4 days or a full-blown launch, this list is a must). Everyone who registers and gets on our Launch List has expressed a specific interest in what’s coming and have asked to be kept informed and learn more, and will be exposed to our entire campaign conditioning and pre-sales process.
Next, let’s assume that from our 100,000 available prospect universe, ten percent of them will choose to join our Launch List, due to the great money magnets and other content we’re providing them as an incentive to pay attention and learn more.
So, we have 10,000 interested prospects on our Launch List, who will be with us on the journey toward launch day.
Next, we must determine what percentage of these folks we believe we can convert into buying customers. Keep in mind that for a real launch, we’ll be using a variety of techniques that dramatically increase our conversion rates – way beyond what you would normally see. It is not uncommon to see 1/3 or even more of your Launch List convert to sales, when everything goes exactly as planned (and you execute your pre-launch flawlessly, get your launch offer and U.S.P. right, etc.)
Let’s say that we believe we will convert just 10% of the Launch List. As it turns out, that’s 1,000 sales!!
OK. That was too easy. Let’s back up. Instead of 10% of our 100,000 audience joining our Launch List, let’s say only 5% joined, so we now have a Launch List of 5,000. If 10% of those folks buy, then that’s 500 sales.
This means we’re about halfway to our goal with our existing list, partner and social networking assets. Now what?
Well, we have a model to work with here, so it’s time to “reverse engineer” the numbers to see what we need to close this gap. We need 500 additional sales, which means we need 5,000 more prospects to join our Launch List.
So, we must build a plan that will bring us at least 5,000 additional prospects who subscribe to our Launch List at least one week before launch day. How might we do that?
Well, if our earlier conversion rate numbers hold true and 5% of those who are exposed to our canvassing efforts end up subscribing to our Launch List, then we need to reach 20 times 5,000 which equals an additional audience of 100,000 more.
Great. How can we reach 100,000 additional unqualified prospects?
1. Engage one additional JV partner with a list of 100,000 or bigger
2. Engage ten additional JV partners with lists of 10,000 or more each
3. Engage five bloggers with relevant audiences of 20,000 or more each
And so on. Continue with all potential routes to reaching your qualified buyer audiences, including Twitter, Facebook, PR, advertising, radio, TV, etc. (more traditional routes).
Now I realize the above example is probably oversimplified in some ways, but if I can write it down in this blog post, I have to believe it’s possible for more people to set and achieve realistic revenue goals for their campaigns.
The keys to doing this successfully are:
1. Choosing a realistic revenue goal
2. Making realistic assumptions about your conversion rates
3. Having a well-known process in place (or creating one by using someone with the right experience to help you)
4. Building a PLAN that you KNOW you can EXECUTE on to make your numbers
5. Tracking your progress against those numbers each step along the way (conversion rates, audience reach/open rates, click-through rates, Launch List size vs. your target, etc.)
6. Adjusting course as needed to fill any “gaps” that appear in the numbers (e.g., adding more JV partners, optimizing your Launch Landing page, creating additional, more compelling money magnet offers that pull better, etc.
7. Recalculating your model as the numbers come in to ensure you will make your goal.
Sales is a “numbers game”. Always has been, always will be. Every successful sales team and sales person takes their overall revenue goal and then builds a sales plan by reverse-engineering the numbers into a plan that they know for certain they are capable of executing.
This tells sales management how many sales people are needed in each territory, for example. Each sales person is given a “quota”, then they must build their own plan for achieving their part of the overall plan.
It’s always the same, whether you’re selling potato chips or semiconductor chips…whether you’re selling online or offline. You set a revenue target, then build a realistic sales plan for achieving the numbers.
The numbers don’t lie. It takes some work, thought and realism in your planning. It also takes careful tracking of your progress along the way. The good news is, when you approach your selling, in launches or any campaign, this way, you will become better at reproducing revenue results each time you do it.
I hope you found this useful – and more of you get that first question on the readiness exam right next time 
Incidentally, if the above process seems a bit too daunting to do manually, I agree! That’s one of the reasons I developed a software tool that does this for you.
Happy selling!
P.S. I realize that a million dollar example is almost certainly not the right example for everyone. For some, it’s too high. For others, it’s too low. And a $1,000 average sale is also not ideal. Use your own numbers. If your product sells for $50 and you want to make $100,000, you probably aren’t being realistic (unless you have a huge route to market available) -or- it means you have a price/value problem and need to increase the value you’re delivering!
If you only have a small list, then you must either: a) sell something at a higher price point that delivers more value, or b) find partners willing to help you reach a much larger audience for a piece of the action; e.g., affiliates, resellers, OEMs, etc.
Again, the numbers don’t lie, so pay attention to what they’re telling you and adjust things until you can build a viable plan that’s capable of generating the numbers you need.
{ 5 comments }
RT @rickbraddy The importance of the campaign revenue goal http://bit.ly/cntlPX
How to set and achieve sales goals http://bit.ly/bL93r4 It's easier than you think
Rick, thanks for this post. As someone who uses your software to strategize my launches I find that this is the part of the plan I go back to the most. Both in the initial number phase for sales and how many to target, but also as I’m tweaking the launch in progress. All my launch clients want to know numbers and what they need to achieve those numbers, from a prospect list. This post gives you a guideline to follow for any launch.
How to build a million-dollar sales plan http://bit.ly/bL93r4
Marc,
You’re certainly welcome. It’s good to hear you’re finding the software useful. And you hit the nail on the head there. Once you have the goals established, the next key step is building a plan for actually turning those numbers into reality.
Thanks for your insights.
Rick
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