Calculate how many leads you need and what you can afford

Most companies start channel selection by asking "which channels should we use?" That's backwards. The first question is: how many leads do you need, and how much can you afford to spend getting them?

Without these numbers, you're flying blind. You might test LinkedIn ads, get £50 cost per lead, and have no idea if that's good or disastrous. You might avoid Google search because it "seems expensive" without calculating whether you can actually afford it.

This chapter shows you how to work backwards from revenue targets to required lead volume, set maximum cost per lifecycle stage based on LTV and target margin, and calculate CPM benchmarks to understand impression requirements. These calculations tell you which channels are mathematically possible before you spend a penny.

Start with your revenue target. Let's say £500,000 in new revenue this year. Now work backwards through your conversion rates.

If your average deal size is £10,000, you need 50 new customers (£500,000 ÷ £10,000 = 50 customers).

If your sales close rate is 25% (1 in 4 opportunities closes), you need 200 opportunities (50 customers ÷ 0.25 = 200 opportunities).

If your qualification rate is 50% (half of SQLs become opportunities), you need 400 SQLs (200 opportunities ÷ 0.5 = 400 SQLs).

If your MQL-to-SQL rate is 40%, you need 1,000 MQLs (400 SQLs ÷ 0.4 = 1,000 MQLs).

If your lead-to-MQL rate is 25% (1 in 4 leads scores as marketing qualified), you need 4,000 leads (1,000 MQLs ÷ 0.25 = 4,000 leads).

That's your lead volume target: 4,000 leads to hit £500,000 in revenue. Now break that down by segment. If you have three segments (compliance-driven, breach-reactive, proactive) and you know compliance-driven closes at 30% whilst proactive closes at 20%, allocate lead targets accordingly. You might need 2,000 compliance-driven leads, 1,000 breach-reactive leads, 1,000 proactive leads.

Add a 20% buffer for testing, seasonality, and failed experiments. So 4,000 leads becomes 4,800 leads. That's your working target. This buffer prevents you from falling short when campaigns underperform or timing shifts.

Now determine what you can afford to spend. This is based on customer lifetime value (LTV) and your target customer acquisition cost (CAC) as a percentage of LTV.

A healthy B2B SaaS target is CAC = 30% of LTV. If LTV is £30,000 (customer stays 3 years at £10,000/year), target CAC is £9,000. That's your maximum spend per new customer.

Now divide that across lifecycle stages. If you need 200 opportunities to get 50 customers, you can spend £9,000 ÷ 4 = £2,250 per opportunity. If you need 400 SQLs to get 200 opportunities, you can spend £2,250 ÷ 2 = £1,125 per SQL. If you need 1,000 MQLs to get 400 SQLs, you can spend £1,125 ÷ 2.5 = £450 per MQL. If you need 4,000 leads to get 1,000 MQLs, you can spend £450 ÷ 4 = £112 per lead.

These are your cost targets: £112 per lead, £450 per MQL, £1,125 per SQL, £2,250 per opportunity, £9,000 per customer. Any channel that can hit these numbers is mathematically viable. Any channel that can't is too expensive.

But here's the insight: different segments have different LTVs and close rates. Compliance-driven might close at 30% with £12,000 LTV. Proactive might close at 20% with £40,000 LTV (larger deals, longer retention). Calculate separate cost targets per segment. You can afford £150 per lead for compliance-driven but £200 per lead for proactive because proactive has higher LTV.

This is why "cost per lead" alone is misleading. A £200 lead might be profitable for one segment and unprofitable for another. Always tie cost targets to segment economics.

Cost per lead is what you care about, but channels sell on cost per thousand impressions (CPM). You need to bridge these two metrics.

CPM varies by platform: LinkedIn £25-40, Google Display £5-15, Facebook £10-20. If you're running LinkedIn ads with £30 CPM, how many impressions do you need to get 4,000 leads?

Work through the funnel: impressions → clicks (via CTR) → engaged visitors → leads (via capture rate). If your ad has 1.5% CTR (typical for good LinkedIn ads), 1,000 impressions = 15 clicks. If engagement rate is 60% (40% bounce), 15 clicks = 9 engaged visitors. If lead capture rate is 4%, 9 engaged visitors = 0.36 leads.

So 1,000 impressions = 0.36 leads. To get 4,000 leads, you need 11.1 million impressions (4,000 ÷ 0.36 × 1,000). At £30 CPM, that's £333,000 in ad spend (11.1M ÷ 1,000 × £30). Divide by 4,000 leads = £83 per lead. That's below your £112 target, so LinkedIn is viable.

Now test Google Display at £10 CPM but assume worse CTR (0.5% instead of 1.5% because display ads are less targeted). 1,000 impressions = 5 clicks = 3 engaged visitors = 0.12 leads. To get 4,000 leads needs 33.3M impressions = £333,000. Same total spend, same cost per lead. Both channels are mathematically equivalent in this scenario.

The insight: CPM is only half the equation. A cheaper CPM with worse CTR can cost the same as expensive CPM with better CTR. Always calculate through to cost per lead, not just CPM.

Now create a forecast showing how much volume each channel can deliver at what cost. This reveals whether you can actually hit your lead target or if you need to adjust expectations.

For each channel, estimate: maximum daily impressions (how big is the audience?), expected CTR (based on benchmarks or current performance), expected engagement rate (60% is typical), expected lead capture rate (2-5% depending on offer), resulting cost per lead.

LinkedIn for compliance-driven segment: audience size 500,000 (CISOs and security directors at target companies), can reach 10,000 impressions/day sustainably, 1.5% CTR = 150 clicks/day, 60% engaged = 90 engaged visitors/day, 4% capture rate = 3.6 leads/day = 1,300 leads/year. At £30 CPM, costs £109,500/year for 1,300 leads = £84 per lead. This is below target, and delivers 1,300 of your needed 2,000 compliance-driven leads.

Google Search for compliance-driven segment: search volume 2,000/month for "compliance training" and related terms, can capture 20% share = 400 clicks/month = 4,800 clicks/year. 60% engaged = 2,880 engaged visitors. 5% capture rate (search traffic converts better than cold ads) = 144 leads/year. At £3 CPC, costs £14,400/year for 144 leads = £100 per lead. Below target, but only delivers 144 leads (small volume).

You've now identified that LinkedIn can deliver 1,300 of your needed 2,000 compliance leads, and Google can deliver 144. You need another 556 from somewhere (or you need to increase impression share on LinkedIn, or improve conversion rates to get more leads from same traffic).

Do this for all segments and all channels. The forecast shows you where you're short, which channels are viable at your cost targets, and where you need to improve conversion rates or find new channels.

Calculate lead volume requirements by working backwards from revenue through conversion rates. Add 20% buffer for testing and seasonality. Break down by segment based on different deal values and close rates.

Set maximum cost per lifecycle stage based on LTV and target CAC. Different segments can support different costs based on their economics. A £200 lead might be profitable for high-LTV segments and unprofitable for low-LTV segments.

Understand CPM benchmarks and calculate impression requirements. Bridge CPM to cost per lead by modelling CTR, engagement rate, and capture rate. A cheap CPM with low CTR can cost the same as expensive CPM with high CTR.

Build a volume forecast per channel showing maximum deliverable leads and cost per lead. This reveals gaps where you need more channels, better conversion rates, or adjusted expectations.

With these numbers in hand, you're ready to select channels systematically in the next chapter.