Learn how to calculate the amount of outreach you should conduct on a regular basis to reach $1M ARR. Includes a simple calculator based on industry averages for enterprise B2B companies doing cold outreach.
In Fixing Seed-Stage sales, I covered how founders and first-time sellers often mistake activity for progress by not properly qualifying opportunities.
For this post, I'll start right at the moment after you’ve had the first meeting with your investors and all parties have agreed on a revenue goal for the fiscal year. (For most Seed-Stage startups, that number is $1M ARR or total bookings.)
The majority of enterprise B2B founders can take that revenue goal and divide it by four quarters or 12 months to figure out roughly how much new business they need to close to hit or surpass that target. Where the wheels tend to fall off is when you ask founders how those quarterly or monthly goals translate into the number of prospects they need to reach out to — in other words, how many net new meetings they need each week to be on pace.
To help founders get an idea of how much weekly, monthly, and quarterly outreach they need to be doing to hit their given revenue milestone, I’ve created this simple calculator based on industry averages for Enterprise B2B companies doing cold outreach.
If you input your revenue goal and ASP, the calculator shows you roughly how many prospects you’ll need to reach out to in a given quarter to stay on track when it comes to the required number of net-new meetings, demos, proposal reviews, deals closed/won, etc.
Here are the sales funnel assumptions I’m making for cold outbound outreach in the enterprise B2B space:
For example, let’s say you cold outreach 1,000 individual prospects following the math above:
Total outreach: 1,000
Positive Reply Rate: 20
Discovery meetings/demos: 14
Technical deep-dive meetings: 7
Proposals reviewed: 3 (round down; better to be pessimistic 😎)
New business closed/won: 1
This would give you a 15% overall close rate for all qualified opportunities (new business closed / technical deep dives), which is a rough industry standard for many enterprise B2B companies, with 20%–30% close rates being world-class.
Breaking down your required sales outreach is no different than breaking down a study schedule for a test (GMAT, LSAT, SAT, etc.). You want a target score and you have a limited amount of time until test day (in this case, the end of the fiscal year) to achieve it. So, you might break down your study schedule into manageable chunks:
Of course, there are several other factors to consider and the example might seem simplistic, but the underlying logic is the same.
If you can’t run a fairly simple process for how many net new meetings you need every week to hit your overall revenue target, then how do you know if you’re on track?
Finally, before you dive-in to the calculator here are a few important notes:
One of the top reasons I’ve seen startups struggle is by not being systematic enough about their sales outreach process and vastly underestimating how many people they’ll need to talk to every week, month, quarter.
My aim in creating this tool is that by providing a range of total outreach required, working backward from your revenue goal and ASP, founders will quickly understand how much outreach is needed that quarter and be able to adjust their pace, volume or accuracy to stay on track.