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About This Episode
The last time I visited Austin I got to meet two really cool guys.
But what’s really cool is the equation they came up with to help sales reps calculate how much each meeting is worth in revenue. I invited them to come on the latest episode of the Sales Engagement podcast to tell us all about it.
The big equation
Ben and Aaron have put together a framework to have sales reps and leaders quantify the value of their meetings.
By doing this, you can track, compare, analyze, and, ultimately, optimize your data.
When they first came up with this framework they had a giant spreadsheet with 14 inputs and every consideration you could think of.
But they realized that this model was far too complicated for anyone to remember or actually use.
So, they’ve distilled it down to something much simpler…a nice little math equation:
Average Value Per Meeting = Average Annualized Contract Value * Qualified Opportunity to Close Rate * Meeting to Qualified Opportunity Rate.
Now don’t get intimidated…we’re going to break it down so that you’ll be able to implement this model to make sure you’re maximizing the opportunities you have in your own business.
Average value per meeting
So, to figure out what your average meeting is worth in revenue, you want to start with your average annualized contract value. It’s what an average customer worth to you over a year.
Then you want to multiply that number by the likelihood that a qualified opportunity becomes a closed/won deal.
Finally, you multiply that by the percentage of meetings that become qualified opportunities.
Let’s look at an example.
Maybe your annualized contract value mean is $1000. And maybe 40% of your closed/won ops become qualified business and 50% of your meetings turn into qualified opportunities.
So, you’d multiply $1000 by 40% and then by 50% to get $200.
That’s your average value per meeting.
Lowering your lead deficit
So, why does that little number matter?
Well, first, it can help you lower your lead deficit.
Let’s assume that each month you have 300 webinar leads.
Let’s further assume that you’re only booking 64 meetings out of those 300 leads.
If we multiply 236, the number of leads you’re not booking each month, by your average value per meeting, which was $200, we get $47,200.
That’s a big number.
And it represents the business you’re losing every month by not converting leads to meetings from that one channel.
See how valuable this little equation really is?
And in Ben and Aaron’s experience, that lead deficit is almost always a full order of magnitude larger than anyone expected.
So, take the time to calculate your lead deficit.
You might find some channels where a little extra focus could go a long way.
Another reason this equation is so important
In addition to helping you identify ways to decrease your lead deficit, this little equation offers a lot of other benefits.
Here’s one more.
Ben and Aaron have found that, for most companies, the average value per meeting is often significantly larger than any of the leaders or sellers thought it would be.
In fact, these average values usually come in around $1000.
So, every time your business development rep or your ISRs get on a discovery call, that’s $1000 in bookings.
Think about that.
If a meeting is worth $1000 to you, are you bringing $1000 worth of value to that meeting?
That’s a pretty powerful thought.
So, do a little meeting math.
Figure out what your meetings are worth.
Then go out and offer that value to your prospects.
This is an interview with Ben Parker and Aaron Bollinger from Kronologic. To hear this episode, and many more like it, you can subscribe to The Sales Engagement Podcast on Apple Podcasts, on Spotify, or on our website.