GUIDE TO:
OPTIMIZING YOUR
LEADS RATIO
TO REP
SALES OPTIMIZATION STUDY
Executive summary
Imagine a top sales rep underutilized by 50%. Any sales manager having
In this guide, we also highlight current practices from our research, around
visibility into the rep s utilization level would most certainly look to
the distribution of work assignments and the days and times that reps are
increase the volume of leads assigned. Often, however, the utilization
most productive and effective in order to help organizations optimize their
threshold ‒ where results and productivity are at their optimal level ‒ is
sales engine. The application of these formulas to the data analyzed
incredibly hard to identify. At Velocify, we are often asked by sales leaders
revealed that sales reps are often underutilized and that workload is not
how many leads they should be sending to their reps, or if they should hire
evenly distributed throughout the day or week.
more reps given the volume of leads generated. This guide presents a
methodology to help sales managers determine optimal utilization levels
to achieve peak performance.
The analysis of millions of sales calls and associated metrics allowed us to
create a framework that enables organizations to calculate an expected
conversion rate based on the number of new leads assigned per rep per
day. This calculation, coupled with a standard profit formula, can also be
used to find the optimal lead volume necessary to break even, maximize
profits, or maximize revenues, depending on an organization s
ultimate goal.
SALES OPTIMIZATION STUDY
01
BACKGROUND
Many sales organizations experience struggles between their sales and
marketing teams. Sales might claim they aren t receiving enough leads,
Study Methodology
while marketing might claim the leads they re generating aren t receiving
This data reflects results aggregated across multiple industries
the proper attention from sales. So, who is right ‒ sales or marketing? How
during a six month period. More than 5 million calls made by
many new leads should each sales rep get on a daily basis? Are they being
given more than they can handle? Is it better to give them a small number
of leads to make sure they are doing everything possible to convert every
one of those leads?
Finding the optimal operating level, given each organization s unique goals
more than 2,000 users were analyzed to arrive at the results
presented in this study.
In order to collect the most detailed call data possible, only
Velocify clients and users taking advantage of Dial-IQ,
and conditions, can be an art form and is usually a guessing game for sales
Velocify s intelligent dialer, during the six month period
managers. Fortunately, we can use historical data from a large number of
studied were included in this analysis. Additionally, in the
sales organizations to predict possible outcomes as lead assignment levels
analysis of rep data, the numbers reported reflect only the data
are changed so that each organization can find its optimal leads-to-rep
for reps that appear to be active in the system, meaning that
ratio. If changes are necessary to current lead assignment volumes, it is
they are being assigned leads and working them during a
important to understand the level of rep utilization, when reps are the
busiest, most effective, and most productive, and the factors that have the
greatest impact on those measures in order to identify the ideal days and
times to reduce or increase the number of new lead assignments.
given hour.
It is important to note that while these results and
recommendations are widely applicable, they may not reflect
the optimal strategy for some businesses.
SALES OPTIMIZATION STUDY
02
RESULTS
Identifying a Sales Rep s Peak Performance Zone
Figure 1: Impact of lead volume on conversion
One of the keys to arriving at an optimal rep utilization level is determining
One of the most interesting insights
gleaned from this research was the predictability of sales rep performance
(measured in terms of conversion rate) using the number of brand new leads
assigned to that rep. Figure 1 shows the rate at which a rep s ability to
convert a high percentage of leads decreases as that rep is assigned a
higher number of new leads per day. In other words, reps assigned more
leads will likely convert more leads, but at a lower conversion rate as lead
count increases. There are many factors that influence conversion rate, but
this study suggests the number of new leads assigned per rep per day is a
valuable predictor.
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
0
5
10
15
20
25
30
35
new leads assigned per rep per day
Table 1: Conversion rate estimates
Based on this data, Table 1 allows one to estimate expected conversion rates
based on the number of new lead assignments per rep per day . The two
A
primary reasons this negative relationship exists between a rep s conversion
rate and the number of new leads assigned are: (1) as workload increases,
reps effectiveness is more likely to decrease and (2) in some cases,
larger lead volumes usually come from lower quality lead sources. The
more new leads reps are assigned, the less likely they are to respond to each
new lead quickly.
APlease
60.0%
conversion rate per rep
how workload affects reps results.
see Appendix A for the formula used to create Table 1. One can also use the formula to calculate expected
conversion rates for different numbers of new leads assigned per rep per day that may not be shown in the table.
new leads per
rep per day
expected
conversion rate
1
2
3
4
5
8
10
12
15
20
25
30
24.5%
14.2%
10.3%
8.2%
6.9%
4.8%
4.0%
3.5%
2.9%
2.3%
1.9%
1.7%
SALES OPTIMIZATION STUDY
03
RESULTS
Figure 2A: Maximizing profit (example)
At some point, reps may receive so many new leads that efforts to contact
all of them would leave no time for follow-up attempts. Eventually, their
$200.00
only conversions might come from those they are able to close on the first
call, which for most industries can be extremely difficult, if not impossible
(please refer to prior Velocify research on the Ultimate Contact Strategy,
$150.00
prospect). Moreover, if lead volume were to increase even further, reps
would not have enough time to even attempt to contact all newly assigned
leads. At this point of oversaturation, any additional leads assigned would
be completely wasted.
These findings reveal something most sales managers already know: there
is both a minimum and maximum lead volume per rep that is
profit per sales rep per day
which illustrates what methods to use and how often to contact a
$100.00
$50.00
$0
$(50.00)
0
5
10
15
20
25
30
necessary to break even. If you operate with a lead volume below the
minimum number, the small revenues you may be able to generate will not
$(100.00)
cover the costs of running your business. On the other hand, if you operate
with a lead volume above the maximum number, the cost of generating a
$(150.00)
large number of leads will exceed the benefit gained from additional
revenue. Logically, the key to maximizing profits is finding the peak
new leads assigned per rep per day
performance point between the minimum and maximum lead volumes,
as illustrated in Figure 2A.
SALES OPTIMIZATION STUDY
04
RESULTS
Figure 2B: Maximizing profit (example)
Obviously, finding those values is different for every organization and is
dependent on a number of factors, which include the Lifetime Value of a
customer (LTV), the Number of New leads assigned per rep per day (N), the
$200.00
Expected Conversion Rate (ECR), the Commission per Sale (CPS), the Cost
per Lead (CPL), the Direct Cost per Rep per day (DCR), and the Other Costs
$150.00
Optimal
of Sales (OCS) .
Figure 2 shows that for an organization with values similar to those used in
this example, each rep would need to be assigned an average of just over
two new leads per day in order to add value to the company and for the
company to be profitable. Also, the maximum profit contribution per sales
rep would be achieved at approximately 11 new leads per rep per day.
Finally, for an organization that is most interested in growth and not
necessarily profit without adding more reps, the highest volume that still
allows them to break even is shown to be about 28 new leads per rep per
profit per sales rep per day
B
$100.00
$50.00
$0
$(50.00)
Maximum
Minimum
0
5
10
15
20
25
30
$(100.00)
day. The maximum value is not indicative of a rep s actual capacity, which
is dependent on an individual rep s skill level. Instead, it is just the value at
which most companies will begin to incur losses from a typical rep because
they re wasting away too many leads.
BSee
$(150.00)
new leads assigned per rep per day
Appendix B for the complete profit formula and sample values used to generate Figure 2
SALES OPTIMIZATION STUDY
05
RESULTS
Table 2: Critical lead volumes (example)
new leads per
rep per day
expected
conversion rate
sales profit per
rep per day
significance
2.1
13.6%
$ 0.00
Minimum lead volume per rep to be profitable
10.6
3.81%
$ 180.85
Optimal lead volume for maximum profit
28.2
1.77%
$ 0.00
Maximum lead volume for highest revenue without profit losses
Table 2 summarizes these three key values for the example given. Just as
the expected conversion rate can be calculated using a formula based on
data from this research , a detailed profit formula , which is dependent on
A
B
the expected conversion rate, can be used to calculate expected profits
given a variety of different inputs, allowing organizations to find their
breakeven lead volumes and their optimal lead volume for maximum
profit. A little bit of calculus results in an optimal lead volume formula that
C
is only dependent on LTV, CPS, and CPL, assuming all other factors stay
fixed as lead volume per rep changes.
APlease
BPlease
CPlease
see Appendix A
see Appendix B
see Appendix C
SALES OPTIMIZATION STUDY
06
RESULTS
Table 3: Finding the number of new leads to assign each rep per day to maximize profits
Lifetime Value (LTV) minus Commission per Sale (CPS)
Cost per
Lead
(CPL)
$500 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $8,000 $10,000 $15,000
$5
$10
$15
$20
$30
$40
$50
$60
$80
$100
$150
$200
8
3
2
1
1
1
0
0
0
0
0
0
20
8
5
3
2
1
1
1
1
0
0
0
48
20
12
8
5
3
3
2
1
1
1
0
80
33
20
14
8
6
4
3
2
2
1
1
115
48
28
20
12
8
6
5
3
3
2
1
152
63
38
26
16
11
8
6
4
3
2
1
192
80
48
33
20
14
10
8
6
4
3
2
277
115
68
48
28
20
15
12
8
6
4
3
367
152
91
63
38
26
20
16
11
8
5
3
615
255
152
106
63
44
33
26
18
14
8
6
$20,000
886
367
219
152
91
63
48
38
26
20
12
8
$25,000
1176
488
291
202
121
84
63
50
35
26
16
11
$30,000
1486
615
367
255
152
106
80
63
44
33
20
14
The optimal lead assignment level can be calculated using the optimal lead volume formula or it can be estimated using the values for CPL and LTV ‒ CPS along
C
with Table 3. For example, for a company with an LTV of $9,000, a CPS of $1,000, and a CPL of $50, we would need to look across the $50 row and down the $8,000
column (LTV-CPS=$8,000), and we would find that 15 is the optimal number of leads we should assign each rep per day for maximum profit. If this company were
currently assigning fewer than 15 new leads per rep, they should work on increasing the number of new lead assignments. On the other hand, if they were
(cont. on next page)
CPlease
see Appendix C
SALES OPTIMIZATION STUDY
07
RESULTS
exceeding that lead volume, they should probably consider hiring more
One of the easiest and fastest ways to achieve larger lead volumes without
reps to reduce the workload at that lead volume because it is likely that the
significantly impacting other costs of sales (OCS) is simply to purchase
cost of wasted leads is reducing their profits. Similarly, a company can
more leads, but regardless of how new lead volumes are increased, it is not
calculate how many reps they need by taking their daily lead volume and
advised that one just increase new lead assignments indiscriminately. As
dividing it by the optimal number resulting from Table 3. For example,
the remainder of this study shows, there are clearly better and worse days
if the company in the example above generates 600 new leads per day,
and times to increase or decrease the number of new leads assignments
the number of reps that will result in maximum profits is equal to
based on rep availability, productivity, and effectiveness.
600/15= 40 reps.
For reference, and as a point of comparison, the average sales rep in our
study was assigned less than six new leads per day. Given the results
shown in Table 3, most organizations would likely benefit from
increasing the number of new leads they are assigning their reps each
day because most probably fall within the green operating range of Table
3, which generally suggests that optimal lead volumes should be at least
double what they are currently for maximum profit. At those volumes, the
expected conversion rates are between two and five percent. Comparably,
lead volumes should be even larger for maximum revenue growth.
SALES OPTIMIZATION STUDY
08
RESULTS
Lead Volume Decreases Considerably on Weekends
One of the first set of factors that an organization should look at when
considering lead assignment changes is their current distribution of leads
throughout the different days of the week. Overall, the number of lead
Figure 3: Total lead volume assigned
Saturday
Sunday
2.5%
0.3%
assignments is pretty evenly distributed throughout the first four days of the
workweek. As Figure 3 illustrates, there is approximately a 30% drop in
lead volume on Fridays and about a 90% drop on Saturdays. However, the
average number of lead assignments per rep per hour remains about the
Friday
14.1%
Monday
19.6%
same Monday through Saturday, indicating that most companies reduce
the number of active sales staff and/or the number of hours worked on
Fridays and Saturdays in proportion to the drop in lead volume. Figure 3 also
reveals that the total number of lead assignments is clearly lowest on
Sundays. Additionally, sales reps that do actively work leads on Sundays, on
Thursday
20.1%
Tuesday
22.0%
average, are assigned 20% fewer leads per hour than they are during the
other days of the week. The drop in total lead volume on weekends is
probably not a surprise given the majority of sales organizations do not
operate on weekends.
Wednesday
21.3%
SALES OPTIMIZATION STUDY
09
RESULTS
Lead Assignments and Activity per Rep
Decrease throughout the Day
Our research found that the bigger the sales team, the more likely reps will
receive a higher proportion of re-assigned leads. Lead re-assignments are
Although the average number of lead assignments per rep per hour is
normally highest earlier in the morning as reps catch up on prospects
evenly distributed throughout the different days of the week, except
requiring follow-up that accumulated overnight. This is especially true in
Sunday, lead assignments per rep per hour are not evenly distributed
cases where a number of reps start earlier in the day, before the rest of the
throughout each day. Figure 4 shows that the total number of newly
team, driving lead re-assignments when reps originally assigned to certain
assigned leads per rep per hour is highest early in the day and declines as
leads have not started working yet. Consequently, the total number of
the day progresses. Notice the total number of lead assignments is
lead assignments per hour per rep decreases throughout the day,
comprised of both brand new leads and re-assigned leads. Re-assigned
primarily because the number of re-assigned leads decreases. But also, as
leads, which typically outnumber brand new leads, are leads that have
shown in Figure 4, the number of brand new leads assigned per rep is
been previously assigned to one rep, but for a variety of reasons are
slightly higher earlier in the day.
re-assigned to a different rep.
average number of assigned leads
per hour per rep
Figure 4: Lead volume by time of day
6.00
5.00
4.00
3.00
2.00
1.00
0.00
0
6:0
am
0
7:0
am
0
8:0
am
0
9:0
am
1
0
0:0
am
1
0
1:0
am
1
0
2:0
pm
0
1:0
pm
0
2:0
pm
0
3:0
pm
0
4:0
new leads
pm
0
5:0
pm
0
6:0
pm
0
7:0
pm
0
8:0
rs
pm
hou
r
e
aft
re-assigned leads
SALES OPTIMIZATION STUDY
10
RESULTS
Our research found that for the most part, time spent on the phone and
the number of phone calls and actions taken on a lead were very much
Productivity and Effectiveness Peak on Weekends
Similarly, since the average lead assignments per hour are fairly constant
in line with lead volume assignments. In other words, the more leads a
across each day of the workweek, the average time spent on the phone
rep is assigned per hour, the more time one can expect the rep to be on
per hour is also fairly constant. Interestingly, Saturday and Sunday had
the phone and the higher the activity one can expect on leads.
higher percentages of phone time per hour than Monday through Friday
Consequently, since reps typically have a larger number of lead
even though the number of leads assigned per rep are the same on
assignments earlier in the day (Figure 4), they tend to make more phone
Saturdays as they are during the workweek, and even lower on Sundays
calls, take more actions in the system, and spend a higher proportion of
than they are any other day. On average, sales reps spend approximately
their time on the phone earlier in the day, leaving them with more
20 minutes per hour on the phone on weekends versus only 15 minutes
available time in the afternoon and early evening.
on the phone per hour during the workweek.
The fact that sales reps are spending only a quarter, or at best a third, of
their time on the phone also suggests that most reps are probably being
underutilized
from
an
overall
capacity
standpoint.
Most
sales
organizations would probably not want or need their sales reps to spend
100% of their time on the phone either, but these results indicate the
opportunity for added phone time per rep exists, further supporting the
earlier finding that most organizations would probably benefit from
assigning a higher number of new leads per rep.
SALES OPTIMIZATION STUDY
11
RESULTS
Figure 5: Average Calls per Hour per Rep
One of the main reasons reps tend to spend more time on the phone per
14
and trying to connect during the workweek but only about 20% of their
12
phone time on weekends.
10
8
calls made successfully connect. That s almost double the 6% connection
6
rate of weekdays. For more information about the largely untapped
4
opportunities that exist for working on weekends, please see Velocify s
2
ay
Su
Sa
tu
rd
nd
ay
y
ida
Fr
ay
sd
ur
Th
ay
sd
ne
normally make during the workweek, as shown in Figure 5.
0
ed
are when reps are most productive, making 25% more calls than they
ay
study on The Value of Weekend Leads Unveiled. Furthermore, Saturdays
W
weekends, with the greatest success rate on Sundays, when 11% of all
sd
successful in contacting a higher percentage of their leads on the
Tu
e
This is largely because reps are more
ay
time actually connected. Reps spend 25% of their phone time waiting
nd
the phone waiting to connect and a higher percentage of their phone
16
Mo
hour on weekends is that they spend a lower percentage of their time on
SALES OPTIMIZATION STUDY
12
SUMMARY & CONCLUSIONS
Takeaways and Recommendations
While a rep s productivity usually increases as more leads are
Data suggests that most organizations would likely benefit from
number of new leads per day.
day.
assigned, conversion rate drops as reps are assigned a higher
It is possible to calculate the expected conversion rate of a rep
based on the number of new leads assigned per rep per day . This
A
calculation provides a higher degree of clarity around rep
utilization.
The expected conversion rate formula coupled with a detailed
A
profit formula can be used to calculate three key lead volume
B
operating levels for an organization.
increasing the average number of new leads assigned per rep per
Lead assignments per rep per day are fairly constant Monday
through Saturday but drop about 20% on Sundays.
Lead assignments per rep decrease throughout the day.
Reps typically make more calls, take more actions, and spend more
time on the phone when they are assigned more leads.
Reps are generally most productive on Saturdays and most
effective in contacting leads on Sundays, signaling an untapped
• The first breakeven point can provide the minimum
number of new leads a rep needs to be assigned per day
in order to make profitable contributions.
opportunity.
Ideally, organizations should try to increase the number of new
leads assigned to reps during the hours and days in which reps tend
• The second breakeven point provides the maximum
number of leads that can be assigned without losing too
much money on wasted leads- this is the optimal volume
for organizations interested in revenue growth rather
to be most available, productive, and/or effective, which means in
the afternoons, for most companies, and on weekends, for those
companies whose industry and business conditions allow for that
option.
than maximum profit.
• The final key operating level is between the two
Note:
breakeven points, where the number of new leads
assigned per rep maximizes the rep s profit contribution .
C
While these results may provide a benchmark and a point of
reference, the best way to make use of this information is to
actually compare them to your team’s specific metrics and
performance. Velocify’s solutions allow you to track and monitor
your team’s activity and effectiveness so that you too can optimize
APlease
see Appendix A
see Appendix B
CPlease see Appendix C
BPlease
your sales engine.
SALES OPTIMIZATION STUDY
13
CONTACT & SHARE
About Velocify
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SALES OPTIMIZATION STUDY
14
APPENDICES
Appendix A Expected Conversion Rate Formula:
The measure for reliability (R2) for the equation derived from the analysis of real performance data indicates that more than 43% of the variability of reps conversion rate can be
explained by the rate at which they are assigned brand new leads. Therefore, the following equation can be used to predict a rep s expected conversion rate:
Conversion rate = 0.245 ×(Number of new assigned leads per rep per day)-0.787
Appendix B
Detailed Profit Formula:
Profit per rep per day = (LTV×N×ECR)-(CPS×N×ECR)-(CPL×N)-DCR-OCS, where:
LTV
= Lifetime Value of a Customer
= (Expected revenue over the lifetime of a customer-Cost of product or services) or
= (Expected revenue over the lifetime of a customer ×Gross margin) = Used $4,000 in Figure 2
N
= Number of New Leads Assigned per Rep per Day = Independent Variable
ECR
= Expected Conversion Rate = 0.245×(N)-0.787 = Calculated using N values
CPS
= Commission per Sale = Average $ amount paid to a rep for each closed sale = Used $300 in Figure 2
CPL
= Cost per Lead = Average direct cost to generate or purchase a lead = Used $30 in Figure 2
DCR = Direct Cost per Rep per Day = Base salary and benefits for a rep per day = Used $200 in Figure 2
OCS
= Other Costs of Sales per Rep per Day
= Other costs including supplies, telephone, facilities, marketing support, etc. broken down per rep per day = Used $800 in Figure 2
Appendix C Optimal Lead Volume Formula:
[
Optimal number of new lead assignments per rep per day = .0235 ×
(LTV-CPS)
CPL
]
1.27
SALES OPTIMIZATION STUDY
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