The Value of a Lead

How much is a lead worth to you and your business? If your answer is "I don't know," don't be dismayed. There are more of you out there than you think.

In a recent poll done by Hubspot, 40 out of their 102 respondents didn't know the value of their leads. These results are hardly surprising considering the June survey of EXHIBITOR magazine that revealed "only 47% of companies track leads generated at trade shows and events throughout the sales cycle and only 28% measure and report the number of leads that ultimately convert to sales..."

For a study on the economics of marketing and sales, a group of brokers and business owners were asked: "What is the value of a Lead?" One answered that it was equal to the revenue stream, another said it depends on convertibility, the industry and the transactional value, another came up with a mathematical formula stating "the value of the lead is the present value of profit stream from a customer relationship times the probability of the lead developing into a customer relationship." And when different people have different ideas on how to find a leads value, what is the guideline?

Overspending or underestimating?

Most companies we know devote large portions of their operating costs on marketing, advertising and public relations. Knowing the value of a lead is absolutely critical to determine the return on investment and make smart decisions on where to invest one's marketing budget. Without a clear idea on the value of a lead, companies tend to overspend time and money on less-effective strategies and underestimate the cheaper and more effective ones. Leading of course, to poor marketing and sales performance.

We suggest strongly recommend that sales and marketing people must look for every way possible to maximize their lead generation. They must determine the number and quality of leads they generate, conversion rates and how many of these leads transform into closed sales. The first step of course is to get a clear idea of a lead's value.

Automated Process

There are a number of ways to calculate the value of a lead. Although crucial, most marketing and sales people hardly have time to crunch these numbers. One easy and convenient way we've discovered to do it is by using a dynamic Lead Value Calculator. All you have to do is type in a few numbers get the value of the leads you purchase you've already taken the first step to improving your lead generation and ultimately your return on investment.

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