How to Calculate What a Sales Lead is Actually Worth

Generating leads is consistently one of the more difficult problems that businesses face.

Lead generation typically takes money up-front in the form of advertising or inbound marketing. It also takes time—even more so if you’re a small, independent business with no staff. Time and money are two things that not many companies, big or small, are willing to cough up and/or spare.

And yet, leads are necessary! They directly translate into revenue, especially if your leads turn into loyal customers. They are undeniably valuable.

Which begs the question: how much is a lead worth? How can you justify your focus on generating leads and your efforts to convert them into sales and lifelong clients?

The answer is pretty straightforward. In this guide, we discuss all things lead generation, including the (priceless) worth of each and every lead that comes in off your website. Keep reading!

How Much Is a Lead Worth?

That depends! How much did you spend on advertising costs? And how many leads came in after that marketing campaign?

It also helps to have a basic understanding of what cost per lead (CPL) is. CPL is how much it costs your business to generate one lead.

So, if you spend thousands of dollars on advertising, but you only bring in a handful of new leads, your CPL is very high, making your marketing efforts not worth the time or money. But, if that same strategy brought in thousands of new clients, your CPL is very low—making your efforts worth your company’s time and money.

How can you figure out the CPL? It’s actually really easy.

The Simplest Math Problem You’ll Do Today: The Cost Per Lead Formula

This simple formula can help you generate a CPL:

  • The total amount spent on marketing / The number of new leads Your cost per lead

And there you have it!

That equation can provide all the answers you need. If your CPL is low, that could be a sign that your efforts are successful, and it’s time to double-down. If your CPL is high, that means you need to evaluate where you went wrong and make some changes.

It’s essential to do some math on the former part of that equation: the total amount spent on marketing. That number should include ad spend, the amount of time spent on that campaign, as well as any third-party resources you used. Add up all those numbers to get the ‘total amount.’

The number of new leads is straightforward. If your campaign is directly targeting new clientele, you’ll be able to cross-reference new leads with your database of established leads and easily find the number.

With this information in mind, you’ve figured out your CPL. Congratulations! Now what?

How to Lower Your Cost Per Lead

The next step is to decide what’s working and what’s not. The CPL does more than give you a number; it gives you insight into how your inbound and/or outbound marketing is working.

If your CPL is high, that means your marketing isn’t reaching the right people. That could be due to several things, such as not targeting a specific audience, or maybe you are posting irrelevant content that’s not intriguing enough to engage with. You’ll have to speak with an industry expert and see what needs improving.

If your CPL is low, ask yourself: is it as low as it could be? Is there any place you can cut costs to even further grow and enhance your revenue stream?

One way to lower your cost per lead is to make the next steps more profitable for you. If the leads you acquire garner even more money than expected, and you’re spending less on marketing than you have to, you’re in a win-win situation. How you achieve this depends on your products or services.

The next thing to do is stop anything that’s not working. For example, if you’re noticing low engagement on social media, but great attention through your email marketing campaign, you may allocate more resources to email and less to social (or vice versa). If your keywords are irrelevant or low-performing, it’s time to upgrade.

You can also optimize your advertising, even the strategies that are working. Are you using relevant keywords and ads? When was the last time you conducted an ad review?

You should also be targeting your efforts to a direct audience.

If you’re a local business, it doesn’t help if your efforts are globalized. Make sure you’ve studied your target demographic’s age, location, education, career, wants, and needs—and cater to them.

How to Generate Even More Leads Through Your Website . . .

We’ve discussed how to lower your CPL, which goes hand-in-hand with generating more leads. The more leads you generate, the lower your CPL. The more effective your advertising campaign, the lower your CPL.

Both of these things are essential to your lead generation campaign.

One significant way to get more engagement is by working on your website.

How’s the UX, or user experience? Is it inviting, easy to navigate, and mobile-friendly? Is it targeting a specific audience?

You should also consider other factors, such as:

  • How clearly your website’s goals are defined (the more transparent, the better)
  • How trustworthy and reputable your website appears (you can improve this quickly through authoritative content marketing)
  • Its uniqueness and ability to be ‘thumb-stopping’
  • Your optimization as far as SEO goes, and your landing pages

Landing pages are arguably one of the most critical factors in getting more leads. They’re a fantastic tool for campaigns and include everything from email promotions, to PPC ads, to inbound marketing.

Other web design trends to consider include:

  • Clean lines and white space, aka minimalism
  • The ability to go into ‘dark mode’
  • Unique elements, such as hand-drawn visuals or luminous color schemes
  • Attractive, bold typography (font)

It’s essential to research what the top-producing websites are doing correctly (or not), and learn from them. How can your website be more eye-catching, more engaging, more profitable for you? When you love a website, can you pick out the elements that affect your opinion?

If you’re a small business owner and you simply don’t have the time to focus on this aspect of your company, you may need to outsource it to someone who can. It’ll cost you money up-front, but attempting to learn and execute things like SEO on your own can be time-consuming—and pointless if done incorrectly.

. . . And Convert Those Leads Into Loyal Customers

Getting leads is only one half of the battle. To win the war, you need to turn those leads into sales.

The more leads you can turn into customers, the better your CPL. Each stage of the funnel is vital in achieving this. Once you’ve gotten new leads, the game has only just begun.

Now it’s conversion time.

There are several ways to seal the deal. Some things that can entice your leads to stay with you until the end are:

  • Offering an incentive, such as discounts, promotions, and more
  • Being readily available to communicate and answer questions, and if not, by having an established FAQ page that can guide your customers
  • Establishing a deadline, such as saying: ‘This promotion ends on [insert date here]! Hurry now, before it’s too late!’
  • Following up with those who didn’t take the next steps, asking for feedback, offering additional incentives, letting them know you’re there, etc.

If your lead doesn’t convert into a customer, that’s obviously a bummer. But, there’s something else you can do: ask them questions.

Have an email drawn up that says something like: “We haven’t heard from you in a week. Have you made a decision? If not, how can we help you make a decision?” You may get a response that’s telling of what you need to change. Perhaps they had an issue you hadn’t even considered, and you can improve that area for them and the next potential leads.

These are all things that will lower your CPL in the long run. The more leads you can convert to customers, the lower your CPL, and the more profitable your business. Every stage of the lead generation process is essential to optimizing your campaign and becoming a more successful operation!

One Last Thing: A Better Look at Inbound Marketing

To cover inbound marketing, we’ll first understand what outbound marketing is.

Outbound marketing contains things such as on-screen banners or embedded videos. This strategy used to work, but it became annoying—so much so that many an internet user has ad-blocking turned on, making these strategies obsolete.

Inbound marketing is customer-focused and non-intrusive. It’s the process of connecting with potential customers through useful strategies they can appreciate. That might include information blog posts, social networking apps, email marketing campaigns (that they willingly sign up for), and more.

This strategy is most often done organically. For example, a customer may search for something through Google, and your website appears as one of the top search results. In that natural fashion, they’ve arrived at your page, perhaps not even realizing the SEO doing its work behind the scenes.

People want value, and inbound marketing campaigns supply that. Most often, that potential customer is already searching for a product or service. So, when your website appears in the search engine results pages (SERPs), it seems incredibly helpful to them rather than intrusive.

Developing an Inbound Marketing Strategy

Now that you know what inbound marketing is, you can see how helpful that is for lowering your cost per lead. If people already want your product or service, it’ll be that much easier to convert valuable leads into loyal customers.

So, how can you develop your strategy so that it works? It’s simple:

  • Determine your end goal and build a plan around that, staying focused and calculated
  • Understand what you can provide a customer to reach that end goal
  • Regularly analyze your plan to see whether it’s working or not. Establish metrics that you can review periodically
  • Revise your efforts based on the results of your reviews

Just like any good marketing campaign, you need to know what you’re looking for and how to measure that success.

For example, your metrics can include things like:

  • How many interactions a blog post gets
  • How many readers click through to a sales page
  • Whether your sales have increased since you began your inbound marketing campaign

Revisions don’t always have to be negative, either. For example, if you notice that one blog post is receiving a lot of engagement, you can consider recycling that content or posting it across all your social media apps, repurposing it.

Lead Generation: You’ve Got This!

So—how much is a lead worth?

That depends on several factors, but the bottom line is this: your leads are invaluable sources of income. They’re what you need to keep your business running successfully. Every company needs leads, and each one that connects with you—whether through email, social media, your website—is worth every ounce of effort.

As mentioned above, one of the surest ways to improve your stream of leads is with a highly-optimized, navigable website that invites viewers to get in touch with you. We can help you leverage your page, garnering you more attention and higher-quality leads that convert. This method directly lowers your cost per lead, making your current campaign the most effective one yet.

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