The Lead Generation Riddle: Exploring What the Hallowed Marketing Trend is Worth to You
Everything is in place. You or your client offers a quality product and service online; the company site is visually appealing, informative and easy to navigate; the e-commerce process is secure; the product delivery vendor is reliable. Everything was done correctly. Yet the site is not attracting the traffic and business you know the company’s diligent work merits. Conventional wisdom dictates one solution: lead generation.
That’s the story so far. Investing in a lead generation program assumes you or your client should conduct online lead generation in the first place. If a company sells online, more likely than not they should invest in lead generation, but knowing this offers no real insight into how to execute a plan or—more importantly—how much to spend. That question (“What should a company pay for leads?”) will drive every decision you or your client makes about the lead generation program. And to know what to pay for leads, you need to know what they’re worth.
The value of a lead is influenced by a variety of factors but is measured by a simple economic axiom: leads cannot cost more than the profit they generate. (And for that, no explanation is needed.)
To determine the profit potential of a lead start by mining data from the existing customer base. Calculate income customers generate over a set period of time—two or three months—and divide by the number of customers. The quotient provides the highest value you can expect from a lead; this is, after all, data about existing customers who are already familiar with the product or service.
Next, throughout the same time period and using the same formula, calculate income generated by new visitors to the company site. This is the lower end of the scale. So, there—simply: what to pay for leads. Good for you.
But wait a minute. Not all leads are created equal.
Just as existing customers are more valuable than new ones, the five types of lead generation vehicles vary in value based on quantity and quality of consumer-centric knowledge they yield. From least to most valuable, here they are:
Reader Comments.
We are all looking forward to the follow-up article from Allan Levy on answering the “burning” question: How to generate the best leads.
Any ideas of when this will be published?
Hi Allan, this is a great post. I like your study and your formula to calculate to get in decision.
Hope most people find it useful as me.
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