What’s a lead worth to you?
Cost-per-lead (CPL) is a time-honored metric for evaluating generation of sales prospects. But it doesn’t measure the value of a lead. With more digital marketing channels available to generate greater sources of leads, it’s all too easy to focus on driving down the CPL. But does that really help drive business growth?
Madison Logic produced an interesting infographic[i] that’s drawn a lot of attention. It shows the cost per lead in select B2B verticals ranging from a high of $60 in healthcare to a low of $31 in technology (to reach those in marketing the cost was $32).
Cost can vary dramatically though. Writing in DemandGenReport[ii], Jenny Vance relates an example of a health care data client targeting prospects that require time to nurture, with campaigns resulting in CPLs that ranged from a low of $259 to a high of $783.
But, she noted, “some of the campaigns with the lowest CPL performed the worst when looking at the number of opportunities generated as well as the forecasted deal size per opportunity; while the two campaigns with the highest CPL had strong conversion to opportunity and were associated with the most forecasted revenue.”
At many companies, volume takes precedence over cost, according to a Heinz Marketing survey of 250 B2B marketing professionals[iii]. Just 25% of respondents say that CPL is a metric used at their company, while 68% say number of leads generated is used.
“There is enormous disparity among B2B companies when it comes to lead generation practices,” Michael Brenner writes in B2B Marketing Insider[iv]. “Many businesses waste money on unqualified leads or fail to nurture the qualified ones. And a shockingly large number have not even identified their sales funnel.”
There are, of course, other ways to track the ROI of lead generation. Those focused on leads generated by web and social media may be more interested in cost per acquisition or cost per conversion[v].
But focusing on CPL alone, or any other metric in isolation, is likely to lead you into the debate over inbound vs. outbound marketing, over which much electronic ink has been spilled. In the B2C market, this is often a no-brainer: web clicks can generate massive volumes of inbound leads and if you can convert them into sales for even low-cost goods and services you can be successful.
Even in the B2B market, the arguments are being waged that customers are going to find you when they need you. Depending on which source you rely, 60% to 90% of the purchasing decision-making process is already complete by the time a live connection is made between buyer and seller[vi].
Still, the B2B market, particularly for complex products like software and medical equipment, is very much dependent on consultative selling. No B2B marketer can afford to be complacent in relying on one strategy versus the other. They need content that will draw in prospective buyers. But B2B marketers also need to be able to identify the right decision-makers and provide the sales team with insight into what makes those prospects tick.
This issue is really about what motivates the buyer and how you can align your assets — both inbound and outbound — with the needs and desires that will make him or her sign on the dotted line.
For more insights, read SimplyDirect’s The Best of Inbound and Outbound to find out how leading companies are avoiding the problems of both by using surveys to engage their prospects with a unique, valued, and differentiated perspective.