How Many Leads Do You Need? Part 3 of 3
Are the leads that come into your business worth more than you thought?
Again, what surprised you?
Could you dig deeper to see which leads are worth more?
This is gold for you if you’re not already doing some analysis like this. You had to work pretty hard for the dollars you have. Don’t send them away with a hope and crossed fingers.
Now that you know where your leads come from, and how much each is worth, you can make some spending decisions that you know will help your business.
This post is Part 3 of 3 in a series of posts designed to help you decide if your website is generating the customer leads that you really need.
Do you need to catch up? Here are all the parts:
Part 1: Does Your Site Generate the Leads You Need?
Part 2: What is a Sales Lead Worth?
Part 3: How Many Leads Do You Need?
So, How Many Leads Do You Need?
Now you have the information you need to figure out how many leads you’ll need to get to meet your revenue targets.
First, A Little More Math AKA Cost Per Lead
So, for the big picture, it’s helpful to know your overall cost per lead. Again, this isn’t exact. If you have lots of folks to track and analyze, awesome, YOU can be exact. I’m talking to people who are busy, trying to do as much themselves as they can.
This math is pretty easy. Look at your marketing expenses for a year. Then figure out an estimate of leads per year. Divide your marketing expenses total by your number of leads per year. This is your overall cost per lead.
Next, take each type of lead you’re getting. With the numbers you have, estimate how many you would get of one type of lead per year. Look up out how much you spending marketing to that group of leads for the year. Divide your expenses by the number of leads. Here’s your cost for that specific type of lead. Is it more or less expensive than your overall cost per lead?
Decision Point 1 – Are the Leads Worth the Expense?
Do the leads that are worth the most cost the most? Or do you have the opposite situation going on? If your lowest value leads cost the most, you may want to stop spending in that area!
Second, How Many More Leads Do You Need?
Now that you have the value and cost of each type of lead you bring in, you can figure out how many more leads you need to bring in the revenue you want.
If you would like another $10,000 per year, and leads are worth an average of $400, then you will need 25 additional leads. If you can just get 25 more leads this year, you can make $10,000 more. So, how to get those leads.
But, if leads from different sources have different values, and different costs, then you have to do a little more math.
You have $500 to spend on gathering new leads, and you need to get $10,000 more per month in revenue. You can spend that $500 and get 23 new website leads valued at $450 per lead. Or, you can spend $500 and get 35 new Yellow Pages leads valued at $350 each.
These numbers are completely made up of course, but you see that once you have some data, you can start looking at your spending this way. Before the lead analysis, you only knew that you could spend $500 and get either 23 or 35 leads. Seems like an easy choice. But if you do the math, the 23 more valuable leads will result in a higher revenue.
Third, Can Your Website Bring You Those Leads You Need?
Like I said last week, I believe that in general, the most cost effective marketing you can do is to have a professional website. But, you have to figure out whether this is true for your business.
Just plonking up a site isn’t really going to cut it. But, if you or your web designer optimize your site for gathering and converting leads, then that website can work for you day and night. It won’t get sick or go on vacation.
You're a business-owning mom, so you use this guide to prioritize your tasks in 2 minutes, and have 41 minutes left to knock out a task.