What is a Sales Lead Worth? Part 2 of 3

If you’re anything like me, you run a small business with clients who come from a variety of sources. Hopefully, you’ve been asking your clients and you’re starting to get a good picture of where your leads and eventual clients come from.

Were you surprised at all? Do you have a minimal Facebook presence, but get half your leads from that page?

Or is it more complicated? Did your leads take a roundabout way to get to you? Saw a billboard, checked out your website to see you professional you looked, and then drove to your storefront?

Knowing this kind of information can help you make decisions on how to spend your marketing dollars. 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. This post is Part 2 of 3 in a series of posts designed to help you decide if your website is generating the customer leads that you really need.

To make much sense of this post, you’re going to need to collect information on actual sales leads. Part 1 of this series has some great info on how to do that:

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?

What is a Sales Lead Worth to You?

Do you ever think that every email, every call, every contact represents potential income? At some point, it’s a numbers game, right? If you get 1000 phone calls, it’s likely that someone will buy from you. If you knew what percentage would buy, you could do some really great planning.

Step One – Basic

So, if you’re not a data-loving person, and you didn’t collect up any data, but are reading through anyway, here’s the basic idea.

  1. Ask yourself: How many calls/emails/walk-ins do you get in one day/week/month?
  2. Next, ask: How many new customers do you get in one day/week/month?
  3. Then do the math. Customers divided by leads = the percentage of leads that become sales. (This is clearly not exact, but will give you a good back-of-the-napkin type figure.)
  4. Okay, do you have a figure for the dollar amount of your average sale? Again, it’s great if you have detailed reports with precise data. But if you don’t, use your best idea here.
  5. Take your average sale amount and mulitply that number times the percentage of leads that become sales.
  6. This is what a lead is worth to you.

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My contractor client gets 25 calls per day.

He gets about 2 sales per day.

So, his percentage of leads that become sales is 2/25, or .08 or 8%. (these are totally fake numbers)

Now, his average sale is $5000.

$5000 * .08 = $400. Each lead is worth $400!

Cool! So my contractor can increase his weekly sales by $1200 if he brings in just 3 more leads per week.


I hope the above numbers make you think about what you can do with that information. When I worked through some guesstimate-type numbers with my contractor, he was surprised how much each lead was worth. So we then turned to the data provided by Yellow Pages about his ad and his website. When he added up the dollar amount for each lead from the YP, it was high enough to justify keeping the ad. It felt good to know he was making the right call.

Now, is that data a little broad? Yes. We didn’t know if all the leads that turned into customers were the ones from the YP. In fact, some were likely from other sources. But we worked with the data we had.

Step Two – Diving Deeper into the Data

Remember the lead tally sheet that you have been keeping? If you don’t have one, re-read Part 1 of this series!

Add some columns or fields to your tally. It’s time to start marking which leads become customers and how much they spend.

I also recommend keeping track on this sheet of which customers were pleasant, which jobs were the type you prefer, and which customers are repeat customers.

Track this info over time and keep your sheets from previous weeks/months. Sometimes it take multiple contacts for a lead to become a customer. You’ll be able to see how long it takes from initial contact for a lead to make a purchase, and you’ll see how many times a lead needs contact before making a purchase.

Also add anything that is relevant to your industry or your particular business. Like, maybe, how connected in the community the lead is, or whether the lead was referred by someone.

All of this information will help you to see:

  • where your leads are coming from
  • what your average lead is worth to you
  • which leads turn into customers
  • which source gives you the leads you want

In Part 3, I’ll take you through some of the decisions this data will let you easily make. I hope that you can see that leads really do have value, and I hope that you can now calculate what value those leads have to you.

If you’d like to read the 3 part series, here are the links:

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?