Understanding the value of your leads isn’t just about knowing if a lead is qualified or not. Tracking lead value, and the analytics associated with current lead activity, not only helps the sales team better understand lead trends and their customers' journey to conversion but also helps leadership make informed decisions on past campaign success and future growth opportunities.
This article will break down 4 different ways to calculate and use lead data to drive growth.
Off the top of your head, do you know how much each lead costs from a specific social media channel or display advertising? Knowing how much each lead costs is critical to a winning marketing plan and overall growth. After all, if you’re paying more for leads than what you are gaining in sales, immediate adjustments need to be made to the current lead generation strategy.
Cost-per-lead = Total marketing spend/Total number of leads generated
Once you understand the cost per lead related to each channel, informed decisions can be made about which channels are providing the highest ROI. Needless to say, those are the channels you’ll want to focus your time and financial resources.
In addition to knowing how much each lead costs to acquire, it’s good practice to know how much value (revenue) a lead provides after conversion. To calculate Lead Value, you’ll need to know two things: Total sales in a set time period and the total number of leads generated during that same time period.
Lead value= Total Sales / Total Leads
Another critical lead benchmark is knowing how many leads actually convert to sales. In other words, how many 'Nos' did it take to get a, 'YES!' ? When calculating lead conversion, it's important to focus on a time period. For example, out of all of the leads generated in January, how many converted? This number can help energize the sales team and reassure the team that they should not to get discouraged after a few nos - the Yes! is right around the corner.
Lead conversion rate = [Converted Leads ÷ Total Lead Volume] x 100
Lead Velocity Rate measures the real-time month-over-month growth of qualified leads coming into your pipeline. Not to be confused with sales velocity rate, which measures how quickly sales move through your pipeline, LV focuses solely on current qualified lead growth. What sets LVR apart from other metrics is that you can accurately gauge in real-time how strong your existing pipeline is and how much revenue can be generated from those qualified leads.
HOW TO CALCULATE LVR
Lead Velocity = The number of qualified leads last month - the number of qualified leads this month / Divided by the number of qualified leads last month. Multiply by 100 to get the percentage.
Depending on your business model, you may find value in tracking all of the lead metrics mentioned above, or possibly only a couple of the metrics. That said, regardless of your business model, understanding the value leads bring to your bottom line in addition to overall sales is critical to future growth.
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