This blog will look at the issue of lead generation costs and how you can attract more leads for your money.
What Is Your Lead Generation Cost?
The cost of generating leads in your business is a critical issue - you can think of a business as having two primary purposes:
- To create a customer - by attracting people who are qualified to buy (they want what you sell and they have the ability to pay for it) and persuading them to buy.
- Keeping the customer buying.
So how much it costs for you to generate a lead and to create a customer are critical statistics that you should know.
First, how much do you spend on lead generation?
I have strong views on this - your lead generation cost must include an assessment of your time to help you to look across the different ways of attracting prospective customers and making an objective assessment.
The easy way to calculate the cost of your time is to decide how much you want to earn and divide it by the number of hours you want to work. That gives you an hourly rate.
So that networking meeting which costs £15 for lunch, doesn't just cost £15.
If you calculate your hourly rate at £50 per hour and it takes three hours, then consider you have spent another £150 - making the total cost £165.
And how many good leads did you get from the meeting? Did you get value for money?
Trading Time For Money
One of my favourite sayings is:
"Rich people spend money to save time.
Poor people spend time to save money."
I also like the idea that "if you want to be rich, you should do what rich people do."
I want you to think about how you trade time for money and whether you have the balance right in your lead generation activities.
As a Guerrilla Marketing Coach, I teach people how to substitute time, energy, imagination and knowledge for money but I also want you to see your time as precious and to continue look for ways to reduce the total lead generation cost.
How To Reduce Your Lead Generation Costs
There are only two ways:
- You can make your individual marketing and lead generation activities more effective.
- You can switch activities to a lower lead generation source.
Making Your Lead Generation Activities More Effective
This is concerned with getting more qualified leads from what you do and that means two things.
- The marketing message - and making it a stronger magnet
- Your target market
So if you are advertising, you need a stronger advert which gives readers a more compelling reason to act now.
The same with direct mail.
If you are networking, then you need to find a better way of explaining how the people you are speaking to - or people they know - can benefit from what you do.
If you are using telemarketing, you need a stronger script or grabber at the start of the call.
You need to improve your message - so look at how other people promote and try to detect patterns. Read my blogs on copywriting./
You also need to consider whether your improved message is reaching the right target market.
Advertising may be right for your business - but you may not be advertising in the right place. Your direct mail list may have a high proportion of people who wouldn't be interested. Your networking group may not have the right people - many I have tried have been filled with professionals - accountants, financial advisers, consultants and coaches.
So is your marketing missing its target market?
Do you even know who you are targeting?
The more precisely anybody thinks the marketing is talking directly to them, the more persuasive it is.
Switching Your Lead Generation Activities
I have a simple rule.
Do more of what's working and do less of what's not working so well.
If you have a great advert that generates a good source of leads but your telemarketing campaign is OK but not exciting, switch the money.
Find another place to run the advert where you will reach more of your target market and do less telemarketing, perhaps focusing on a more tightly defined group to call.
You may be using the wrong media.
If your prospects don't search the Internet, then no matter what you do with your website, it is not going to be effective.
If your target audience resent the intrusion of telemarketing, then the reaction you get will be very frosty and you will find it difficult to start the conversation.
Two Warnings About Reducing Your Lead Generation Costs
Monitoring leads and calculating lead generation costs is relatively easy - although in my experience, most small businesses don't do it.
But generating leads is not the primary objective - it is just the starter.
So ideally you want your tracking system to extend deeper than just identifying how many leads came from which source.
What proportion of leads became customers and what lead sources provided the leads which became long term or high value customers are the true indicators of where your marketing and lead generation money should be spent.
The second warning is that you don't want to rely on only one method of lead generation - no matter who much cheaper it is than the others.
Rules can change.
Suppose that you find telemarketing is the most effective - that's great for now but what would happen if there was a major clamp down on telemarketing either by the regulatory authorities or the prospects had a much more effective way of screening you out.
Or if you attract all your leads through the Internet, what would happen if the search engine algorithms change and you move from page one to page ten?
But My Lead Generation Isn't Attracting Leads
If your problem at the moment is that you are not getting the flood of leads you want, the same advice applies.
The problem lies in how well your message matches your target market or even reaches them through the media you are using.
Is It Time To Increase Your Lead Generation Costs?
The next blog I intend to write will challenge the idea of whether you want to follow the conventional wisdom and continually spend less and less on attracting prospective customers.
The ideas are counter-intuitive but make sense so look out for it or even join my RSS feed.