• Lead Generation Metrics that Matter

    Posted On Monday, January 23, 2017 by Robert Smith

    If you aren't monitoring key performance indicators (KPI) of your lead generation efforts, you won't be able to optimize it. Unfortunately, many business-to-business (B2B) companies and their respective sales and marketing leaders turn a blind eye to this step, focusing strictly on lagging indicators; likes revenue. While sales is arguably the single most important KPI, there are lead generation metrics that are considered leading indicators that you should focus on monitoring, including the following.

    Click-Through-Rate

    Click-through-rate (CTR) is defined as the percentage of prospects who click your call-to-action (CTA) or ad in promotional material. You can calculate your CTR by taking the total number of clicks and dividing it by the total number of views. If 1,000 prospects see your ad on Facebook, 100 of whom proceed to click your ad, your campaign has an average CTR of 10%. 

    You can encourage higher CTRs by split-testing multiple ad copies. Also known as A-B split testing, this involves running two or more different ads simultaneously. After allowing them to run for a given amount of time, you can delete the ad with the lowest CTR and replace it with a new ad. Rinse and repeat while optimizing your ads for a higher CTR.

    Time to Conversion

    As the name suggests, time to conversion is the length of time it takes to convert a prospect into a paying customer. Generally speaking, you want this metric to be as low (or short) as possible. The longer it takes to convert a prospect into a paying customer, the more resources you'll have to exhaust – and those resources cost time, money and energy.

    This doesn't necessarily mean that you should pitch your product or service to a prospect during the initial correspondence. On the contrary, nurturing your leads can yield more sales. However, you should optimize your sales funnel so leads stay interested and engaged through all stages; otherwise, you may struggle with a long time to conversion and fewer sales.

    Return on Investment

    Return on investment (ROI) is a measurement used to define the financial return on a budget allocated for advertising. You can calculate ROI by taking the total amount of revenue generated by your advertising efforts and dividing it by the total amount of money spend on those advertisements (ROI is expressed as a percentage). If you spent $2,000 on advertisements, and those advertisements generated $4,000 worth of sales, your ROI is 200%. 

    It's important to note that an ROI can be negative or positive, depending on whether or not you turn a profit from your advertising efforts. Using the example cited above, if you broke even by spending $2,000 on advertisements and earning $2,000 from those advertisements, you'd have a neutral ROI of 100%. But if you only earned $1,000 from those advertisements, you'd have a negative ROI of 50% – you only recouped 50% of the money you spent. You will also need to consider your companies typical net profit margin per newly acquired client to determine whether or not a strategy is working or should be re-evaluated. 

    Cost-Per-Lead

     This metric is pretty self-explanatory: cost-per-lead (CPL) is the average cost of acquiring a lead. It doesn't matter if the lead converts into a paying customer. Rather, CPL focuses strictly on how much it costs to acquire the lead. This metric is great becuase it will help to give insights on the ROI of each lead generation strategy that you employ.

    If you purchase sales leads it is pretty straight forward to calcuate. CPL is also possible to determine for more indirect methods as well, like organic SEO; just add the resources invested in SEO over a given period up time(content creation, contact promotion, mgmt, etc) and divide the the number new sales leads generated from that source.

    If you spend $500 to acquire 200 leads, your average CPL is $2.50 – each lead costs roughly $2.50 to acquire.

    Cost-Per-Click

    Cost-per-click (CPC) is the average cost for ad clicks. This metric is frequently used when analyzing the performance of PPC campaigns such as Google AdWords and Facebook Ads. Keep in mind, however, that CPC doesn't apply to all advertising platforms. This metric is only used on platforms where the advertiser pays for clicks.

    Cost-Per-Impression

    If an advertising platform doesn't charge for clicks, it probably charges for impressions – or more specifically, every 1,000 impressions. In other words, advertisers are charged a flat fee for every 1,000 people who see their ad. Known as cost-per-impression (CPM), it's frequently used in TV commercials, radio advertisements, magazine advertisements, and various online channels.

    Conversion Rate

    Conversion rate is defined as the total number of leads divided by the total number of sales (conversions), expressed as a percentage. If you have 500 leads, 100 of whom proceed to buy your company's product or service, your conversion rate is 20%.

    So, what's a normal conversion rate for online sales? Well, it depends on dozens of different factors, including the product/service, the platform on which you are selling it, your audience, industry, time of day and more. According to a report published by SearchEngineLand, however, the average landing page conversion rate across all industries was 2.35%, although some of the leading landing pages had conversion rates of 5% or higher.

    Closing Rate 

    Closing rate represents the percentage of sales leads that convert to actual sales. It's pretty much the same as conversion rate, with the only difference being that closing rate is used primarily as a sales metric, whereas conversion rate applies to all industries. Furthermore, conversion rate doesn't have to involve a sale. A prospect can “convert” simply by completing a form of proceeding to another step in the sales process.

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