You’re investing in digital marketing, engaging with your target market via emails and even recording a few videos. You’re doing everything right…right? You can do “good” marketing and still be in a bit of an illusion if you’re not calculating a few key metrics.
What this means is that you may be following the advice of marketing experts, investing in exactly the hottest channels with on-trend graphics and effective branding, but your lead cost is too high. Here are the metrics that can help you determine if your “good” marketing is coming at too high of a cost:
Cost Per Lead
You know what you spend on marketing, and you know what your revenue is, so calculating your cost per lead should be relatively simple. And yet many companies don’t do this math routinely enough to revise their marketing strategies accordingly.
What often keeps this metric from being a key part of planning is that organizations can’t agree on what a lead is. Is it a name and a phone number? Or is it a developed relationship that’s ready for an in-person meeting? Maybe it’s just someone on your email marketing subscription list. You can’t calculate your cost per lead unless you know who counts as a lead for your business.
Lifetime Value of a Customer
Another way to calculate the cost per lead is with a more advanced metric which takes the profit times how many times that customer will buy over time. You can use existing customers and segment them by average order size or type of products to get a more accurate read on this.
Getting a clearer picture of the cost of marketing requires you to examine the percentage of leads that schedule an appointment, and from there, how many actually convert.
You Should be Improving Your Cost Per Lead
Your marketing team is likely considering some new trends and whether they should be woven into your existing strategy. Marketing is an advancing field: not long ago, marketers were tied to the expensive craft of outbound marketing that cast a wide net at a high cost. Now it’s increasingly targeted, allowing companies to only reach out to those most likely to make a purchase.
As a result, your cost per lead should be decreasing over time. And depending on your industry, there’s a lot of variation in how your efforts translate to sales. Here are a few average costs per lead by industry:
|Travel & Tourism||$106|
You can also examine the cost of generating leads by marketing channel. Events and trade shows deliver the most expensive leads at the average cost of $811 per lead. Search engine advertising comes in at $110 per lead and content marketing at $92 per lead. Search engine optimization, for all its seemingly-complicated algorithmic magic, is the budget-friendly option at $31 per lead.
You can’t look at a marketing strategy and know whether it is a successful approach to growth without calculating your cost per lead, your lifetime value of a customer and your conversion rates.
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