The Big 3 Indicators of Lead Quality
When it comes to lead generation, there are three key factors to consider when judging the overall quality of the leads generated from any marketing program.
1. Relevancy: the Right Sales Prospects for the Right Products
Today, businesses have access to more potential buyers than ever before on the Web, but where before high volumes of “traffic” used to be the most important success metric, today “relevancy” has become more important than traffic to B2B marketers. In other words, it’s quality over quantity. Any marketing program, whether it is paid search, SEO, list buys, or outsourced lead generation, is a waste of money if it’s not delivering the kind of targeted prospects that fit your sales goals.
2. Results: Average Cost per Sale and Return in Investment
While it may sound a little counterintuitive, you can’t judge lead quality by one lead. Basic statistical theory will tell you that a sample size of one, or even 10, is just too small to make an accurate assessment. Would you fire a sales person based on the fact they got one lead and didn’t close it? Or, the flip side – would you pay them their entire commission for the year based on closing one deal (assuming their goal is to close many deals over the course of that year)? Then you shouldn’t rule out (or rule in) a lead source based on one lead either.
This is why, whether you’re testing a lead provider or any marketing program, you want to test a large enough sample size of the leads and sales generated (over an appropriate time frame for your sales cycle) to get a clear picture of what the overall return will be. As the old saying goes – it’s not what you spend; it’s what you keep – so, the overall cost per sale and ROI are your most important metrics for judging the quality of the program.
Here’s an example: You’ll see how a test buy of 50 leads can give you a clear picture of which program is your better bet. If you purchase 50 leads at $100 per lead, and those leads are high quality, averaging an 8% close rate, you’ll get 4 deals from a lead spend of $5,000; a $1,250 cost per sale. However, consider if you go for a lower priced lead – say $75, but the quality isn’t as good, and the close rate averages 5%. You get more leads – 67 for your $5,000 spend, but you’ve only closed 3 deals. Your cost per sale nets to about $1,667, but worse - your sales team has put in 30-40% more effort to work the cheaper leads – and for less of a return!
3. Resources: the Human Effort Needed to Close the Lead
As the example in #2 illustrates, all too often, we look at performance metrics for a given marketing program and judge it solely on the numbers. But an essential part of lead quality is how much of your team’s resources (i.e. time, energy, and least important skills) it takes to close the leads they get. Human effort can be measured with time, but can you measure human aggravation? Sales people are at their best when they have a great sales prospect on the line – not when they’re cold calling and getting hung up on, or worse – wasting time on prospects who aren’t in the market for what they’re selling.
The B2B marketer with insight into what makes a quality lead will be the one who gets the most value for their team’s time, money, and effort.