Not All Leads Are Created Equal – 3 Things You Should Know To Spend Your Marketing Dollars Wisely
Recently, a Producers Club member reached out to discuss her marketing plan for the upcoming year.
In preparation, she broke down all the leads generated from the previous year by source: direct mail, referrals, SEO, trade shows, e-mail (which is really a lead activation campaign triggered by e-mail follow-up), Facebook and telemarketing. However, what she failed to provide – and what became the primary discussion of our call – was the VALUE of those leads.
Without THAT, no intelligent decisions can be made about where to invest marketing dollars and effort, no conclusions can be drawn. After a bit of discussion, we discovered that direct mail with telemarketing provided the most QUALIFIED and likely to convert leads.
This was no surprise since she was cleaning the list and targeting specific companies. However, direct mail and telemarketing did not produce the highest quantity of leads, or the number of leads at the lowest cost. Facebook did. But the Facebook leads barely converted (less than 5%) and did not represent the highest ROI in the end.
Further, in her reporting, the #1 lead generation tool was e-mail. However, as I stated above, those GOT to her from some other source. The ORIGINAL source was from direct mail, referrals, trade shows, etc.
A few lessons:
- While you want to track “raw” leads generated from every campaign, QUALIFIED leads matter most; and a subset of that would be qualified ACTIVE leads, meaning they are calling you, responsive, booking an appointment, etc. A campaign that gives you 50 leads in one shout *sounds* impressive, but if those leads don’t convert and/ or aren’t “high-value clients” (HVC), the campaign that brought them is nowhere near as valuable as a campaign that generated five leads that converted one or two into HVCs.My experience has shown that the easier and cheaper the process of fueling a lead, the less valuable it is (excluding referrals). A lead generated from a Facebook click is not as likely to convert or buy, stick and ascend than a lead I generated from a speaking engagement. So when evaluating marketing spend, don’t just look at lead QUANTITY, but quality and conversion.
- The true ROI (return on investment) of any marketing campaign should be viewed long-term, like any investment. If you purchase a home with the intent to rent it out, you don’t expect a return in the first or second month; and if you need that type of return, you’ll never succeed in investing. Therefore, if a lead costs you $500 to generate but gives you an MRR client worth $2,000 to $3,000 per month, that’s an exchange you can make ALL DAY.However, most opt for easy and cheap lead generation. Their cheapness and shortsighted view on marketing, on customers as “assets” and ROI gets in the way of enabling them to craft a more sophisticated approach to building the business.
- In your CRM, you should track not only the original source of a lead, but the campaign that activated them. In our CRM, we have well over 10,000 sweet- spot prospects that got there from various means over the years. That “source” field never changes.However, what will change is the campaign that “activated” them to book an appointment, sit a consult and buy. The ROI is attributed to the campaign that activated them, but we’re constantly looking at the original source to determine which sources bring us the highest-value clients. You should too, particularly if you have limited time and budget for marketing.