Measuring Success Based on Cost-per-Lead Kills Companies
One of the biggest problems with the management of sales leads today is that more and more companies are basing lead-generation buying decisions entirely on cost-per-lead.
Sales people complain about the quality of leads produced, and they likely ignore most of the leads they get anyway. Without feedback from Sales on lead quality, forecast status, and close rates, management defaults to measuring Marketing by quantity rather than quality.
Let’s assume, however, that you work at a company that has been forced to evaluate and reward Marketing on the basis of cost-per-lead, and that the company mandates that cost-per-lead must be $350. You can achieve that by doing the following:
· Reduce the base salary of the employee producing the leads
· Increase the number of leads required per person, per week
· Increase the number of touches per day
· Decrease the number of touches per contact
· Decrease the number of line-of-business contacts per company
Many executives would agree, based on productivity metrics and best-practice requirements, that those are unlikely options. Is it possible to create high-quality leads to support a field sales force selling a $100k+ solution for $350 per lead? Frankly, no.
Over the past 20 years, the average cost-per-lead for a relatively complex sale (e.g., hospital revenue management solution, ERP, and BPO consulting) has ranged from $750 to $1,500—and those programs’ ROI was excellent.
So, how much should a lead cost? A lead should cost more than you think, but probably a lot less than you are paying, especially when process inefficiencies and opportunities lost to the competition are taken into account. The reality is that leads cost what they cost. Continue reading →