What is a lead worth?
How much can you spend on advertising per lead and still make a profit?
By knowing how much a lead is worth to you and your business you can get a jump on your competitors.
Let me give you some tips and steps for creating an effective online lead generation campaign.
The first step is to determine what a lead is worth to you?
Is a lead (for now, let’s define a “lead” as someone who visits your website) worth 10 cents to you? 25 cents? 5 dollars?
You need to understand what leads are worth to you, so you can generate leads at a lower cost than that amount.
How do you determine the value of your leads?
The answer is to know, track and constantly improve your conversion rates. Conversion rates refer to the percentage of website visitors who take the actions you desire.
For example, let’s say that for every 200 visitors that come to your website:
- 6 buy one of your products or services from your website
- 8 fill out your contact form
- 4 email you
- 12 call you
In this example, 30 visitors took the desired action;
Or you had a 15% overall conversion rate.
And your conversion rate on buying online was 3%, on filling out the contact form 4%, and so on.
The next step is to determine how much each of these conversions is worth to you.
For example, let’s say:
- Your average product or service sale on your website generates $50 of gross profit
- 25% of people completing your contact form eventually buy from you at an average gross profit of $100 each
- 50% of people who email you eventually buy from you at an average gross profit of $75 each
- 33% of people who call you eventually buy from you at an average gross profit of $150 each
In this example, for every 200 visitors, you would generate $625 in gross profit as follows:
- $300 in gross profit from online sales
- $200 in gross profit from contact form conversions
- $150 in gross profit from email conversions
- $600 in gross profit from telephone conversions
Which means that every visitor to your website is worth $6.25.
As long as you can drive visitors to your website at less than this amount, you will generate profits.
Importantly…..
Not only must you know your conversion rates, but it is critical for you to continue to test and track to improve your conversion rates.
By changing the layout of certain pages of your website, you could boost overall conversions by perhaps 25%. This would mean that the average value per visitor to your website would jump from $6.25 to $7.81.
Not only would this jump allow you to boost profits,
but it would enable you to outspend your competitors and advertise in places where they can’t (since they perhaps generate only $5 per visitor).
This is how you can truly dominate your market.
Now you can make some very strategic decisions with your business.