How to calculate the ROI of a lead generation campaign and concretely measure its effectiveness
Lead generation is the best digital marketing strategy with ROI (return on investment). I know this is a generalization because, of course, every campaign is personalized – and we would miss something else – on the client’s needs. And yet, in principle, it is not wrong to say that lead generation represents the best measurable investment for a company that wants to take the road of web marketing.
Let’s start with a premise: the world of marketing, especially the online one, is constantly evolving: a fact with which more and more entrepreneurs must come to terms.
Technology simplifies the measurement of results, so the data is rapidly becoming the decisive balance in this area.
If, until a few years ago most entrepreneurs chose a product or service based on the amount written at the bottom of a quote, today things are no longer the case.
Let me explain: today that companies have understood (at least in part) that a web marketing strategy can bring them considerable advantages – direct and indirect – from an economic point of view, price does not make the difference. Not anymore.
And what does it do then?
Web marketing professionals are now being asked to demonstrate not only how they are investing the client company’s money, analyzing the return on investment (ROI) of the lead generation strategy.
Unfortunately, most marketing professionals don’t know how. Or rather, often in order to push a customer to accept their own quote they are content to be entrusted with campaigns for a couple of months.
The truth is that in too short a period of time, generally less than six months – the results that will be obtained are partial and not very indicative with respect to the real effectiveness of the techniques implemented. I’m not saying they are in bad faith, mind you, but I argue that if they really want to offer a valuable service like the one that allows you to calculate the return on investment for a lead generation campaign, they may have to “lose” too indecisive or hasty customers on the street to focus on achieving goals with target customers.
But the point is: how do you calculate the ROI of a lead generation campaign?
So where do we start? Return on investment is particularly difficult to quantify when it comes to marketing actions. To truly understand how your investments in web marketing affect your company’s profits, you may need to employ more than one strategy. And this is the first point that shows how Lead Generation is the right way: because a lead generation campaign includes several strategically distributed actions over a given period of time.
Lead generation has changed traditional marketing. Indeed, he revolutionized it. I am inspired by an article by Frank Barker to help you calculate the roi of a qualified leads generation campaign.
Lead generation is central to most B2B companies. In fact, 83% of marketing managers say that lead generation is one of the main objectives of their marketing strategy.
In the past, static and cold websites and some paid advertising spot initiatives could produce some results. But today potential buyers – both in B2B and in B2C are more experienced and aware, so they expect a more interactive and professional approach.
Among the most commonly used lead generation techniques there are
- Social Media Marketing
- Content Marketing
- Video Marketing
The point is that, whatever tool you use, the results in the web marketing environment can usually be measured in real time. This gives you the ability to quickly adapt to changing scenarios and thus increase your results. There are online tools and tools that can tell you how many people are reading your e-mails and are visiting your website and how many and which leads are converted into customers.
Measure the effectiveness of individual channels
When you understand what your main lead generation activities are, it is much easier to demonstrate ROI.
By comparing the way your marketing content, PPC, SEO, email marketing and social media affect your ability to attract new customers, you can determine which assets are best to invest most of the resources on. But how can you evaluate this?
Cost per lead vs. Cost per acquisition
Two performance indicators (KPIs) useful in web marketing to calculate the return on investment of a lead generation campaign are CPL and CPA (cost per lead and cost per acquisition).
Using for example the Adwords parameters, the cost per lead can be calculated according to a model like this: if we suppose a budget of 3000 euros per month and we divide it by the 500 clicks (not leads) generated we can estimate a cost of 6 euros per click for AdWords campaigns.
If 10% of these 500 unknown clicks are converted into leads by filling in the contact form, you now have 50 qualified contacts (so much more inclined to the final purchase. And the cost per lead compared to the initial budget of 3 thousand euros is 60 euro 3.000: 50 = 60 euros CPL.
But the leads are potential customers willing to buy, but not yet final customers because they haven’t made a purchase yet. Here then we must also calculate the cost per acquisition
We take the same 3000 euros a month and say that we convert those 50 leads into sales at a rate of 10%, or 5 customers.
This means that we have invested 3 thousand euros to win 5 new customers with a CPA of 600 euros per customer. Customers who – if satisfied with the product / service purchased – will make new purchases with us. Therefore, those 600 euros of cost per acquisition of the single customer could significantly decrease in the future, provided however that the strategy contemplates a nurturing post-sales strategy to manage the customer’s purchases and convince them to new purchases.
This is why the campaigns of too short a period that I mentioned at the beginning of this article, especially in the presence of consumer products, are even less useful and convenient.
Calculating the ROI of a lead generation campaign is not so difficult, but to obtain reliable and contextualized performance indicators you need time.
Shannon T Robinson is a specialist in content marketing, she has a vast experience in writing different content on various topics. Currently she is associated with the leading Corporate UAE Film Production Companies. In a meantime she also manage her own blog and reading books.