Marketing Advice

A Quick Way to Measure Marketing ROI and Lead Value

Posted by Travis Baker on April 24, 2017

As marketers, we spend a lot of time and money making sure that we get more leads. Leads are the lifeblood of sales. While you should measure marketing ROI with more than lead generation, many of things that we try to do in marketing are to drive more leads.

There is a world of tactics that you could spend your marketing dollars on to harvest more leads. However, how do you know where you should spend them?Well, I would look at your most recent expenditures. Check your CRM and see where you have spent money in the past. (don’t have a CRM? Let me suggest one for free here).

Let’s say you recently attended a trade show. You spent $50,000. Be sure you include everything. Travel, meals, booth space, entertainment, giveaways. Everything.(and yes I know that there are more benefits to trade shows then raw leads, but we are going to simplify for the sake of illustration.)

You generated 50 leads and 25 qualified leads (want to know the difference between qualified leads and regular leads? Check out our video).

Now we need to make assumptions so feel free to put in your numbers. Download the Lead Calculator here.
Find out the Value of  Your Marketing Leads!
Let’s say for instance that you can usually get five opportunities out of 25 qualified leads, and out of the opportunities, close one sale. 

If your sale generates 50k + you are good. If not let’s say it only causes 20k...well...then you might want to look at what other returns you are getting on that trade show.measure marketing ROI.png

But before you cut the show entirely ask yourself, how many times does that customer you generated buy again? If they are going to buy only one more time, that puts you at a 50K investment with a 40K return. Not great, but a lot better.

But if your customers tend to repeat buy over an amount of years the scenario becomes more attractive. Let’s say if they buy every two years for ten years then absolutely keep going to the show if you can get that return.

How Much is a Lead Worth?  
   
How often will a customer buy? 5 times
Average Sale Price $20,000
Opportunities to Sales 20.00%
Average Opportunities from Q.L. 20.00%
Qualified Leads (Q.L.) from Leads 50.00%
Leads 50
   
Each lead is worth $2,000
You have Generated $100,000

 

This chart demonstrates you can spend $100,000 for your trade show and still break even.

Remember generating leads is not the only goal for marketing, but if you want to tie a quantitative value to a specific marketing spend it works fairly well.

Want your own lead calculator? Download it here.

Topics: lead value, marketing ROI