The majority of marketers spend at least 50% of their marketing budgets on lead generation efforts. And there’s a reason more business owners are investing time and money into lead generation. It’s because to sustain – or better yet, to grow – a business requires a steady and increasing flow of prospects and customers through your funnel.
But if your lead generation investment is only breaking even (or worse, costing you a lot of money), it will not be able to sustain your business long term.
Do you know how profitable your lead gen efforts really are? We breakdown the profitability of lead gen and selecting the right strategies for your business in this article.
How To Know if Your Lead Gen Efforts are Profitable
No matter what you’re putting your time and money into for lead generation projects you pursue, it’s important to measure how profitable, and thus how successful, your efforts are. And this can give business owners critical insights into their growth and potential new markets. It’s simple to calculate, and there are several ways to approach profitability.
Start by tracking key metrics that indicate lead flow and associated cost:
- Number of Leads: total number of prospects in your lead funnel.
- Revenue per Lead (RPL): amount of money earned per lead.
- Cost per Lead (CPL): amount of money required to generate a new lead.
- Sales Conversion Rate: number of closed sales divided by total leads.
Calculating your campaigns’ ROI is integral to determining how profitable your lead gen efforts are. More and more, the bulk of a business’s lead generation efforts are digital marketing. And by merging sales and marketing data, either with a CRM or lead generation agency, you can more precisely determine acquisition costs.
To determine ROI, use this formula:
Forecasted Revenue = [Number of Leads * Sales Conversion Rate * Average Purchase Value]
ROI = [Forecasted Revenue – Marketing Spend]
Being strategic about where you spend your marketing dollars is crucial to ensuring your lead gen efforts are profitable.
For example, if you’re paying for Google ads to be displayed on a wedding planning website, but you own an MSP that targets small, local businesses, you’re probably losing money on those clicks; your ad dollars would be better spent bidding for space on a local business chamber website.
What are Profitable Lead Gen Efforts?
Profitable lead gen efforts look different for every business. It depends on your business’ niche and goals; but more importantly, it depends on your customers. You must develop a strategy that’s right for you.
Here’s some tips for developing a lead gen strategy that fits your business and customers.
#1. Tapping into your audience.
Creating highly targeted campaigns is critical to efficiently applying your lead gen resources. And, to create targeted campaigns, you first need to understand who your audience is, what they care about, and where they are online. Here’s how to start.
- Market research – collect information on purchasing trends, market shifts, and your target audience’s demographic and firmographic data. With these insights, you’ll have the key to understanding your audience’s needs and values.
- List segmentation – apply your market research to your email contacts by segmenting your contact lists. By creating contact groups, united by a commonality, like past purchasing behavior, you can better target prospects and current customers.
Compiling information about your audience will help you connect with them in a meaningful and effective way, and it is the cornerstone to profitable lead gen efforts.
#2. Valuable Content
An effective way to generate leads, and promote re-purchasing, is to create content your audience finds valuable. Your social media page, email, and website are great places to share content that demonstrates your expertise, addresses your audience’s pain points, and provides solutions via your products and services.
Content is also basically free to make, it only requires a bit of time and research – but anyone can do it. Plus, many content tools, like Answer the Public or Canva, offer free access to part or all of the platforms’ functionality. And, of course, it’s free to share your content.
Additionally, by optimizing your content for the search engine (SEO), potential prospects can find your content – and therefore, your business – that matches their queries. This content can be useful for not only identifying potential prospects, but also determining what stage of the buyer’s journey they are at.
#3. Email Marketing
Each contact on your email list(s) represents potential sales. That’s why email marketing is, and has been, a top lead gen tactic in the B2B space. You can reshare your valuable content and new offerings, and have it delivered directly to potential and existing customers’ inboxes.
Part of what makes email marketing so profitable is that it’s low-effort and effective. With automation, list segmentation, and a back log of content, email marketing ROI averages – and can succeed – $36 per $1 spent.
And it’s even more profitable if the only thing you’re investing in it is a little bit of time. At Extu, we provide high-quality content and effortless automation tools to propel your lead generation activities. Our no-cost marketing campaigns and automated email sends ensure lead generation profitability for your business. To learn more about our program, visit our IT partners or brokers program page today.