Every single business, whether it’s a start-up or a multi-billion dollar one, has lost a lead at some point in time. There’s no way around that and we all know how frustrating that can be.
Now, there are a plethora of reasons as to why a lead can go cold for different companies. And guess what? This is exactly what we’ll be focusing on in this post!
To put things into perspective when it comes to lead leakage,78%of businesses were disappointed with their conversion rates for 2016 (according toEconsultancy)!
But first things first, let’s talk about the average value of a lead, what the potential ROI is when it converts and how much you would be spending on a lead.
How much is a lead worth?
Most of us are already familiar with how important each lead is to a business. Your marketing team spends considerable time and money on nurturing a lead and making it sales ready and when the lead isn’t followed up on time for any reason – it loses it’s initial worth and also impacts the business! So let’s take a look at the easiest way to figure out how much a lead costs.
The value of a given lead can vary depending on the source. Without making things more complicated, here is a great and simple formula that will give you an idea about how much the average lead would cost you:
Let’s say the average amount spent on leads is$1000and your conversion rate is 20% (10 leads = 2 conversions/sales). This means that the average lead value would be $200! Or in other words:
(average amount spent) ÷ (conversion rate) = (average lead value) $1000 ÷20% = $200
Keep in mind that this is just an example so that you can get an idea of how much a typical lead would cost you. The ROI and the conversion rate, when you get things right, would skyrocket. That’s a different story, however, let’s see why.
Have a look at the handy formula above. Okay, now increase the conversion rate to 40% – not only will you realize that your ordinary lead will increase in price, but you’ll also be happy to find out that you get a better return on investment as a direct result!
Since we’ve got the lead value subject covered already, it’s time to concentrate on…
Why are companies losing their leads?
Let’s face it – leads can go cold and eventually lost for a number of reasons. Yes, there are boatloads of reasons why that might happen, but for the most part, there are some primary obstacles that every business faces:
- Responsiveness (or lack of) – The levels of impatience in today’s society is rampant. This study clearly shows that responding to a lead in five minutes (or less), rather than say thirty or more, will optimize your chances of converting a lead. That’s why responding to your leads ASAP (as fast as possible) would greatly increase your revenue potential.So don’t keep your leads waiting, because they might as well find what they’re looking for elsewhere. And you don’t want that!
- Biting off more than you can chew– You might have a solid lead generation strategy and have a constant influx of leads. But sometimes reps are overworked and a lead can be sitting idle for a long period of time in the reps bucket. When this happens, there are chances that you would lose a potential prospect. This could be avoided by diverting the lead to someone else on your team, who can follow-up accordingly.
- Failing to follow-up – Everyone loves attention and you’re potential prospects are no different! Showing them respect and admiration can go a long way to cement your business relations. And make sure that your sales team contacts them mainly by phone calls, as most people prefer that over exchanging emails. Also, note that phone leads have to be followed up (before they lose interest) in three minutes or less, on average.
- Improper cooperation between sales and marketing – What might be a valuable lead in the eyes of your sales reps, could be a completely different thing for your marketing team. When your sales team decides to cherry pick leads that they think are important, it could result in valuable leads being left behind. For this reason, it’s crucial to implement a lead scoring strategy to have a consensus between teams of what is important to a business.
Now that you have a clue about how much your average lead actually costs, and you are familiar with the fundamental pain points related to converting leads, you can approach the main issues more confidently.
When you optimize your lead distribution strategy (responding swiftly, adequate follow-up time, a proper collaboration between marketing and sales etc.), there is a significant impact on the loss of the leads which in turn shows up in your overall conversation rates.