We recently held a webinar entitled “Is the Cost of Lead Development Helping or Hurting Your Bottom Line?”
We received an abundance of questions for the speakers: Dave Yoho, Chris Behan of Socius Marketing, Mark Highbaugh of Marlimar Mobile Strategies and Tim Musch of Marketsharp, which will now be addressed here.
NOTE: we will also be producing part 2 of this webinar entitled “10 Ways to Develop the Quantity and Quality of Your Leads” on August 2nd, 2017.
Q: Help me understand, if we are marketing a product, we have to spend money developing leads. If our revenue is increasing and we maintain profitability, how can we be hurting?
A: (Dave) In 2016, the cost of an issued lead rose $50. Marketing costs in some companies range from 8% to 20% (and sometimes more) of the revenue produced. Some companies have a contentment, simply because despite rising costs they made a profit. This webinar was developed as an aftermath of studying results for 2016.
Q: What constitutes fully loaded marketing costs?
A: (Dave) Lots of stuff — All the cost attendant to developing and maintaining your webpage. The cost of preparation and use of print media and direct mail. All the cost attended to participating in a show/event. The cost of maintaining your showroom (a) if you lease the building, that proportionate amount of rent, light and heat for that space (b) if you own the building, same formula. The cost of those that man a showroom or work at events; jobsite signs, canvassers, managers; the cost of the phones and computers enabling the task. Get the picture?
Everything related to all these supports to develop leads. These should be created as a separate classification by your bookkeepers and segmented by your accountant when you receive an operating statement (P&L).
Q: How does the latter relate to the costs of an individual lead?
A: If you add up your fully loaded marketing costs as above, and divide it by the number of leads, which you received, that will give you the basic costs of acquiring the individual lead. The next step is to determine how many of these leads can be turned into and actual appointments where you can make a presentation and present a price. This takes into consideration those leads, which might be out of market or for any reason cannot be converted to an appointment. It also includes leads, which became appointments and were issued, even though for some reason the salesperson did not make a complete presentation. The number of appointments are then measured against the fully loaded marketing costs and you get what is known as fully loaded costs of a lead issued (an appointment).
This continues, with the number of complete presentations made and ultimately the number that turned into sales. Each step along the way, these measurements are used to measure the value of certain kinds of advertising, as well as, the costs for each individual salesperson.
Q: Isn’t the gathering of all this information time consuming and costly?
A: (Dave) Not really. It does require that you change your “chart of accounts” for record keeping; the use of a CRM program and then a valid evaluation on an ongoing basis (daily, weekly, monthly).
Q: What are some of the sophisticated systems that require low costs/practical investment that enable us to do these things?
A: During our webinar, we introduced you to several speakers who gave you practical ideas for decreasing your marketing costs while improving the flow of your leads. Chris Behan of Socius Marketing (email@example.com) discussed lead intake solutions, sweepstakes strategies, and the value of owning your website. We also heard from Mark Highbaugh of Marlimar Mobile Strategies (502-777-4447/Mark@Marlimar.com) who focused on how to generate mobile leads via text message, and confirming appointments through texting. The third presenter was Tim Musch of MarketSharp (608-779-5165 firstname.lastname@example.org) who touched on lead response, lead warming, lead nurturing, and lead monitoring.
Q: How often should I be testing my CTAs?
A: (Chris) It depends on the amount of traffic coming to your website. Typically, if you have 2,500+ visitors coming to your website in a month’s time, than A/B testing your call to actions is a great idea. Even small changes to conversion rates can have a very positive impact on not just the total number of raw leads you receive in a month, but also the quality of those leads, which can potentially increase your ability to issue them.
The cadence for a website with traffic in the 2,500 to 5,000 a month range should be 1-3 tests every 2-3 months so that each test will be allowed to hit statistical significance. When a site has more traffic, it should be tested on an ongoing basis.
Q: What should our sweepstakes giveaway be?
A: (Chris) A sweepstakes giveaway should always involve some type of credit or funds toward a home improvement project for the winner.
Our studies, show that it really makes no difference how big the giveaway amount is. In fact, one of our highest converting campaigns is a $10,000 giveaway, versus some of the larger amounts, which exceed $25,000.
It should not however, be a cash or some unrelated prize. This will seriously hurt your ability to issue those leads.
Q: You spoke about owning/ controlling our website so how can I tell if I don’t own the hosting or code of my website?
A: (Chris) If your site is not coded in an open-source content management system like Drupal or WordPress, there is a good chance you may not have full ownership or control over your website.
Many Internet marketing companies insist on hosting your website. It is important for you to understand that hosting has nothing to do with marketing and in most cases is simply a play to have a higher level of control over the web solution you are paying for.
I encourage you to review the fine print in the proposal to avoid surprises later.
Q: What are some of the challenges for newbies with web page development?
A: (Chris) There are many challenges to navigate when first developing your website. First, you want to make sure you have full ownership of the solution and the site is hosted by a reputable third party. Make sure to choose an Internet marketing company that has a solid understanding of your industry with a proven track record. Lastly, you need to understand what it takes to compete within your specific market. Large markets tend to take a little longer to generate traction when it comes to search engine optimization, sometimes making pay-per-click the right option for you.
Check back as we address more questions in a later blog posting.