What does a sales lead cost? Various methods compared

[wecandobiz]

I got wondering just where people’s expectations are as far as the cost of a sales lead. So I decided to draw up some comparisons with methods I have advocated in the past. I’d love to read your comments as the article is bound to get some reaction from an audience focused around business leads with representatives of each of the methods I've covered!

A summary of the stats:

Telesales/telemarketing — CPL £200 – £385
Email marketing — CPL £179
Web advertising (banner) — CPL £30 – £50
Web advertising (affiliate) – N/A
Web advertising (Google Adwords) — CPL £21.50
Twitter Sales Leads tool — CPL £1

As we get more feedback to the article from Twitter and other sources we're improving the accuracy of the figures on our original article at http://bit.ly/3NjoDu.

Let us know what you think or whether you can provide more accurate figures to update the article for everyone's benefit.

 

[oldeagleeye]

As a mortgage broker in the 80's and early 90's I used to take full page promotions in all the local newspapers withing 40 miles. 5 in all at an average of £1,000 per page each publication. For that we were virtually guaranteed some 25 leads a week. We used to vet all leads on the phone however including a credit check and 20% would be useless leaving us with 20. Of those we had an incredible 95% conversion rate.

Typical cost of a qualified lead in the local ragsheet for the main advertisers - mortgages - property - cars - double glazing where your looking at earning around £500 + a deal would work out a just under £200.

Can't see how you get the cost on email marketing. The only people I know that use it run highly targeted campaigns and I am sure it don't cost £179 to send out 100 emails even for a modest response of 1%.

Hope the info helps

 

[wecandobiz]

Great information. I may well add a bit about newspaper advertising, although I think the financial services industry does tend to work to a different set of metrics to the rest of us.

The CPL on email is based on also needing data to send emails to, as specified in my article. I agree that targetted email marketing can be effective, but it requires a list of fairly well researched contacts to be so -- and these cost.

IH

 

[telemax]

The problem is not all sales leads are created equal. Some are "hotter" than others. How do you differentiate in cost between someone "mildly interested in 3 months" or someone ready to buy right now.

It also depends very much on the competitiveness of the industry and size of company that you are contacting..

Jonathan

 

[oldeagleeye]

That is why I went into some detail about 'Qualified' leads Jonathan.

As far s Financial Services being different to other consumer related products I have to disagree with IH. I did say that very similar results apply to everything from Property to Cars.

I think that if anyone wants a ball park price then where advetising is concerned they should be looking at around a third of profit margins going on 'cost of sales'.

Robert

 

[PerplexismGirl]

How can you possibly quantify the exact cost of a lead without knowing the product/variables?

Every campaign is different, every business has different needs, there is no ballpark figure.

If you need a price for lead gen, get in touch with a reputable company who will price it to specifically fit your business needs.

 

[oldeagleeye]

Sorry Perplexed but you are wrong. You didn't read my post properly. Mortgages - Property - Double Glazing - Cars you can't get any more vaiable than that.

There are also some basic numbers which have become well establsied over the years when it comes to direct selling. I am not going into them all here but I'll give you one example as we are coming up to Christmas. It is this.

If you set off down one side of the street selling pairs of nickers with Santa Claus on them priced at £1 and I set out down the other side with faulty buckets with holes in them and no handle that had been chucked out by the manufacturer but which I was also selling for £1 quid each we would both end up with at least 2 sales after 100 houses. In fact at this time of year we would propbably get at least 5 customers each.

Why would be people buy such gawdy or useless items. The nickers mums would be for their daughter thinking they were cute or buy for themselves to give the 'old git' a laugh. The buckets. Bit of coloured paper around them perfect for the Chjristmas tree.

The mention of which. I would probably cheat on you. While your out there pounding the streets in the freezing cold I would have sold my buckets to the green grocer selling pines as a job lot and be down the pub sipping a brandy in front of a blazing fire.

Robert

 

[MH1]

As above, having worked in direct sales I would expect £25-40 (generating cost) cost per sale, an average of 1-2 sales per 100 doors on most products, in some areas such as utilities in the early days 20-30 per 100 doors could be achieved in the early days, reducing those generating sales costs to £3-4 per sale. This latter figure is exceptional, and normally short lived (3-6months). Utilities now are closer to the first figure. You then have the sales commissions on top of these figures too allow for.

I have been experimenting with a leaflet drop for a new company I have been working with for the last two weeks and have seen an average 1-2% response, £5-10 per sale generating cost.

 

[PerplexismGirl]

I am not wrong.
I work at a b2c b2b direct marketing company, every single campaign has a different conversion rate from contact to lead/sale - it varies of course per canvasser, but the overall average for each campaign IS so variable.

To price a lead/sale, we must first work out how much time it takes to generate, and I completely disagree that two people on opposite sides of the street marketing different products will get the same result.

I have been in tele/field marketing for 16 years, and rarely is any one campaign priced the same as another, unless the product/service concerned is very similar or identical.

To say that ALL leads cost about the same amount of money to generate is just naive.

 

[wecandobiz]

Some interesting discussion here and it is of course true that there are a bunch of variables, not least of all that of taking a "sales lead" and converting it to a sale -- ultimately, the only true measure of how effective a programme has been.

But in order to compare costs to discover an opportunity ahead of passing it to a sales person (as a marketing exercise, in other words), which isn't an unreasonable thing to want to do, it IS possible to compare methods of achieving JUST the "sales lead" -- details of someone with a need with whom you haven't yet started a full process of qualification, but which meets your basic requirements for a prospective opportunity: typically, it's the right person (influencer and/or decision maker) and they have a need which needs a solution. But it can be whatever you feel is the least you expect of a basic leads, dependent on your business and which can be equally compared across different methods.

By the way, our Twitter Sales Leads tool is no live as a test version for people to have a fiddle here. You need to register but you can sign in with your Twitter account before setting up a profile with your keywords in it.

All feedback welcomed.

 

[oldeagleeye]

I never said that all leads cost the same. What I did say was that there are cetain basic principles in direct marketing and I don't give a hoot what you say about every campign being different and I have been in marketing 40 years. I have also marketed everything from sewing machines thru surveillance equipment for spies to financial services.

Yes - a good telsales can do better than the average - as could a better more determined door to door salesman. Yes - costs can vary but I don't think that your industry is particularly cost effective when it comes to costs. However the basic fundementals still apply.

Your telsales team spend a day and from a 100 calls each and each of you will get an average 2 qualified lead.

Knock on any 100 doors anywhere and ditto.

End of story.

 

[davezzr]

not rocket science is it.....if you spent 500 smackers on advertising and got 10 confirmed leads then your lead cost is 50 quid a lead. if you got 1000 leads its 50p per lead..if you just got one lead then that lead owes you 500....

cost per sale is more important

once you got the leads you need to sell your product or service:
lets suppose you have 10 leads to pitch too,its your time as well so you want to earn say 20 for each pitch/sit. thats now 600 you need to clear to break even and you not sold anything yet. thats now 60 per lead,you may lose 5 sales straight away that means your next 5 leads cost 120 each.
should you manage to sell 3 out of the 5 then your cost per sale is 200

if what your selling costs less than 200 then you have just lost money

this is a simplified senario but the point is made

 

[oldeagleeye]

Point made exactly Dave. Typical cost per sale - Cars - Mortgages - Property - Double glazing etc about £200 - £250 quid. It is not cost effective then to employy telesales for say costume jewellery retailing at £5 quid a piece or a b2b service that doesn't net £500 a pop but they would have you believe it.

I also happen to believe that business is doomed. Tighter regulations will soon be in force as regards unsolicited telephone calls and most of us hang up now anyway.

Pests all of them these so called tele marketeers I am afraid to say. Well actually I am not.

Robert

 

[omostra06]

some interesting points, that has got me thinking about our business, we sell property in portugal, we make an average of just over one house sale per week, we use a mixture of advertising methods to get leads,
what would you suggest the best way for us to work out our cost of per sale?

I tend to think of cost per sale as, what it cost me to run the office per month, all costs, then divided by the number of sales we achieve/ commission made.