The importance of revenue attribution is just one of a number of factors that marketing agencies need to track in order to measure their performance.
Factors such as cost-per-lead, customer value, traffic-to-lead ratio, and others let marketing agencies know how they're doing—and how to tweak their performance to become fine-tuned revenue generating machines.
How to Track Cost Per Lead
Leads aren't an unmitigated good. Getting a new lead is good, but the goal is to get inexpensive leads that turn into lucrative opportunities. Doing this the wrong way around is a short path to insolvency.
HubSpot has already done a bit of helpful research that details the average cost of a lead by industry. The cheapest is media and publishing, with costs ranging from $11-$25 per lead, and the most expensive being financial services with costs of $51-$100.
Calculating your cost per lead is as easy as taking one month's marketing spend and dividing it by one month's new leads. If your cost per lead is wildly under or above the numbers in the linked chart, however, it's not necessarily cause for either worry or celebration. Other corroborating factors will help determine whether there is a problem.
Corroborating Cost Per Lead with Customer Value
If you're spending more on average for leads than is customary for your industry, you may also want to take a look at the value of your customers. After all, it may be worth spending more per lead if you're also bringing in business with a higher than average lifetime value.
Again per Hubspot, calculating customer value is outwardly simple. At a minimum, you'll know that it will be equal to the amount you charge per month, times the number of months in their contract, but there are other sub-factors that can make this much more accurate.
- Modeling the behavior of similar customers will show how often they renew contracts
- Add a shrinkage factor to understand how many customers will leave early
- Project-based and contract-based clients will have slightly different equations
Upselling project-based clients and renewing contract-based clients is the best possible way to improve customer value. It's worth paying more for leads that result in lucrative long-term customers.
Converting Leads with Your Site and Landing Pages
Leads cost money—and time is also money. If it takes a lot of time to generate leads relative to the number of people visiting your website - that can be a sign of a problem. Perking up your traffic-to-lead ratio may depend greatly on where your site's visitors end up.
In one example, research shows that websites with up to 40 landing pages generate 7 times more leads than sites with just 1-5. You should find more ways to create offers, such as creating more gated content, more webinars, content kits, in-person events, and other media that would inspire someone to fill out a contact form.
On the other hand, your site's architecture may be to blame. One of the most commonly cited statistics in marketing is that a delay of one second will push conversions down by 7%. Find ways to optimize your site with lightweight images, or invest in a CDN that can accelerate your loading times.
Buying Signs: Converting Leads to Customers
Generally, if a person has signed up for an event, requested to be contacted by a representative, or proactively contacted the business, that prospect is ready to be contacted directly by the sales department—they're a sales qualified lead.
On the other hand, if they've completed a low-interaction process, such as downloading a white paper, the lead will probably need a few more touches before he or she becomes an opportunity. Marketing should coordinate with sales in order to determine how best to approach both kinds of leads, but they should be most concerned with the rate at which their MQLs convert.
Remember that your conversion rates are all part of a linked system. Converting leads to customers is essential, but it's most important when those customers provide a high lifetime value. Similarly, it might make sense to scrutinize how much you pay per lead, but if those leads result in high-value customers, they could be worth the cost.
The thing to stress here is "could be." The important part about tracking metrics isn't the numbers themselves—it's context.
In order to get the right context for your metrics, you need to keep a close eye on all of them. That's the one surefire way for your marketing organization to become a successful business.