A Large Net, Butterflies, And Reducing Cost Per Lead

Reduce Your Cost-per-Lead To Maximize Profits

July 17, 2007
Found in: Articles : Editorial : Web Site Marketing & Strategy :

If you’re spending time and money to increase traffic, you can put a price tag on the leads you generate.

This cost per lead is an important metric, because it puts a ceiling on what you can do with your marketing budget. Suppose you need 1,000 leads to get 50 new clients, each of whom will generate $1,000 in revenue for your business. If your profit margin is 20%, this means 1,000 leads will bring you $10,000 in profit.

Naturally, if you’re paying $10 per lead, it will eat your entire profit. In fact, your maximum cost per lead will have to be significantly less than this.

Once you know your cost per lead, and you have a good estimate of how many leads you’ll generate from a given advertising campaign, you’ll know how much you can spend on advertising.

But there’s more to marketing than just advertising, and this is good news. Using some of the tricks below, you can generate a steady stream of “organic” leads at a rock-bottom cost, or even free. This will allow you to significantly lower your costs per lead.

Casting A Large Net For Web Marketing

A broad, "shotgun" approach to web marketing may seem counterintuitive at first. When you conduct any kind of direct marketing you’ve been taught to segment your list and carefully target the narrowest niches you can find. And this makes sense when you’re paying for every click.

But beyond the high walls of carefully crafted campaigns and the airtight precision of email marketing, other people will still learn of the existence of your web site from time to time. Whenever you do anything at all to promote your company, you’re going to get at least a small amount of “free” traffic. And it can’t hurt to encourage this traffic and make the most of it.

The first step is to ensure that every living soul who sees or hears you also gets your URL. Every piece of stationery or correspondence, any public speech or presentation or media contact should include an “offer.” Allow people to gain something in exchange for going to your web site and giving you their contact info.

A mix of targeted and broad is appropriate in most instances.

A few examples:

• The signature in your email includes an invitation to subscribe to your newsletter
• The byline of an article includes a link where readers can download a white paper on the same topic as the article.
• Include a “tell a friend” link in every email and web post.
  

All these tactics create a steady supply of leads over time, at no extra cost.

Put The Social Butterflies To Work For You

If you have interesting, interactive, and continuously updated content on your web site, you’ll get more traffic and repeat traffic. As your web site increases in “mass,” people will start to gravitate towards it.

A web site with an engaging, ongoing discussion is more likely to be discussed elsewhere, bringing new visitors. There’s a greater chance that visitors will refer others to your site. A simple example was put up at the end of last year here.

Eventually curious visitors will come of their own initiative. When they do, give them ample opportunities to subscribe, register, or download—all of which confirm their interest and give you a chance to follow up.

Simple Search Engine Marketing

Unless you still use a couch-sized computer that runs on punch cards, you know that the ultimate low-cost lead generator is the Search Engine.

There’s both things you can do to your site and things you can have others do to their site that enhance Search Engine Marketing. Both aspects are often errantly heralded under the title "Search Engine Optimization" or SEO for short, which describes the on-page changes, or the things you can do to your own web site. The most effective thing you can do for long term value is to create unique, keyword focused content on a regular basis. Additionally, having a search engine friendly platform that creates keyword rich web addresses or URLs, enables unique meta information per page, and creates good quality code adds significant value to every single article or success story you write.

Not everyone who stumbles upon your site is going to be a potential prospect. But if you’ve got a flow of interested visitors who are reading, contributing, and linking to your web pages, you can count on a flow of good leads coming to you for free.

Ultimately, lowering your cost per lead is a rich-get-richer game. Once you’ve got the tools in place to attract free or low cost leads, you can count on getting more of the same.

Reducing Cost per Lead, How About Finding It?

The major challenge to reducing cost per lead is most often a lack of measurement. It is a challenge to know how much attracting a lead actually costs. Thankfully, the numbers do not need to be exact to be useful. Even if they are quite inaccurate, it is a starting point that assists in intelligent decision making. One way to do this is take what you have invested in your web site for a particular period and look at the number of leads generated over that same period. Divide the two and that is a simple, often conservative estimate. Adding in copywriter, design, and other time after the site went live will add more accuracy.

Some simple steps to help in determining your web site cost per lead are:

• Create a separate toll free number just for the web site.
• Add a question to the phone script receptionists and other point-of-entry personnel ask when transferring to sales.
• Work with your CRM or SFA team to make sure web leads are tagged as such and can be tracked through to revenue.
  
• Create a spreadsheet that tracks which leads close and how much revenue results.
  

Hopefully this number is positive, if it isn't then maybe your web site is not intended to be a lead generator at all but more of a sales support or internal communications device.

If it is negative, then you certainly have the benefit of knowing and can do something about it.

Get In The Know

Bad news is still better than no news when it comes to cost per lead and we would love to help. Enthusiast provides comprehensive web solutions focused on results. Start a conversation today and receive our FREE report titled "5 Ways To Maximize Free Web Traffic Today" with no obligation."

* This article is part of the "Aligning Financial Measurements & Maximizing Revenue" topic from the Enthusiast Editorial Calendar. You can get more of what you want and help us by suggesting a topic or asking a question.