Having a long list of leads is great, but if you don’t turn these leads into paying customers, you’ll soon be out of business so probably learning more about lead conversion metrics can be understandable.
A recent study called The State of Lead Conversion in Marketing and Sales found that only 12% of marketing professionals are very happy with their ability of converting leads. That’s a shockingly low number, and the same study says it’s because it’s hard to do actual conversion work and figure out if what’s being done now is important enough to make a difference.
Many businesses make the mistake of spending time and money on well-thought-out campaigns but then putting them out there without being able to measure their success. Don’t work for this business.
Your prospects interact with your marketing in so many ways that not knowing which channels, tactics, and campaigns bring in the most traffic and turn qualified leads into sales is like flying blind.
You can use various methods and tools to measure your marketing and just as many KPIs (KPIs). But, like everything else, you need to understand which tools and KPIs are most important and useful for your business.
Still, every business needs to track and measure a basic set of key performance indicators (KPIs) to generate and convert B2B leads. Here’s what they are:
What Is A Lead Conversion?
Converting a lead into a sale is called “lead conversion.” Usually, sales and marketing work together on this, using methods like email nurturing, retargeting, and discovery calls.
It turns a lead into a potential customer where leads pass from marketing to sales. This differs from lead generation, where marketing teams turn website visitors into potential customers.
Due to its place in the pipeline, most lead conversion strategies are implemented by sales teams.
But for the most impact, sales and marketing should work together to improve lead conversions.
How Do You Calculate Lead Conversion Rate & What Kind Of Metrics Do You Need?
Lead conversion rate is a way to figure out how many of your leads turn into opportunities. Your lead conversion rate is easy to calculate. Just divide the total number of conversions by the total number of leads, then multiply by 100. This is the lead conversion formula.
For example, if your monthly pay-per-click (PPC) advertising campaign brings in 150 leads and 15 of them turn into customers, your lead conversion rate is 10%.
This means that for future PPC Management services and campaigns, you can expect that 10% of leads will turn into paying customers.
Your lead conversion rate will depend on many things, including your industry, your product, and more. But you can compare your conversion metrics analytics to others in your field.
Most of the time, you’ll need to look at your data to determine your business’s best lead conversion rate. However, if you don’t have enough historical data, you can use your target Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV) instead.
This calculation determines how much money your marketing campaign will make you. If it costs you more to get a customer than they’ll pay you throughout their lifetime, you’ll run out of money.
What Lead Conversion Metrics Do You Need To Track?
Tracking your lead conversion rate is only one way to measure how well your marketing works.
By comparing your marketing to key lead conversion metrics, you can find exactly what works and doesn’t.
COST PER LEAD
CPL stands for “cost per lead,” which is the amount of money you have to spend to get a new lead a crucial lead conversion metric you must learn and understand. It’s a good way to tell how well your marketing budget works.
But you can only go so far with cost per lead. A lead doesn’t mean that you’ll make money. So the money you spend on each lead might never actually turn into a sale. Even so, it’s a great way to see how your lead generation funnel works to bring in new leads.
The average cost per lead changes depending on your business and how you market. It’s important to know this number. If each lead costs you a lot of money, you will want to ensure they are good.
LEAD CONVERSION RATE
Monitoring the percentage of leads that turn into opportunities is the best way to tell if the leads you’re getting are good or not. And if the ways you care for them are working. With the lead conversion rates by channel and campaign, you can figure out what drives your bottom line the most.
The goal is to get people to your landing pages, but once they’re there, you want to turn them into contacts or leads. How many, or what percentage, of your visitors are buying? This can be measured on a site-wide level as well as on a page-by-page basis. Pay attention to the pages getting the most conversions and the CTA and forms on those pages. Try to figure out why they are doing better than other pages and try to copy their design on pages that aren’t doing as well to see if that helps them convert more. There should be a 20% conversion rate on landing pages. If not, check to see what might be wrong.
LEAD-TO-SALE CONVERSION RATE
The lead-to-sale conversion rate is the next step because it shows how well you can turn a lead into a paying customer. This metric is all about how many leads become sales and bring in revenue. Marketers and sales teams are very interested in this rate because it shows how many leads turn into sales and bring in money. This number is found by dividing the number of leads turned into sales by the total number of leads.
CUSTOMER CONVERSION RATE
Getting new customers and making money is, of course, the best way to measure success.
Make sure to keep track of how many of your leads turn into paying customers, and work to increase this rate as much as possible. Look closely at the leads turning into sales and see if they share any themes, traits, or ways users act. With this information, you can target your prospects at the start of the buying cycle.
CUSTOMER ACQUISITION COSTS
The cost of acquiring a new customer is the money you spend on marketing your business to each new customer.
For example, if a banner ad costs $100 and brings in 10 new customers, the average cost to get a new customer is $10.
Track how much you spend on sales, marketing, and promotional items over a certain time and how many new customers you get during that time or directly from your campaigns. Now, divide your costs by how many new customers you have. The goal is, of course, to have the lowest cost of getting a new customer as possible since this helps your profit margin.
CUSTOMER LIFETIME VALUE
Customer lifetime value is how much a customer spends on your product or service over their life.
You want to know the long-term value of your customers so you can often give deals and perks to those who help you reach your sales goals. These people are your best clients.
Once you know how much your customers spend on average throughout their lives, you can compare this number to how much it costs to get a new customer. This will tell you if you are spending more on marketing to customers than they are spending on your products or services.
TIME TO CONVERSION
Time to Conversion is a metric that measures exactly how long it takes for a website visitor to turn into a lead. You divide the total time people spend on your website by the total number of leads. It’s a great way to find out if there are places on your website where you can improve the average lead conversion rates. Of course, a long time could mean people are taking their time to read your content, which isn’t bad.
This will tell you exactly how long it takes for a lead to find your brand. It will teach you enough to convince them that they need your service. This shows your optimized lead converters team what might get in the way between processes and makes them think about how they can get to a state of instant conversion.
For your lead generation to work, you need to be able to keep track of how it’s going. You can also hire Lead Conversions Specialists who know how to bring in the right leads. With PPC Services USA, you not only reach verified and validated leads but also track and monitor key metrics to make sure your conversion efforts are working.
Lead conversion metrics are important for any sales and marketing team that wants to know if the leads they are bringing in are turning into sales.
If you are still optimizing your content and campaigns based on vanity metrics like clicks, traffic, and opens, you need to rethink how you are tracking and reporting.
Make sure you can test and measure how well your marketing works to determine what works and, more importantly, what doesn’t. This will help you get the most out of your time and money.
Anas Reaz got his Bachelors in Commerce from the University of Alberta in Canada. He was a valuable employee at ExxonMobil for 7 years with notable roles of AV Track Lead, App Lead, and Digital Support Advisor. Currently, he is the Digital Marketing Director of AMZ One Step and Out Origin, two leading digital marketing firms based in Canada with a dense portfolio of high-profile brands clientele.