I review a lot of content on this topic and am amazed at what I find written about lead cost. For example:
“The average cost per lead across all the companies surveyed is almost $200 ($198.44).Admittedly, that’s a useless statistic, as these figures vary quite dramatically depending on industry, company size, etc.” (see marketing charts analysis of HubSpot’s “2017 Demand Generation Benchmarks Report”)
Others stated that the range is between $35 – $100 for a B2B lead.
Of course, it depends on what you are selling, but common sense tells you that B2B leads for a complex sale (that are worth a sales rep’s time) are probably going to cost more than $200.
Look at this data from an actual PoinClear teleprospecting client:
- One source of leads was PointClear—we sent them only qualified leads and nurtured leads—at an average cost of $1,357.25.
- Five additional sources of leads were from other sources, which included some qualified leads and nurtured leads, but which also included many, many more which were termed just plain “leads” (not even scrubbed, let alone qualified and nurtured) and a lot of “scrubbed” leads which were also not qualified and nurtured. Leads from these sources, most of which will land in a black hole, all cost more than the PointClear qualified and nurtured leads.
This table compares the cost per lead on outbound (PointClear Prospecting/Nurturing) to several other sources of inbound leads.
- The EVP of Sales at this client, a big division of one of the world’s largest software companies, said that he received zero qualified leads from marketing—except for the PointClear outbound leads.
- Marketing on the other hand stated that they had provided sales with more than 4,000 leads.
This problem is classic and represents the disconnect between marketing and sales:
- Marketing is focused on the quantity and cost of the leads.
- Sales is focused on the quality of the leads and revenue generated.
Marketing considered the content syndicator download “leads” to be “too valuable to stop buying” (at $23.15 per gross lead). Because prequalifying the leads adds cost, marketing’s solution was that they would just quit prequalifying the leads and send them straight to sales.
What do you think the chances are that sales will cull through 3,117 suspects to find 40 prospects? Right. Zilch. Yet from one source alone marketing spent $72,158 per quarter on leads that were sent to sales and ignored. You can read more here.
What is the “right” price to pay for leads? Here are some scenarios to review:
Lead Rate Break-Even Analysis
To convert to a SaaS solution, calculate lifetime net present value of the average deal.
While this is a simplistic approach, you can see the extent to which average deal size, margin and the percent of revenue that is spent on marketing impacts the allowable cost per lead. Only the $50,000, 60% margin, 15% allowable marketing cost ($1,500 target allowable $ per lead) scenario works for proactive outbound marketing. You can’t cost effectively buy quality leads for low price and low margin offers.
I go through an exercise like this with prospects and clients as we work through whether our services will result in a successful outcome.
I would be happy to walk you through this exercise if that would be helpful to you.