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Many businesses allocate lead dollars by cost/lead, rather than determining whether the lead is generating profitable customers.  This slide shows how to lay out lead profitability, to optimize for profitable customers.

Lead Optimization Analysis

The analysis generally requires that you pull reports for a reasonable period of time, which depends on your product.  The appropriate length of time will depend on several things:

• Lead volume: Period of time to have a big enough sample of leads across your vendors to make real decisions
• Time to conversion: Time it takes for the lead to convert to a sale.  Used to calculate lead conversion
• Customer lifetime value: Time to determine the overall value of that new customer to your business.  Used to calculate revenue/ household

The results of this analysis are usually helpful in determining which lead sources are the most profitable for you…which generally helps you to rank your lead sources or change the types of leads purchased from them.  This also can quickly to help you stop the losses from the worst sources right away, which can immediately improve the bottom line!

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Customers not converting from existing marketing campaigns?  Plot them out against a marketing funnel and see where they are stuck and what steps you can take to improve purchases.
Marketing Funnel

A marketing funnel is used to determine where your customers are to date and where efforts should be targeted.  Let’s go through the example above.

Customers have 5 stages of familiarity with your product or service:

• Unaware: Potential customers who do not know that your product exists
• Awareness: Potential customers who are aware that your product exists
• Consideration: Potential customers who are considering purchasing/ using your product
• Purchase: Customers who have purchased your product
• Repeat/ Recommend: Repeat customers who have re-purchased your product and/or recommend your product to their friends

As you examine the impact of marketing efforts, consider what types of needs your customers have at each of these transition points:

• Unaware → aware: Are customers aware that your service exists?  Find ways to make them aware that a solution to their problems exists by finding ways to come across their path.
• Aware → considering: Customers know that you exist, but may be need help determining which product they want or whether you are worth the effort.  This is where you can differentiate your product (price, features, recommendations, ROI).  Any required customization or negotiation would occur at this step.
• Considering → purchase: Customers have decided to buy, so make sure you close the transaction.  Ensure a smooth buying process and appropriate followup if the process stalls.  Poor experiences can kill a deal that a customer wants to happen, so ensure this is easy and a positive experience.  Also, appropriate expectation setting can keep a customer from backing away as unexpected issues arise.
• Purchase → repeat/ recommend: Your existing customers are your best marketing tool.  Happy customers want to come back and continue to use your product/ service.  Give them the tools to tell relevant friends about you.  This may include highlighting situations where you create value, packaging your value proposition in an easy-to-remember way, or making word-of-mouth easy.

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