That’s a question that keeps almost every B2B marketer up at night. Rising costs of lead generation, increasing competition and a rapidly growing population of buyers that function almost like intense research organizations—these are the factors we are up against in the B2B world.
See this Infographic from Madison Logic showing ways in which the cost per lead is calculated: http://www.slideshare.net/madisonlogic
There are a variety of tools out there to calculate cost per lead. Here is one I have seen frequently: http://www.clickz.com/static/cpa-calculator
At the recent Aberdeen Group Chief Procurement Officer (CPO) Summit in Boston, we heard loud and clear, the buyers’ viewpoint. These speakers and the conference attendees were all heads of procurement sharing the common goals of cost-reduction, collaboration, supply chain management and integration, payment optimization strategies, spend management, etc. The dominant theme was cost-reduction—so, these are buyers working collaboratively and investing in knowledge sharing among their peers on how to buy more for less. From who? From B2B marketers.
Let’s examine this from a seller’s viewpoint. With the knowledge that our biggest B2B customers are working very hard to buy more from us at reduced cost, we need to be prepared for lower profit margins. Can we then allow our lead generation costs to rise when there is no assurance of matching increase in revenue? I get it; this is a logical way of thinking and it certainly puts us on guard to watch our costs very carefully. However, we cannot do this at the cost of lead quality. Research by The Aberdeen Group shows that it takes 10 marketing touches from initial inquiry to sales completion in the B2B space. As marketers we have no choice but to invest in these essential lead nurturing steps. In my experience of working with clients across various industries, I have seen that the best way to reduce cost per lead is to:
- Drive greater conversion
- Garner increased ROI
- Enhance profit
Rather than focus our energies on driving down cost per lead, there needs to be greater focus on driving up quality of leads. Let’s bring back the emphasis on qualifying a lead through the key criteria of BANT—Budget, Authority, Need and a defined Timeframe.
Note: The true definition of a qualified lead is one that is “actionable” – a marketer can use the lead to engage a prospect into a meaningful dialogue or interaction that has a greater chance to move towards conversion and sales closure.
Lead Nurturing Through Value Creation Yields the Best Results
On my recent visit to Portugal, I went to a restaurant I had been to before. 2 Passos is a shack on stilts overlooking the Praia do Ancao beach in Almancil. Imagine my surprise when I got a really warm welcome and they remembered me by name! I was offered special appetizers on the house. Soon after dinner arrived, the owner was at my table to make sure everything was to my satisfaction. I enjoyed my meal but also the conversation with this warm, welcoming owner. I was touched by his personalized attention and I could see he really cared about his customers.
In fact, each employee seemed to be empowered to act like the owner and demonstrated that they took responsibility for meeting customer expectation. This high level of employee engagement was more than apparent because they treated me like I was family. The owner made note of my email address saying he regularly reaches out to his customers around the world sending them pictures and updates of his restaurant by email and snail mail. I think I will actually look forward to those emails and gladly share with them with friends and family. This restaurateur has hit the lead nurturing nail on its head AND he is driving down his cost per lead by investing in quality customer care and value creation. A great lesson for us B2B marketers.
It’s time to be innovative and flexible enough to accommodate market dynamics and changing buyer behaviours. By doing so you can actually lower your cost per lead. What are your thoughts and experiences? Please leave me a comment.
Image credit: Shutterstock
