What is the value of a sales lead?

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Almost every business in the world has the need of sales and marketing. Some businesses tend to simply advertise and conduct promotions to seek new clients whereas others look for leads which can then lead to sales. Generating leads is an integral aspect of sales and marketing for more than 80% of small, medium and large businesses globally. The advertisements of reputed brands that we see on TV form only a fraction of the global giants. Small to medium companies do not have the luxury of carrying out large scale advertising programs hence sales leads play a defining role in the business’ viability and profitability.

There is a need to calculate the value of a sales lead as that would determine how much an entrepreneur should be spending to generate those leads and also to decide if the exercise is turning out to be a rewarding and profitable one or is simply turning out to be a futile activity. At times, if one does not calculate the value of a sales lead then it might happen that the business would actually be spending more on the sales leads than what it would be earning from sales revenue.

There are a few steps to calculate the value of sales leads and we shall take a look at those here.

  • Any business would know the cost of generating sales leads. One must make a note of that.
  • There is a need to include the marketing costs, if any, that are needed to use the sales leads and convert them into sales.
  • Once the sales leads have been worked upon and there are sales statistics, one must note down the value of sales (revenue) that has been generated from those leads.
  • The two values (costs of sales leads plus marketing expenses if any and the revenue earned from sales) must be tallied for profitability. The revenue would not reflect the value of a sales lead. The revenue generated should offer an insight if you are making more money than what you are spending on generating the leads in the first place. The revenue as well as the cost of sales needs to be split to a cost per lead. Once the cost per sales lead has been determined, one has to look into it if it is the desired value.
  • The value of sales leads should also be determined based on their future conversion, client referrals, repeat buying and the customer database and not just the one off sales.

 

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