Here’s an interesting “tidbit” that (candidly) surprised me and my sales team – 58% of the new customers we brought in last year were not what we consider “sweet spot” prospects. Specifically, they could not be identified as a “sweet spot” prospect initially. We had to retarget them, use e-mail follow-up and good old-fashioned online investigation and Google search to find out who they were, then append that data and continue to e-mail, mail and call to follow up to develop their interest and get them to provide more details on who they were (many initially use Gmail or similar when they opt in). There’s a HUGE money lesson in this.
Too many businesses don’t think of leads as having value. They only see value if the lead closes, or is, at least, extremely interested in buying when they initially come in. This too-quick evaluation of leads coming in causes them to neglect and fail to sufficiently follow up on a LOT of potential opportunities that are coming their way, akin to the farmer who only picks the ripe fruit one time, abandoning the green ones developing on the vine because they aren’t ready to eat at that very moment.
This devaluing of leads starts with the problem that very few businesses actually track their marketing numbers. To the point, they don’t know how many leads are coming in at all because they don’t utilize phone tracking and Google analytics, and don’t have all of their webforms connected to a CRM so leads flow directly in, are captured and tracked. Because of this, they don’t know how many raw leads turn into appointments, how many appointments turn into legit opportunities (proposals), how many close and what the contract value of those customers is. They also really don’t know what their LTV (lifetime value) of a client is. When you are ignorant of all these key metrics, you can’t properly or intelligently value leads, make good value decisions, know what marketing (which may appear to be initially failing) is actually working and extract the highest ROI from your marketing investments.
But when a business owner starts to truly think and behave like an INVESTOR rather than a seller, seeing customers and leads as “assets,” a lot of good things happen. Let me give you an example.
Let’s suppose your average client is initially worth $24,000 a year. Over time, by doing a good job with your QBRs and cross-selling, you can get them up to $30,000 a year, along with special projects from time to time and referrals, making them worth $40,000 in year three. If we say they were worth $24K in year one, $30K in year two and $40K in year three, that makes that asset worth $94,000 – an asset that will continue to pay over time, but we’ll call it $94,000 to do the math.
Let’s suppose you generate 10 leads a month with only five being qualified. Of the five, three move to appointments and two go to the proposal stage, with one turning into a customer. Over a year, that would look like this:
- 120 Raw Leads
- 60 Qualified Leads
- 36 First-Time Appointments (FTAs)
- 24 Proposals
- 12 Customers
- 12 x $94,000 = $1,128,000
If the above numbers were true for you (and you have to determine YOUR numbers by meticulous tracking and going back in time), then EACH lead you generated is worth $9,400 ($1,128,000 ÷ 120). Now, I realize that emotionally you’re not buying it; but if you put your “Spock” brain on, you can see that this is 100% true and a perfectly logical way to assess the value of a lead.
What this exercise will (hopefully) reveal when you do it is that you don’t have a marketing or business model problem, but a cash-flow problem, meaning you don’t have sufficient funds to invest into marketing because you’re living “paycheck to paycheck.” For others, it may reveal you are woefully underinvested in marketing and devaluing the leads you’re getting.
And, of course, if you’re in urgent need of a new or returning client THIS WEEK to feed the wolves gathering outside your door, I realize this is not helpful or even welcome advice. That said, we all know a garden doesn’t produce crops overnight, so if you want to get to a point where you are making better-than-average gains and not living hand-to-mouth, you have to START thinking and behaving like an investor TODAY, being more careful and diligent about the capture, follow-up, care and communication with your list and leads generated. There aren’t any real shortcuts to this, and you can’t go back in time to undo the neglect. All you can do is get started today behaving like an investor.
And even if you cannot afford to spend thousands on marketing because you have a cash-flow problem and lack sufficient funds, if you know every lead coming in is worth $94,000, you can at the very least start being a hell of a lot stricter about how your phone is being answered and how leads are being captured, entered, tracked and followed up on. You’ll be far more diligent on your list cleaning, care and maintenance. You’ll be more careful about dismissing leads as “not qualified” due to your initial assessment. You’ll also be more disciplined to implement drip marketing campaigns, both online and offline, so you can have a constant flow of maturing harvests.
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