Lead Generation Best Practices Part 7: Measure Beyond Cost-Per-Lead

Conventional wisdom—that something called a “lead” can and should be had at consistently lower price points where it will still deliver value—is at the root of a host of sales and marketing problems and deserves a closer look.

The value of a lower cost-per-lead approach may have merit early in the funnel where inbound marketing and marketing automation can be helpful in moving large numbers of sales prospects to raise their hands and express interest. Problems arise when marketing points to delivery of hundreds and thousands of names delivered at a low cost-per-lead while reps shake their heads wondering why the unqualified names they receive are even called “leads.”

Striving for lower cost leads while defining a lead as a sales-ready buyer is a recipe for disaster. Cost-per-opportunity and cost-per-deal are better indexes when measuring prospect development initiatives. This is particularly true where there is a complex buying landscape, a long sales cycle and a high-investment solution. ROI measurement and performance metrics here should be grounded—not in volume—but in opportunity quality, conversion ability and revenue generated on investment.

The cost-per-lead is going to be driven by how a lead is defined, the nature of the solution and selling process and the type of metrics used to measure marketing performance. The reality is that leads cost what they cost—particularly when developing high-value, qualified sales opportunities in complex sales.

Another important measurement of program performance can be found in tracking and reporting on lead categories set forth in SiriusDecisions’ Demand Metrics Waterfall. Success criteria can be clearly established by measuring the percentage of Marketing Qualified Leads (MQLs) that become Sales Accepted Leads (SALs) as well as measuring the percentage of Marketing Qualified Leads (MQLs) that become Sales Qualified Leads (SQLs). Perfection, of course, is that 100% of MQLs become SALs and 100% of SALs become SQLs. But sales and marketing demonstrate great progress toward full alignment the closer both percentages get to 100%.

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