demand creation

Weigh the total cost of lead generation into P4P deals

In my 20 year career, I’ve used nearly every form of B2B lead generation available.

To properly evaluate the performance of your marketing campaigns, it is important to know your real cost of a lead.

Forrester Research recently revealed that about 50% of b-to-b marketers don’t use e-mail metrics to measure their campaign results(1). Do you know what your real cost of a lead is? If you are thinking about building a pay for performance (p4p) marketing campaign with your vendor, it is important to know this number before speaking with a prospective vendor.

Email campaigns are simple to measure. In fact, most email marketing tools have built-in measurement dashboards.

Overcoming inertia aside, once you start combining marketing tactics, it is deceptively difficult to determine your true cost of a lead because you must add all your costs – your tools, time and vendor costs for going to market. Assessing the real cost of lead generation requires an deep understanding of all the costs and expenses involved in the process. Think about all the activities you employ to make the phone ring: website optimization, direct sales, email newsletters, press releases, direct mail, networking, speaking engagements, etc.

There are very few companies that are using just one tactic to drive new business. In other words, I know of very few companies that are just using just cold calls or just PR to drive their entire business. The successful marketers layer multiple tactics to achieve stable lead flow.

So it should come as no surprise that the true “ballpark” cost of a lead is between $200 and $4000 depending on the market and difficulty reaching the decision maker.

Some clients think this ballpark is reasonable. Others run screaming for the door thinking that these numbers can’t possibly be true.

So the next time you think about building a p4p campaign, ask another question “where and how should we spend our money to get the best, most stable cost-per-lead” not “what do you charge for a meeting?”

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