Are you tracking your cost-per-lead?

Perhaps you’ve heard the statement, “At the end of the day, it’s all about leads.” This is true to a large extent, but at the end of the day, it’s also about your cost per lead. Successful ISV marketers know how many leads that they received from each marketing program, as well as how much each lead costs them to acquire. Therefore, it’s critical that ISV marketers participate in programs that allow them to accurately capture this information.

I was speaking to an ISV a few days ago about their performance at a previous in-person trade show. The company had spent $8,000 for an exhibit booth sponsorship, and received 71 leads. I asked them what their cost-per-lead was and they informed me that it was $112.67 ($8,000 divided by 71). What this marketer didn’t do was factor in all of the additional costs associated with this particular marketing program (i.e., travel, food and entertainment, booth set-up fees, and employee time).

Their travel, food and entertainment, and booth set-up fees amounted to $7,100, bring the cost of this marketing program to $15,100. The next cost that needed to be determined, and added to the running total, was employee time. This is the most overlooked item when calculating the cost-per-lead. This company had sent four people to the trade show. Each person made a salary of about $58,000 per year, which equates to $1,115 per week; $24.77 per hour (assuming each employee works no more than nine hours per day). Each employee was out of the office for about three-and-a-half days, which equals roughly 33 hours of work.

Now consider the following equation: $24.77 (employee salary per hour) x 33 hours = $817.41 (cost per employee) x 4 employees = $3,269.64.

Their total program expenses were: $8,000 (booth sponsorship) + $7,100 (travel, food and entertainment, booth set-up fees) + $3,269.64 (employee time) = $18,369.64.

Total number of leads generated = 71 $18,369.64 / 71 leads = $258.72 per lead.

The company’s total cost-per-lead was $258.72, a value 2.3 times higher than what they originally thought.

Many ISV marketers do not track their cost-per-lead for the marketing programs they utilize. For those of you who do carefully track this data, great job. For those of you who don’t, you may be spending marketing dollars on activities that aren’t yielding the best possible results.

Savvy marketers will consistently track their cost per lead in order to make adjustments to their marketing campaigns. In turn, they can potentially free up marketing dollars for useful programs and stop betting on programs that don’t pay off.

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