Here is the link to the site that many of our marketing managers are using to track which marketing tactics they spend time on during the year.
They add the time cost for the tactic to the actual hard costs to determine to annual “cost per lead” for a tactic.
Example #1: You may place an ad in a magazine and it could take 10 hours to design and send the ad to the magazine. This ad costs $2,500 + (10 hours at $25/hr = $250) = $2750.
When 10 leads come in for this ad, we divide it by $2750, not just the cost of the ad.
Total cost per lead = $275
Example #2: Let’s say your direct mail produces 25 leads, but it takes 300 hours per year to manage. The program could have $2,500 of hard costs + (300 hours at $25/hr = $7,500) = $10,000
Total cost per lead = $400
The first assumption would be to say “direct mail” is better because it produces 2.5x’s the lead count (isn’t it easy to be obsessed with quantity of leads as the #1 measurement tool), but the efficiency per lead is below ”magazine ads,” and if you turned up ads and turned down direct mail, you would increase sales in this example.
To grow faster: After you have done the calculation above for all of your marketing tactics, decipher the “quality” of the leads for each group based on the goals of your program. Average home value, average order size, average gross margin, and your closing rates within each group. Starting spending your money based on the quality and total costs per lead and you will see your business grow.
Filed under: strategy