We love sharing knowledge about how to achieve the best results in your lead generation plan – especially when it comes to measuring success and proving that your dollars are spent wisely. We really geek out on the numbers behind building a lead generation plan, because data is the best way to prove the value of marketing. Anyone who appreciates the art and science of a lead generation strategy will love this engineer-inspired approach to lead generation budget planning.
Back to Basics – Lead Generation Defined
Before we talk budget, let’s discuss the elephant in the room – lead lists. Real lead generation is more than purchasing a prefabricated lead list (which we highly discourage, since lead lists may not be as accurate as they are described). However, in the case that you do decide to purchase a lead list, make sure that someone at the very least pre-qualifies the leads and ensures the information is correct before inputting the list into your CRM. Before you put any information into your database/CRM, you need to make sure it’s clean!
Here’s what lead generation really is. Lead generation refers to creating a database of leads through marketing efforts in order to generate more revenue for your business. Lead generation is a beautiful partnership between sales and marketing, and developing a strong strategy can greatly impact your sales success and business revenue.
Your potential customers are researching, having conversations, and making purchasing decisions online every day – with or without you. How can you ensure you are present where this action is happening? Do you have tactics in place to capture and nurture potential customers? And most importantly, can you find the budget for it?
Planning a Lead Generation Budget
53% of marketers say half or more of their budget is allocated to lead generation. That’s because, through a lead generation strategy, you can attract more potential buyers, provide them the information they need when they need it, and let them tell you when they’re ready to be contacted (i.e. get more inbound leads).
Adding a budget line for lead generation can help you better plan your marketing tactics that are specifically aligned with generating more leads. A lead generation budget takes into account your monthly revenue goals, number of leads you need to reach your goals, and the overall cost of attaining those leads. Keep reading, and we’ll explain exactly how to crunch the numbers.
Now before we get into the specifics of lead generation budget planning, we recommend downloading our Guide to Lead Generation Budget Planning Workbook, which has a worksheet that will help you plan an effective lead generation budget. Below, we’ll walk through the five steps to creating a lead generation budget – and it’ll be a bit more clear with the workbook in front of you.
Here are 5 steps to plan your lead generation budget:
1. Know Your Lead Goal
The first step in creating a successful marketing campaign is setting goals to measure your results against. To set an accurate and attainable lead goal, it is important to know a few key numbers:
- Monthly Revenue Goal
- Percent of Revenue from Marketing Goal – how much revenue do you want marketing to be responsible for?
- Average Deal Size
- Your Average Sales Close Rate – heads up: if you don’t know yours, the standard is 6%.
You may not know the exact number of each field, and that’s ok. That shouldn’t stop you from planning. You have to start somewhere, so try to estimate to your best knowledge and pick a number as a good starting point. Use our Lead Goal Calculator to save yourself the math calculations and headaches.
2. Landing Page Visitors and Conversion Rate
One of the most important aspects of a lead generation strategy is to capture your leads through a form on a landing page. Filling out the form will give visitors access to a resource that’s free and valuable to them. You’ll want to drive all of your visitors to this landing page in order to convert them into leads.
The average conversion rate for a landing page is 2.35%. Assuming that your landing page will convert at least the average, next determine how many visitors you’ll need to drive to your landing page in order to reach your lead goal. Multiply your lead goal by 100, then divide that number by 2.35 to get the number of visitors you need to drive to your landing page.
3. Cost for Web Traffic
After determining the amount of traffic that needs to visit your landing page, you may be
feeling overwhelmed about how to get so many visitors to your landing page. This is where your lead generation strategy comes in. A good place to start is by planning out the costs for the following needs:
- People: whether you are executing your lead generation strategy yourself or hiring someone, take into consideration the cost of time.
- Process: the cost of driving traffic to your landing page, e.g. advertising, influencer marketing, etc. If you are unsure of this exact cost, it’s a good idea to estimate what you would be comfortable spending and adjust this once you get started and know more about how much you’re spending. We’ll explain later, and you’ll understand how and when you’d know to adjust this amount.
- Technology: Any technology involved in producing and executing your lead generation strategy. e.g. a marketing automation software, like Pardot, which will help you create landing pages and capture your lead information easily into your CRM (among many other cool things that Pardot can do).
Add up the total cost of the people, process, and technology to find your total cost of a lead generation program.
4. Cost per Lead and Lead Value
This is hugely important to determine adequate and comfortable spend for your lead generation program.
To find your cost per lead, divide the total cost of your lead generation strategy (calculated in step 3) and divide it by your lead goal (calculated in step 1).
To find your lead value, take your average deal size and multiply it by your average conversion rate.
Keep reading to see what to do next with these numbers…
5. Check Your ROI
The last step is to check your ROI and make sure that your cost per lead is less than your lead value. If so, this is where you may find some wiggle room and play around with your lead generation budget (people, process, technology) – you may even find that you have enough budget to hire someone to create and execute your lead generation strategy.
However, if your cost per lead is more than your lead value, you may want to readjust your lead generation budget by cutting some costs.
If you haven’t already done so, download our guide to Lead Generation Budget Workbook to learn more and start generating leads! And if you need any explanations or have any questions about creating a lead generation strategy/budget, contact us! We would love to help you reach your goals.