Thet price of leads is a fascinating topic, one that is not often debated by our marketing friends.
The marketing department does an A/B test:
A offers leads at $10
$1000 = 100 leads
Conversion rate 10% > 10 customers
B offers leads at $50
$1000 = 20 leads
Conversion rate 50% > 10 customers
On paper the two offers are equivalent …
In reality, the sales people have to contact these leads … let’s take the minimum figures
- 10mn to reach them (multiple calls)
- 5 mn to requalify them
- 15mn for the follow-up, reminder, etc …
- 10mn for a personalized offer
Source A
- 10x100 = 1000 minutes
- 5x100 = 500 min > 30% pass qualification
- 15x100x30% = 450 minutes
- 10x100x30% - 300 min for a personalized offer
Total sales time of 2250 minutes
Source B
- 10x20 = 100 min
- 5x20 = 100 min > 80% pass qualification
- 15x20x80% = 240 min
- 10x100x80% - 160 min for a personalized offer
Total sales time of 600 minutes
With source A, the work overload is therefore
2250-600 = 1650 mn or 27.5h
The direct overhead, at $20/hour, is therefore $550!
And find me a good salesman at $20/h!
The indirect cost in loss of turnover will be between $2200 and $8800 depending on the company…
I will detail this point in another post …