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Cost-per-Lead/ROI Model Help

Cost per Sales Call
For most companies in the B2B market, the goal of marketing is usually to stimulate demand - ideally to generate qualified sales leads for their sales people so they don't have to do any cold calling, which many sales people dislike or simply can't do. The calls may be simple teleconferences. They may be field sales calls where the sales person drives to the meeting. Or you may have to buy an airplane ticket. This can become a pretty expensive proposition, so a comparison of the cost of each marketing strategy has to consider the cost of making the actual sales calls that result from the leads.

As you can imagine, the fewer sales calls that you have to make in order to achieve your revenue goal, the cheaper is the overall program. So with better leads you have a lower sales expense. Potentially a lot lower.

Industry statistics say that the average field sales call costs $300. You can calculate yours on the basis of actual costs, if you know them. Or, if you don't, there are several ways to do it. One good way is to take the loaded cost (salary plus expenses,) of a typical sales person, multiply it by the percentage of time they allocate to new sales, and divide by the number of new prospects they see during the year. Remember, even if they sell by phone, there is still a cost associated with the sales function.

As you compare marketing strategies, by the way, there is one other thing that you might want to consider, although the model really can't capture it. Specifically, what is the impact on your sales people going to be if you send them out on bad leads? This is, perhaps, the greatest cost, and risk, factor of all, since not only do you end up paying for the bad lead, but you also end up paying for the wasted sales calls. In many cases sales people won't want to go out on any more calls if the first few leads were bad, and in some cases the sales people might simply quit if you keep giving them bad leads, and they can't make their quota.

Considering the cost of turnover, is this the best time to be "penny wise and pound foolish?"

Regardless, you need to consider the cost of a sales call in order to measure your cost-per-lead because you have to consider the cost of "waste."

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