Quality lead generation, sales and startup life

Lead generation business case - justify Leadfeeder's profit

“What is this Leadfeeder thing and how does it correlate with your financial success?” That’s what your CFO will ask you when you suggest purchasing Leadfeeder Premium. The thing is, you should be able to show payback on anything you do in your business. In this post we’re going to explore the numbers behind the financial benefits of Leadfeeder, so you can show your CFO who’s boss.

CFO looking for payback for lead generation

Website leads

A recent Salesforce study called B2B Sales Benchmarks: Lead to Opportunity Conversion Rate found that on average in B2B sales there is a conversion rate of 13% from lead to opportunity and a conversion rate of 6% from opportunity to deal.

This means that:

the average conversion rate from lead to deal is around 0.78%

Another way of looking at this is that for every 130 “raw leads” in the hands of your salespeople one becomes a deal. As you can see in the graph below, conversion rates vary dramatically across channels, but 0.78% is the average across all channels.


Graphic showing which lead sources convert with best ratio


For website leads the conversion rate is starkly better than average at 31.3% from lead to opportunity and 5% from opportunity to deal. This gives an overall conversion rate from lead to deal of around 1.55% – making it the second best way to generate sales for your business.

Let’s use the average conversion percentage of website lead to deal to make some simple calculations in our incredibly useful Break-even calculator.

  • First, check your Leadfeeder monthly subscription fee in USD (see the pricing page if you need help) and add it to the calculator.
  • Next write down your average deal size in USD.
  • Now press “Calculate”.

Break-even calculator

Leadfeeder price ($):

(cheat list: monthly fees)

Average deal size ($):


Calculate
Sales break-even point: 0 leads needed OR 0 deals
Clear Form


The break-even calculator shows you two things:

  • How many raw leads you need per month to reach sales break-even point (lead-to-deal conversion rate of 1.55%), OR:
  • How many deals you need to make per month (based on your average deal size).

Increased profit

Are you ready for some more complex maths? Whereas the first calculator told you many leads you needed per month, now we are aiming for profit!

How to use it:

  • Like before, enter the monthly price you pay for Leadfeeder and your average deal size.
  • Now enter how many qualified leads you’ve got with Leadfeeder during the last month. Check from the app if you can’t remember.
  • Now enter how much profit you typically make per deal. If you sell something for $300 and it costs $100 to produce then that’s 67% profit.
  • Finally enter your lead-to-deal conversion percentage or if you don’t know it enter 1.55 (typical B2B website lead-to-deal conversion).
  • Hit “calculate profits”.

Profit calculator

Leadfeeder price ($): (cheat list: monthly fees)
AVG deal size ($): AVG deal profit (%):
Website leads: Lead-to-deal (%):
Calculate profits
Profit out of leads: 0 $
Clear Form


The calculator above doesn’t take into account resource costs e.g. the time it takes someone to check the leads from Leadfeeder and then follow up. But I bet you have already noticed that Leadfeeder reduces the time needed to do follow-ups and it certainly stamps out a lot of guesswork and blind cold-calling.

Real-life examples of Return on Investment

If you’re not convinced by this no-brainer maths and these awesomely simple calculators (perfect for answering those tough ROI questions from your boss) how about some real-life examples to feed management and colleagues?

We asked some of our customers how Leadfeeder works for them when costs, deal sizes and margins are taking into consideration.

Here’s one reply we got:

“Our lowest price point for a deal is £402. If we were able to convert at least 1 visitor at the small, medium or large subscription price then we would consider this a good return on investment. That said, this doesn’t take into account customer lifetime value whereby the cost of acquiring a customer decreases should they renew for multiple years.”

Customer lifetime value can be difficult to evaluate but if you’re in complex sales with high-value deals and long sales cycles, it’s truly invaluable.

Here’s another concrete example from one month’s stats one of our customers jotted down:

  • Leadfeeder website leads: 120
  • Qualified and followed-up leads: 25
  • Opportunities (meetings): 8
  • Deals: 2

Appear like stats you would like to your company, doesn’t it?

Cost reduction

What are the best ways to increase profit margins when it comes to your online lead generation strategy? Internal efficiency and sales costs are two areas where resource costs can be reduced – you know, if your sales guys aren’t blindly calling through “dumb” lead lists bought from some out-of-date company database.

Consider these things when evaluating how using website visitor tracking software like Leadfeeder can help your business to:

Hit rate. The average B2B conversion rates from cold calls to appointments is roughly 0.3%. Typically Leadfeeder customers report a 4x better hit rate when they compare contacting cold leads (e.g. from a company database) with contacting companies who’ve shown an interest on their website.

Time saved by marketing. In 2016 sales and marketing will move even closer together as sales becomes more intelligent and sales people want to have more autonomy to qualify leads. Saas tools like Leadfeeder put more power in the hands of the salesperson and reduce the time spent by marketing. As our social selling specialist Jaakko Paalanen put it in this article on analytics-based sales.:

“It is important that sales and marketing work closely together, but it’s not efficient if they keep requiring each other’s time. Especially if, for example, there are tools that can automate the lead generation process from your website. When lead feeds can be created and monitored by salespeople alone, it will release time for marketing people to concentrate more on driving traffic and qualifying leads from other sources.

Long-term benefits

The long-term benefits for investments are sometimes more difficult to narrow down to tangible numbers (and you must be already fed up with me pasting calculation forms). But let’s identify some of the other overlooked things to think about.

Reduced costs of retention. Once you’ve closed the deal, you want to monetise the existing relationship. The probability of selling to an existing customer is 60-70% (according to this study) whereas the probability of selling to a new prospect is 5-20%. Tracking website visitors enables you to know what your existing customers are doing and puts you in a much better position to up-sell, cross-sell and tailor offers of one kind of another.

Track your competitors online and discover new competitors. We’ve a whole guide devoted to how to achieve this with Leadfeeder. Have a look.

Keep track of which investors are silently checking you out. This might be your top management’s dream-come-true and the payback can be enormous.

Measure how well your SEM and other campaigns attract relevant leads. Want to quickly see how your paid adverts and other marketing generates relevant leads? Create a custom feed with filter “Source / Medium” = Google / cpc”

Filtering leads in Leadfeeder originated from cost-per-click

How about your social media channels? Are you creating awareness or do your social channels attract real B2B leads? Try creating the following filter in Leadfeeder:

Filtering leads in Leadfeeder per social channels

Conclusion

By now you’re probably feeling a bit bombarded by all the ways you can establish the true value of Leadfeeder for your company. Leadfeeder is not meant to be just another “SaaS toy” in your marketing stack. If you find it difficult to put Leadfeeder’s benefits into tangible numbers, please contact us at team@leadfeeder.com.





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