How Not to Blow Half Your Marketing Budget on Lead Generation
About 53% of marketers say that they allocate more than half of their marketing budget to lead generation. From the outside, this makes sense. Lead generation is built on the concept of pay-to-play, meaning the more money you shell out, the more leads you’ll see.
However, this was true a decade ago. Today, when you factor in the intensive online competition, your huge lead generation budget may not translate to more leads. While you need a significant budget, you don’t have to blow half of your marketing budget to be successful. With a proper lead generation strategy, you can drive quality leads to your businesses and boost your conversion rate.
This guide will take you through the top factors that affect lead generation budget and surefire steps on planning a reasonable but effective lead generation budget.
4 Factors to Consider When Budgeting for Lead Generation
Here are the main factors to consider when preparing a lead generation budget for your business.
1. The Product Life Cycle Stage
If you’re planning on launching a new product, you don’t need a lead generation budget for the product as the focus will be on bringing it to the market first.
After launching, you’ll need to attract customers to it. Thus, you can budget for lead generation at this stage to establish the product’s position in the market. When the product is well-established, you’ll spend less on lead generation as it already has significant customer traffic and market share.
Lastly, since consumer behavior is ever-changing, the product may start losing traction from customers with time. At this phase, you may want to increase your lead generation budget.
2. Scope of Operations
Internationally operating companies should have a high budget for lead generation since they focus on a larger geographical area. They may have to include extra costs such as the translation of websites. Conversely, locally operating companies have a small budget for lead generation since they focus on smaller geographical areas.
3. Company’s Position
Your business will budget less for lead generation if it has high brand awareness and credibility than those without. Companies lacking authority in their specific niche budget huge amounts for their lead generation strategy to attract new customers and build credibility.
4. Target Market
If you’re aiming to sell to the mid-market, you’ll budget less for lead generation as it’s easily accessible compared to companies looking to attract high-end clients who are usually hard to reach.
Once you have considered all these four factors, you’re ready to plan out the budget.
Planning for Lead Generation Without Blowing Half of Your Marketing Budget
Here are five steps to planning the best lead generation budget:
Step 1: Know Your Lead Generation Goal
To create a successful marketing campaign, you need to set goals that you can use to measure your results against. It’s important to have the following numbers in place to set an attainable and accurate lead goal:
- Monthly revenue goal: How much in total are you aiming to make by the end of the month?
- Percentage of revenue from your marketing goal: How much revenue will come from your marketing efforts?
- Average deal size: The number of leads that your business actually converts
- Average sales close rate: Measure of your business’ efficiency to convert a lead
Step 2: Know the Number of Visitors You Need to Drive to a Landing Page
A good way to do this is to make your visitors fill out a form to get free access to a valuable resource on your landing page. Once you drive them to this landing page, you can convert them into leads. The average conversion rate of a typical landing page is 2.35%.
Next, determine how many visitors you will need to drive to the landing page to achieve your lead goal. This can be done by multiplying your lead goal by 100 and dividing the result by 2.35.
Step 3: Find the Cost of Your Lead Generation Program
A good place to start is knowing the costs for:
- Technology: For example, the cost of marketing automation software that helps create landing pages and capture data into your CRM.
- Process: This involves the cost of driving traffic such as advertising and influencer marketing.
- People: This is the cost of hiring someone to do your lead generation or the time taken executing the strategy yourself.
Add up the cost of the technology, process, and people for the total cost of your lead generation program.
Step 4: Calculate the Cost Per Lead and Your Lead Value
To calculate the cost per lead, divide the total cost of your lead generation marketing program (from step 3) by your lead goal (from step 1).
For your lead value, multiply your average conversion rate (from step 2) by your average deal size (from step 1).
Step 5: Analyze Your ROI
To create a reasonable lead generation budget, your cost per lead should be less than your lead value.
If this is not the case, readjust your budget by cutting some costs.
Let Televerde Execute Your Lead Generation Strategy
Do you need help with your lead generation? Look no further than Televerde – a global sales and marketing services company specializing in modern demand generation solutions that drive revenue. Whatever your lead generation budget, we can work with you to scale up your business with sales growth.
Get in touch with us to get started.