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On January 23, 2013

Reducing the Cost of a Sales Lead

How to make your marketing campaign more cost-effective

 New business leads cost most of us a fortune. We’re not talking about prospects in a directory or sending out advertisements via email or direct mail. Real marketing leads for new business are direct results of conversions from your marketing efforts and can cost up to $500 each.

An HVAC company runs a pay per click (PPC) campaign on the Internet. Two hundred Internet users see the ad on a search engine and click through to the company’s website at an average cost of $3.50 per click. Twenty of those Internet users actually contacted the company for an estimate. Cost per lead, $35 each. The same formula of dividing leads into the cost of the total campaign holds true, whether an advertiser uses the Internet, direct mail, newspapers, radio or television. Cost of the campaign, divided by new leads generated.

A new car dealer places ads in the local newspaper and an automotive classified website. Thousands of people see the ads, and the ad costs the dealership thousands of dollars. One hundred people come into the dealership to talk to a salesman and some even took a test drive. Eight people actually purchased vehicles. The total campaign cost was $6,000 and the customer acquisition cost was $750. What about the other 92 leads resulting from the dealerships marketing efforts?

So now do you get the idea? The cost of a new customer is much higher than the cost per marketing lead. However, the trick to reduce the cost of a lead may be even more difficult than reducing the customer acquisition cost. This holds true for both consumer leads and business-to-business sales leads.

Here are five tips to reduce the cost per sales lead for your next marketing campaign:

  1. Market to your own customer list. These people know you, like you, and should be interested and open to what you’re offering. Also, you will not have to purchase this list.
  2. Target your audience. One way to do this is to determine the demographics of your current customers and where they are located. For instance: age, income gender and marital status.
  3. Create a great offer. No matter whom you market to or how you phrase the offer, if the offer is weak, chances are your response rate will also be weak. The better the offer, the better the response. Thus, the cost per lead is reduced. Also, the offer should be well timed. For example, don’t try to market a snow blower in June.
  4. Choosing the right marketing vehicle. There are several main vehicles to choose from for marketing a product or service. Direct mail, print, TV and radio, and of course the Internet. The Internet is huge; this includes PPC, social media, banner ads and website conversions. If you do not have a website, shame on you; have one developed. Any offer, promotion or sale should always be displayed and promoted on your company website. However, if you’re looking to drive new business and create new business leads you’ll need to do much more than just have a website. The goal should be to use your website to not only support your brand and your product or services, but to also feature and support your other marketing efforts.
  5. Pick the right vendor. The right vendor could help make your marketing campaign successful. The right vendor not only has competitive prices, but also has the experience to guide you in the right direction. Before you choose a vendor, whether for direct mail or Internet marketing, visit their company website. After you make initial contact with a vendor, go to LinkedIn and check out the profile of the salesperson you’re dealing with. See if they have the experience and expertise you believe would benefit you and determine if you believe you could form a relationship to work closely with that individual.

Here are five tips to reduce your customer acquisition cost and how to increase customers:

  1. Collect information from your prospects. Just because a new sales lead or prospect does not purchase any of your products or services today, does not mean they will not turn into a new customer tomorrow. Your chances are better converting them into a new customer if you’re able to contact them with other promotions and offers you have over time.
  2. Following up with your leads is without question the very best way to reduce new customer cost. By the way, even if they don’t purchase products or services from you today, you can always add them to your marketing list for future marketing efforts.  This will also help defray the cost per lead for your next marketing campaign.
  3. Keep in constant contact with your sales prospects. Following up is so important to reducing new customer cost, it should be mentioned in all five tips. The trick is how to follow up with a prospective new customer. This all depends on the information you have for that prospect. If you have full contact information, you can make a telephone call, you can send an email, or the very best way to follow up with a potential new customer is to send a personalized direct mail letter. Don’t send a generic letter in a window envelope. Instead send a personalized business letter in a closed face envelope. If the communication feels like a real business correspondence, the potential customer usually cannot resist opening it. Making a telephone call to your prospect might work if you have already formed some type of a relationship with that individual, whether it’s a consumer or business-to-business sales lead. But be careful, most of us do not like getting sales calls and you could do more damage than good if you call too often. Email is free and it works sometimes. But if your marketing efforts are successful and you get a lot of leads, you will need to resort to using email blasts. Email blasts are notorious for getting blocked by todays sophisticated spam filters. Therefore, those emails may or may not reach your target prospect, also emails are too easy to ignore and delete.
  4. Create a follow-up system. The most difficult task for converting marketing leads into new customers is creating a good follow-up system. Following up with leads should be automated and allow you to contact prospects in a timely and meaningful manner. KD Mailing & Fulfillment provides our clients with an everyday direct mail solution that generates personalized mail merge leads and sales letters the day after a customer or prospect lead is generated. We can also create and provide email blasts with your message.
  5. Remarket to your lead and prospect list. Once you have made a connection with a potential customer or prospect, you should treat them as you would a customer. Every time you send a newsletter, they should be on the newsletter list. If you have an announcement, they should receive it. Any promotion you provide for your customer list you should also provide for those names that you have collected that are considered leads.
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