Should You Invest in Lead Nurturing?
Even in today’s competitive B2B environment, there are still some executives wondering if they should invest in lead nurturing. Let’s take a look at why lead nurturing should be incorporated into your lead management strategy.
Research done in 2012 reveals that nurturing leads increases sales opportunities 20% over non-nurtured leads. Another 2012 study shows that an effective lead nurturing strategy can:
- Increase sales-ready leads by at least 50%
- Reduce cost per lead by an average of 33%
- Lower ignored or discarded leads from 80% to as low as 25%
- Increase sales quota achievement by 9%
- Reduce “no decisions” by 6%
So operational returns can be improved significantly, but what about financial returns?
Calculating ROI
There are several options when calculating a return on your lead nurturing investment. As an example, let’s use the number of leads converting from a prospect status to sales-ready lead in the sales funnel, with and without nurturing. Using a database of 1,000 existing leads, let’s assume a non-nurtured conversion rate of 5% – or 50 sales-ready leads. Next, estimate a reasonable increase in conversion from lead nurturing activities of 2.5x the existing conversion rate (Industry analysts suggest using an average increase of 2.0-3.0 times non-nurtured leads). Then multiply the non-nurtured conversions (50) by the nurturing conversion rate (2.5), which results in 125. This is an increase of 75 sales-ready leads.
Now, if you’re monthly marketing budget is $10,000, with 10% devoted to lead nurturing, you’ll spend $1,000 for lead nurturing activities. Divide that amount by the total new sales-ready leads (1000/125); this will give you an average cost per lead of $8.
If your average sales amount is $50 per close then your cost per lead is 16% of sales. Not a bad return.
Compare that result to the cost per lead without nurturing. If your budget is $10,000 to convert 50 sales-ready leads, then the cost per lead would be $20.00. By nurturing leads toward a sales engagement, your total cost per lead decreases by 60%!
By incorporating Lead Liaison’s proven lead nurturing strategies, you can boost your marketing results and decrease your cost per lead. Find out how – contact a Lead Liaison representative today!
