Lead generation. 77% of businesses say it’s their top marketing priority according to one recent study. Yet companies that focus solely on getting new leads are leaving an absurd amount of money on the table.
On the surface, that single-minded focus on lead gen seems to make sense. More leads = more revenue.
But this is an example of the bad math often found in small local businesses.
- It’s the kind of math that prevents owners from growing the kind of businesses they really want.
- It’s the kind of math that can keep a business “grinding along” day to day rather than moving towards financial freedom.
How to Get More Revenue from the Same Number of Leads
Clues to that success lie in that same study of marketing priorities from Service Direct.
Coming in a distant second is the Lead Close Rate at 29%, and Customer Upselling in fifth place at 28%.
These two factors can be even MORE important than lead generation.
Allow me to explain.
Let’s assume your focus is SOLELY on lead generation as the #1 marketing priority. I’ll use a simple math example for purposes of illustration. You can plug in your own numbers to see what this would do for you.
Focus on Lead Generation Only - Example
Let’s say you currently get 100 leads/month, 10 become customers at $1,000 each = $10,000/month. [A 10% closing rate.]
Your priority is increasing leads, so let's say next month you increase your Lead Generation results to get 110 leads, 11 become customers at $1,000 each = $11,000/month.
You increased your lead gen results by 10%, your closing rate remains the same, and you grew your revenues by 10%. That’s what I like to call “linear growth.”
Focus on Lead Close Rate Only - Example
Now, let’s say that instead of working on your number of leads, you increase your Lead Close Rate by a measly 1%, from 10 to 11%.
Working with the same 100 leads/month, 11 become customers at $1,000 each = $11,000/month.
It’s the same result you’d get by increasing your number of leads by 10%.
So, which sounds easier…increasing something by 10% or by 1%?
Which do you think would cost less money?
But that's just the beginning. There is much more that can be squeezed from this kind of “good math”.
Let’s go a step further and say you worked to get your Lead Close Rate from 10% up to 20%...a reasonable expectation.
At the same 100 leads/month, 20 become customers at $1,000 each = $20,000/month.
You’ve now DOUBLED your sales on the same volume of leads. And you did it WITHOUT spending any extra money on additional (probably expensive advertising) lead generation efforts.
So, do you think Lead Generation should still be the ONLY priority?
But, as the famous salesperson Billy Mays used to say, we’re not done.
Focus on an Increase in Up-selling - Example
What if we could increase the Average Sale/Customer from $1,000 to $1,100.
At our original 10 customers a month, that gives us a 10% increase in revenue to $11,000/month.
One simple way to increase the “average transaction” is to offer extra services, additional options, paid warranties, or other products at the time of purchase. A small percentage will always buy something. In turn this increases your overall average.
Focus on All 3 – Exponential Growth Example
Now, let’s do all three together to get to “Exponential growth”:
Increase # of Leads AND Increase Lead Close Rate AND Increase Average Sale/Customer
[110 new leads X 20% close rate] X $1,100 =
22 new customers X $1,100 = $24,200
That’s a 142% increase in revenue.
That’s the potential power of “Exponential growth” you get by focusing on more than one metric. You can plug in your own numbers to try it out.
It’s a strategic way to squeeze far more from your current marketing budget than you might have thought possible.
The good news is, you don’t have to be a math or statistics geek to figure this out. With the right lead generation and sales systems in place, this all starts to take place automatically.
If you need a little help making your processes more efficient, be sure to get a free copy of 5 Key Steps for Creating Efficient and Powerful Business Processes.