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How to calculate the value of a website lead

How to calculate the value of a website lead

According to the Content Marketing Institute, 73 per cent of Australian content marketers can demonstrate that their campaigns have generated more leads. Lead generation remains one of the most popular goals of content marketing strategies and inbound marketing in general.

But generating good quality leads will only get you so far. Leads need to turn into sales in order for savvier bosses to grant you more funds for bigger, bolder content marketing campaigns. A particularly useful metric when making those arguments is the value of a website lead.

Yes, inbound is driving more leads through the site, but what is each lead worth to the business? And how do you calculate that figure?

How to calculate the value of a website lead: the short answer

Start with the average value of a sale. Let’s say you sell software packages on 12-month subscriptions worth $10,000 on average. Next you need your conversion rate. From all the leads you get through your website, what percentage convert into sales? For the purposes of our example, let’s say 5 per cent.

You then take $10,000 (average value of a sale) and multiply it by 5 per cent (conversion rate) and you get $500 (value of a website lead). This means that every lead your site generates is worth, on average, $500.

How to calculate the value of a website lead: the longer answer

If it was that easy we wouldn’t need a whole blog post. So, now for some caveats:

1) Firstly, with our example, you obviously don’t get $500 in the bank every time you get a website lead (although that would be nice). A 5 per cent conversion rate means you need 20 leads to get one sale and you don’t see any money until that sale happens.

2) Second, and also, hopefully pretty obvious, is that sales revenue is not all profit. The business has to recover the cost of making the sale and then pay for the staff and materials required to deliver the product or service the customer has purchased.

Spending $50,000 on a content marketing campaign that generated $50,000 in sales would not win your team many friends upstairs. Using the gross or net margin for the average value of a sale can get around this problem.

3) You would want to calculate the value of your average sale using only sales that came from website leads. There might be a big difference between what a customer who came through the website will spend versus leads from other sources (outbound sales, trade shows, networking events etc).

4) If your software package always costs $10,000 then the average value of a sale is a reliable number. If however, the value of a sale moves around a lot (one customer spends $5,000, next customer spends $20,000) it’s less so. If you like maths you can use standard deviation to work out how much each sale differs from the average value (if you really like maths, you will call this the “mean value”).

5) Finally, you need to ask if you’re capturing all of your website’s leads. And then are you attributing credit for sales fairly between your different lead sources?

It’s common these days for customers to have multiple interactions with brands they’re interested in. They might visit your site via a social media post and take no action only to return via an ad a few days later. Or they might spend some time browsing the site and then call in the following week to speak to sales. You might end up counting this lead as having come from sales when in reality your website did the work.

Two really powerful tools you can use to help with this particular challenge are marketing automation (HubSpot, Marketo, Pardot etc) and Google Analytics.

How to calculate the value of a website lead with marketing automation

Marketing automation software enables marketers to identify leads and track their activity in emails and around their websites. And it can really help with the problem brands have capturing all the leads their websites are generating or contributing towards.

Identifying and nurturing leads with marketing automation

Without marketing automation, a user could visit your website multiple times before becoming a customer without you knowing. If you can’t connect that customer to their browsing history you could be missing the vital contribution your website made engaging, informing and nurturing them..

You would also miss the opportunity to push users down the sales funnel. If you have proper conversion goals tailored for users at different stages of the sales funnel, marketing automation allows you to do just that.

You can identify users at the top of the funnel with a low commitment goal, like a newsletter sign-up or a whitepaper download. Once identified, you can retarget those users with follow-up emails or prompts to consider mid-funnel goals, like downloadable product guides or case studies. When users are at the bottom of the sales funnel they need a final push to make sure they choose you over the competition. This is where a compelling offer like a trial or a free consultation can be really effective.

This graphic from HubSpot is a good illustration of how different goals and different types of content can be used to target users at different stages of the sales funnel:

How to calculate the value of a website lead

Tracking users through the sales funnel has two main benefits: firstly, you’ll have a much clearer picture of the steps users took between first being introduced to your brand through to becoming a customer. Secondly, you’ll be actively pushing users down the sales funnel, improving your conversion rate at each stage.

This means that you’ll be in a much stronger position when making the argument for more inbound marketing spend. Even if users are making the final conversion to customer away from your site, you’ll be able to show the interactions they had with your content higher up the sales funnel.

A better conversion rate will also boost the value of each lead. Improving your conversion rate is often the most cost-effective way to drive more leads, especially if a lot of your website traffic is paid (Google AdWords, social media ads etc). You might also find your higher-ups are more impressed by the value rather than the volume of leads you can deliver. Bean counters love efficiency as much as a good cost-benefit analysis.

How to calculate the value of a website lead with Google Analytics

You can’t write a post about the value of website leads without getting into Google Analytics. By mastering Google Analytics you can run more effective inbound marketing campaigns, keep your agency partners honest and impress your bosses with hard numbers.

Creating goals in Google Analytics

Google Analytics allows you to set up four types of Goals: Destination (user visits a particular page), Duration (user’s session lasts more than a minimum period of time), Pages Per Session (a minimum number of pages are viewed in a session) and Event (an event is triggered, usually a particular button being clicked).

You might want to track any number of Goals, but you should start with whatever constitutes a lead for your business. Typically with B2B sites this would involve a user completing a form, which you would track with either a Destination (user visits a thank you page) or Event (user clicks a button to submit their information).

Adding dollar values to goals in Google Analytics

Once you’ve got Goals in place to track lead conversions you can assign dollar values to them. In the last section we talked about some of the important considerations when setting values for website leads. When you’re happy with how you’re doing those calculations, you can assign a value to each Goal completion.

How to calculate the value of a website lead

Goal values allow you to see the dollar contribution that particular campaigns or market segments are making to your company’s bottom line. For example, if you run a social media campaign pushing users to your sign-up page, Goals with assigned values mean you can quickly pull a report showing the leads and the dollar value of those leads.

This is particularly useful if you’re trialling a number of different inbound marketing tactics. You can compare the dollar return you get from your social media campaigns against your organic search campaigns. You can then use this data to reassign resources and budget.

Attribution models in Google Analytics

Earlier on in this post we mentioned the issue of attribution. This is when a user has multiple interactions with your brand before converting. You want to make sure that you’re capturing as much of that data as possible and that you make some decisions about assigning credit.

Google Analytics offers a number of different options for creating your own attribution mode:

How to calculate the value of a website lead

The decisions you make about your attribution model make a huge difference to the value you assign to a particular inbound marketing tactic or campaign. But it can also have a significant impact on how you calculate the value of a lead.

A user might be more likely to complete your primary goal (a sales demo request, for example) if they have previously completed softer goals, like downloading an eBook or subscribing to your newsletter. A Last Interaction or Time Decay attribution model could mean you undervalue those leads nearer the top of the sales funnel.

How to calculate the value of a website lead; key takeaways

Thank you for reading this far. We covered quite a lot of information in this post so here’s a handy recap of the key takeaways:

  • you can calculate the value of a website lead by finding the average value of a sale and multiplying that figure by your conversion
  • that’s simple enough but you’ll need to consider some complicating factors such as the real value of a sale to your business and whether or not all your website leads are being captured;
  • marketing automation is a really powerful tool that can help you more accurately determine the value of a lead and increase the value of leads higher up the sales funnel;
  • you can use marketing automation to identify leads earlier and retarget them with content specifically designed to move them down the sales funnel;
  • this means higher conversion rates at each stage of the sales funnel and more accurate data about how different inbound marketing tactics contributed to a sale;
  • another essential tool for accurately measuring the value of website leads is Google Analytics;
  • you can create Goals in Google Analytics for conversions and other useful actions users take around your website;
  • once you’ve created your Goals you can assign dollar values to them. This makes it much easier to compare the return on investment you’re getting from different inbound marketing tactics and campaigns;
  • Finally, you can use different attribution models in Google Analytics to assign credit for sales to different actions along the buyer journey.

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Adam Barber
Adam Barber About the author

Adam is one of Castleford's founders and remains actively involved in the day-to-day running of the business. He started out as a writer and still contributes regularly to our blog, covering SEO, CRO, social media and digital strategy.

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