Date posted

22 May 2023

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Is it worth it? Understanding the value of your leads

In B2B and SaaS, lead generation is arguably the most important metric for business growth.

But the lead generation business model faces distinct challenges when it comes to measuring return on investment (ROI) from performance marketing and website development.

Is my digital activity producing return on investment?

This can be tricky to answer, but the value of getting it right is enormous.

The importance of measuring lead value

Being able to estimate and later accurately measure ROI will unlock confidence in your digital strategies.

Real-time digital marketing optimisation enables marketing platforms, such as Google Ads, to leverage advanced algorithms to target your advertising more effectively.

This relies on first party signals of value, such as data that has been inputted into a website form and subsequent interactions, like clicks. 

But, with your target audience often needing to meet very specific criteria, such as minimum business size or buying power, it’s important to understand that not all leads are equal and adjust your marketing efforts accordingly.

Getting started on your lead measurement

To improve the understanding of the value of your leads, start by calculating an estimated value using historical business data.

This can be as simple as: Avg. lead value = Avg. lead CVR * Avg. lifetime value

E.g. a typical 2% conversion rate (CVR) from a lead and an average lifetime value (LTV) of £20,000 means a lead is worth ~£400

This is a starting point to measuring commerciality of your leads.

Next, advance this by breaking down further signals such as products or lead types e.g. lead company size:

Company size Est. lead value
1-50 £400
51-100 £1,000
101-500 £2,500
500+ £5,000

Finally, work towards a predictive LTV based on first party data to feed into reporting and ad optimisation algorithms.

If you need support in building your lead generation strategy, get in touch.