How Much is a Qualified Sales Lead Worth (EXACTLY!)?

How Much is a Qualified Sales Lead Worth (EXACTLY!)?

Qualified sales leads are the life blood of most businesses. Sure it is possible for someone to make the leap from “target” or even “prospect” directly to “buyer” but, more often than not, getting a “sale” involves a bit of a courtship process. You need to bring someone into your community (usually by providing value) and let them get to know you a little before they are willing to spend money with you. The process of turning someone from a “target” into a “qualified” community member, and hopefully future buyer, is called lead generation.

So, how much is a qualified sales lead worth (exactly!)?

I put the emphasis on the word “exactly” because it is different for every business and it is important to understand how to calculate the value of YOUR leads. It is also important to understand what “qualified” means. If you don’t, you’re lulling yourself into a false sense of security that the person will EVER buy anything from you.

Why “Qualified” and “Exactly” Matter So Much

Why is it important to understand these two terms?

Well, if you know how much you can earn from each lead you can figure out how much you are willing to spend to acquire that lead. Makes sense right? If you knew, without a doubt, that every qualified lead you earned would be worth $25 in lifetime customer value you would certainly be willing to spend $10 to acquire that lead wouldn’t you (presuming you had the cash flow)?

By being “qualified” I mean that the person has already shown some specific interest in the types of products and services your company sells. We do this at Boom! Social by building and giving away lead magnets or free offers related to products we sell. In other words, if you opt-in for a free guide we produced on how to do Facebook Ads, then it is a safe assumption that you will at least be interested in looking at our paid Facebook Ads course if we offered it to you, right?

We do a simple little calculation every time we are determining how much to spend on paid traffic to acquire a qualified sales lead. Let me walk you through what we do.

Our Simple Little Paid Traffic Calculation

1

January Lead Magnet and Mini-Course Sales for One of our Offers

In January, Boom! Social ran Facebook Ads to our 27 Killer Facebook Post Ideas for Small Business Owners lead magnet/free offer. We paid $1.61 in advertising fees for each of the 4,707 people who traded us their email address for this great little guide.

Of the 4,707 people who took the offer, 653, or 13.87%, of them took the $9 upsell that was offered directly after they opted in.

You can do the math a number of different ways, but long and short of it we spent $7,578 in Facebook Ads costs to earn $5,877 in digital product sales. Add the time it took to the write the lead magnet, develop the mini-course, produce the Facebook Ads and manage the whole process and the damage looks even worse.

That’s a net loss of $1,701…in one month, for just ONE of the four different free offers we are running!

That’s a HORRIBLE business move, right?  Think about it. We just paid $1,701 to give something away for free!

Nope, it’s actually the best money our company could have spent. We invested $1,701 to add 4,707 qualified sales leads and 653 buyers to our email subscriber list. That’s 36 cents for every opt-in and just $2.60 for each buyer!

Where Lunacy Turns to Genius

We are averaging $8.63 in annual sales for each subscriber on our email list. We get this revenue by selling them other products usually related to the low dollar offers they originally bought from us. That means those 4,707 new subscribers, on average, will spend $40,621 with us over the next 12 months.

In other words, we spent $1,701 now to make $40,621 over the next 12 months. Most entrepreneurs would take that kind of return.

Another of our funnels did even better.

2

We gave away 1,806 “Ultimate Facebook Ads Jumpstart Guides” and had 184 people take the $17 Facebook Ads Launch Pad mini-course upsell and pay us $3,128 on an ad spend of $2,980 ($1.65 per Facebook Ad conversion). Yep, we got our money back immediately and added 1,806 leads and 184 buyers to our list. We should sell those subscribers $15,585 worth of other products and services over the next 12 months.

Obviously, Facebook Ads are a major source of generating qualified leads for our company, Boom! Social, and they can work for your company too. If you would like a little help getting organized with your Facebook ads you are going to want to check out this related post: “The Facebook Ads Recipe: 7 Ingredients to Building GREAT Facebook Ads”

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What is YOUR Bottom Line?

How much is a qualified sales lead worth (exactly!)? For us it’s worth $8.63 in product sales over the first 12 months. That is an important number for us to know and one you should figure out for your company. Once you do it will give you an entirely different perspective on how much you are willing to spend on acquiring that qualified sales lead using either paid traffic or other means.

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