A few days ago, in a meeting with a client, a conversation came up that is repeated much more often than it seems.
The concern was legitimate: spending on marketing continues to grow. Campaigns, content, tools, commercial actions, positioning, social networks, events… When you look at the annual budget, the figure is usually considerable.
At one point in the conversation I asked a seemingly simple question:
—How much is a lead worth to your company?
There were a few seconds of silence.
It’s no wonder. Many organizations know how much it costs them to acquire a lead. They even have detailed reports on cost per click, cost per opportunity, or cost per customer. But very few know how to answer the above question with certainty.
And it’s a shame, because this is probably the most important data of all.
Because before deciding whether an investment in marketing is high or low, before discussing whether a campaign works or not, before assessing whether it is necessary to increase or reduce the budget, it is important to know what economic value each potential contact that enters the organization brings.
The idea is surprisingly simple.
This is how the value of a lead is calculated
Let’s imagine a company that generates 10 million euros in margin over the course of a year. Not in turnover. In margin.
During this same period, its commercial activity has managed approximately one million leads.
If we divide the total margin by the number of leads we obtain a first approximation to the economic value of a lead:
€10,000,000 ÷ 1,000,000 leads = €10 per lead
It is clear that the reality is more complex. Not all leads have the same quality. Some become customers and others do not. Some generate very profitable projects and others consume resources without ever materializing.
But as an initial exercise it is extraordinarily useful.
For the first time we have an objective reference.
If each lead brings in an average of 10 euros in profit, what happens if it costs us 2 euros to capture it? We probably have room to grow.
What if it costs us 8 euros? Maybe it’s still a reasonable investment.
And what if it costs us 15 euros? Then that’s a different conversation.
What does doing the calculation mean for the company?
The most interesting thing is that this calculation completely changes the way we understand marketing.
Suddenly we stop talking about spending.
Let’s start talking about investment.
Let’s stop wondering how much marketing costs us.
We begin to wonder how much margin it is capable of generating.
This change in perspective is especially relevant in industrial companies, B2B services or businesses with long commercial processes, where the marketing budget is often questioned without having a minimum model to assess its return.
Naturally, this first calculation can be refined.
We can incorporate conversion rates. We can differentiate channels. We can separate new and returning customers. We can calculate customer lifecycle value or take into account the business hours invested in each opportunity.
But I almost always recommend starting in the same place.
Before analyzing campaigns. Before reviewing indicators. Before discussing budgets.
Calculate how much a lead is worth to your business.
Because it is very difficult to decide if marketing works when we don’t yet know what economic value is what we are trying to capture.
