Building A Modern Sales & Marketing Machine

How Enterprise CMOs Can Reduce Their Cost Per Lead

Posted by Phil Harrell

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Mar 2, 2014 8:36:00 PM

Your CEO is demanding to know the ROI of your marketing spend. And you know your CEO doesn't want to hear fluffy stats like number of likes you’ve been able to acquire on Facebook. She wants hard data on the efficacy of the company's marketing investment-"Is it working?", "Are we improving our ROI on marketing dollars?", "How many leads are we getting for the money we're spending"-and wants proof of the contribution you and your team are making to the revenue growth of the company.  

Do you have the data? If not, how are you going to capture the data and what metrics are you going to use to prove to your CEO and your peers on the executive team that you and your team are impacting the bottom line?


There's lots of room for improvement in this area-according to a recent study put out by Fournaise Marketing Group, 73% of executives don't believe that marketing drives demand or revenue!!  Which means you have a opportunity to alter that impression and determine the key performance indicators (KPIs) that your CEO should be using to measure your impact.  But what are those KPIs?

In order to measure these results, you first have to have closed loop marketing in place, which means connecting the sales and marketing databases to allow the free flow of information about prospects as they move from the top of the funnel to the bottom of the funnel.  

Connecting the sales and marketing databases will allow you to measure the following key funnel conversion metrics:

  • # of web site visitors->How many visitors are you generating with your current marketing spend?

  • # of leads->How many total leads are you capturing from all those visitors? 

  • # of marketing qualified leads (MQLs)->of those total leads, how many are high quality MQLs?

  • # of opportunities->How many opportunities were created by sales team from leads sourced by marketing? 

  • # of customers->How many customers resulted from the opportunities that marketing generated?
Once you're able to measure these funnel metrics, then you can get the conversion percentage from each of the conversion steps:
  • Visitor to lead conversion percentage. What percentage of visitors to your web site are you turning into leads?

  • Lead to opportunity conversion percentage.   What percentage of your leads become sales opportunities?

  • Marketing qualified lead (MQL) to opportunity conversion percentage. What percentage of your high quality leads (MQLs) become opportunities?

  • Opportunity to customer conversion percentage. What percentage of opportunities convert into paying customers?

  • Overall lead to customer conversion percentage.  From the top of the funnel metric of leads to bottom of the funnel customers, what is your overall conversion funnel? This is a key indicator of the quality of the visitors and lead that you’re generating with your company’s marketing dollars.

With these metrics, you can then start to share hard hitting KPIs that prove the ROI of your marketing investment and allow you to allocate dollars to the channels that work and away from channels that don't.

Below are some of the KPIs that all marketing executives should be tracking and sharing with their peers on the executive team:

  • Cost per lead-how many leads are you and your team generating for the sales team and what is cost to generate these leads?  

  • Cost of customer acquisition (CAC)->what were the fully loaded costs (marketing, sales) to close these customers?
By analyzing the effectiveness of your current marketing spend, you can begin to develop a plan to improve the results you drive with your marketing dollars.  

Below are two options on how Enterprise CMOs can reduce their cost per lead:
  • Increase by 2x the number of visitors to their web site
  • Increase by 2x the number of leads that they capture on their web site

Do you know your cost per lead and CAC? What are you doing to increase the number of visitors and leads to your web site and reduce the cost per lead and per customer?


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Topics: CMO/VP Marketing

Building A Modern Sales & Marketing Machine

This blog is for CEOs, Sales and Marketing Executives who are interested in transforming their sales & marketing machine to align with how B2B buyers buy today.

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