What is a Lead Worth?

Lately, I have been happily attracting leads for my Internet marketing products and services from a wide range of sources including search engine advertising, online classified ads and even an eBay campaign. But am I spending too much? What is a lead worth anyway?

I figured I had better find out! Otherwise I could be spending more money than a lead is actually worth to me.

Here is the process I went through to determine how much I should pay for a lead..

1. Defining what a lead is for you.
There are different definitions of leads in different industries. For myself, I defined a lead as someone who actually visited my web site and signed up for either a free e-book or my newsletter. This way, I know they are interested in the kind of help I offer. They have seen MY web site and they have freely given me their e-mail address to stay in touch.

If you are buying lead lists from someone, the value is much less because the people haven't heard of you, they have just opted in to someone else's list.

2. Tracking your leads.
It is critical that you are tracking your advertising to see how much of it is resulting in leads and sales. I dump 95% of all Internet advertising I try after the first month because my tracking tells me it doesn't work!

Without the ad tracking, I would never know which campaigns were working and I would be wasting 95% of my marketing dollars.

The ad tracking service I use is called 1ShoppingCart. They offer unlimited ad tracking and auto responders.

3. How many leads does it take to generate a customer?
Not everyone who signs up for a free e-book or a newsletter becomes a customer. If only 1 in 100 of your signups become customers, you need to take this into account when you are valuing your lead. In my case, I feel 1 in 25 signups become a customer at some level.

4. What is each customer worth?
How much does your average customer spend with you? At first, I found this difficult to calculate because my customers range from a $9 e-book to $1,000s of dollars each year in coaching. In addition, I receive passive and residual income from my customers which comes from their use of products and services I recommend. But then I looked at my accounting program and simply took my total income for the year and divided it by the number of clients. This showed me that my average client spent $259 in 2004.

5. Calculating the value of your leads.
Here is the formula to calculate the value of your leads:

Value per lead = value per customer ÷ number of leads needed to generate 1 customer.

In my case, my accounting program for 2004 showed an average expenditure per customer of $259. In my own case, I believe that 1 out of every 25 signups will result in a sale.

Value per lead = $259 ÷ $25 = $10.36

In my case, each lead I generate should bring me $10.36 in sales.

5. What about profitability?
If I spend $10 to generate $10 in sales, I don't make any profit and I haven't covered my costs of operating.

If I assume that I currently make $5 profit on a $10 sale, I might want to set a target of paying a maximum per lead of $2. This way, on a $10 sale, my total cost including the cost of the lead plus the cost of the product is $7, leaving me a $3 profit.

In my case, my actual costs in 2004 were only 37% of my sales, so I could afford to pay even more, but the $2 target seems a good one for me to work with. Fortunately, it is easy for me to generate all the leads I need for less than $2 each through the various types of advertising available.

Garland Coulson, "The E-Business Tutor" is an acclaimed speaker, author and coach in the field of Internet marketing for small business and home business. For more information, visit The E-Business Tutor web site at http://www.ebusinesstutor.com or call toll-free in North America at 1-866-413-0951.

---

How To Do Effective Keyword Research To Find Good Niches

It is true that with online business, the entire world... Read More

MLM Network Marketing - Why Failure Rate Is so High?

In recent years people are increasingly looking for extra source... Read More

MLM Success - For MLM Success, Its ALL About VALUE in Network Marketing

There is ONE Word in Network Marketing that prospects seem... Read More

The Best Network Marketing Company

...is the one that will work best for you.With that... Read More

Making Money With Any MLM Program

Multi-level Marketing companies abound by the thousands. A great many... Read More

MLM Training - The TRUE COST of Your Lack of Action in Network Marketing

Expensive.VERY expensive.That is what LOA is in the network marketing... Read More

MLM Genealogy Leads

As with any other start up, a new multi-level marketing... Read More

MLM Success Training - The Top 15 Power Phrases for Recruiting Business Professionals into MLM

What do you say to a small business owner? How... Read More

How Network Marketing Can Help You Build A Second Income Fortune

We live today in an age of inflated money- where... Read More

Network Marketing Lets You Use Collaborative Approach - and Get Leveraged Earnings

By helping others to grow their business you ensure growth... Read More

The 5 Critical Elements of A Successful MLM System

Take it or leave it but all big MLM earners... Read More

Diversification on the Internet

I have been on the Internet observing many new and... Read More

Hey Dummy, Youre Asking The Wrong MLM Questions! ($$$$)

Talk about total dumbness. I wasted over $3,200 and maybe... Read More

Network Marketing Decisions: Ask Mr. Kipling

I kept six honest serving men, They taught me all... Read More

Why 95% of MLM or Network Marketing People Fail with Their Home Based Business

Every MLM or network marketing operation offers the same promises... Read More

MLM Pyramid Misunderstanding, Its Actually Inverted and Fair

Many people that bad mouth MLM industry use the pyramid... Read More

How to Avoid Losing Money to Affiliate URL Thieves!

If you are promoting your affiliate URL on the web... Read More

Genealogy Leads: Pros and Cons

Working genealogy leads can be an effective method of building... Read More

Five Steps That Will Help You Succeed in Niche Marketing

Niche marketing is a manifestation of how much internet marketing... Read More

The MLM Dilemma

Does this sound familiar...?You have taken ALL of the company... Read More

Keep Getting Paid Over And Over For Every Sale You Make!

If we could all have one wish granted chances are... Read More

The MLM Revolving Door Syndrome

In the 15+ years I've been involved with network marketing,... Read More

Three Very Key Aspects Of Successful Network Marketing

Network marketing has many aspects, but promotion, persistence, and patience... Read More

MLM Success Network Marketing Secrets - The MLM Power of Patience

"Persistence is needed, but Patience is a MUST." Ben Johnson-... Read More

Choosing to be a Work @ Home Mom

There can be so many reasons why we choose to... Read More

Home Based Business on the Internet

The subconscious mind is a very powerful thing and if... Read More

The Brutally Honest Approach to Network Marketing

Network marketing has quickly become one of the fastest growing... Read More

8 Reasons MLM Distributors Fail

There dozens of reasons why any one individual might not... Read More

MLM Local Leads

In multi-level marketing (MLM), one of the goals of the... Read More

Listening Your Way to Greatness

What you listen for in your conversations with others determines... Read More

MLM versus Pyramid

Many people don't know the difference between MLM and pyramid,... Read More

MLM Recruiting- Cold Market Prospecting- 5 SCORCHING Opening Phrases

There is a phrase in MLM Recruiting that we call... Read More

Make Your Home Party a Success!

Home parties can be a lot of fun and a... Read More