What is the value of an online-generated lead? Part III – Time vs. Money

In this section, you will see how to assign a true and accurate value to the leads you generate online as well as a value and true cost of the time you spend doing so.  Such information is critical if you are to work smarter rather than harder online.  In addition, you will want to know if you should invest actual money using paid searches and pay-per-click services or if free organic search is for you.  If you have not read Part I and II of this series, you may want to do so before reading on.

Your numbers

By now, you should have obtained all of your performance numbers and been able to assign an overall value to a lead.  If you have not yet generated leads from online searching, for now use any type of lead.  With that information in mind, let us go back to our hypothetical sales person, Joe and go a bit further.

Remember Joe’s numbers as he uses 100 leads the he generated online via free organic searches:

  1. Average sales commission:  $300 US
  2. Overall closing average:  25%
  3. Appointment to closing average: 65%
  4. Prospect to appointment average: 30%
  5. Lead to prospect average:  20%

We know that in Joe’s case, an online lead is worth $3 each and we know that Joe searches organically and spends no actual cash.  However, how much time does it take Joe to find these 100 leads online?  If it takes Joe 20 minutes to find each lead, he is effectively only making $9 an hour.  If he is able to generate 100 leads in 8 hours, then Joe earns $37.50 per hour while generating leads online.

However, Joe must compare this with the money he earns while out in the field and talking to potential customers on the telephone.  For example, Joe has a 25% closing average when asking for the order and each sale grosses him $300.  Therefore, Joe effectively earns $75 for every closing sales interview.  If each sales close takes 30 minutes, then Joe earns $150 an hour when he is in front of potential customers.  Obviously, this is where he needs to spend most of his time.  Joe has to weigh the cost of the time he invests in using free organic search as compared to investing money for online leads that may in turn afford him more face-to-face time.

Paid vs. Organic

Joe also knows that since 100 online generated leads is worth $300 to him, he can purchase the leads or use more aggressive paid search methods if he so chooses.  For instance, would it be worth it to Joe to invest $50 to get those same 100 leads without investing any time?  On the other hand, could he invest $25 to gather the same leads but in only half the time?  Are you beginning to see the importance of knowing all of your numbers?

For Joe as for you, time is a major factor.  If Joe is able to generate 100 sales leads online in 10 hours, then he effectively earns $30 per hour for this activity.  If it took Joe 20 hours to generate the same, then he earns but $15.  Another way to look at it is to consider how much money Joe is losing every hour he spends online as compared to being in front of a customer.

Of course, you must spend time generating leads and prospecting.  You must spend time following up, providing customer service, after the sale service and a host of other sales activities.  However, you must know which activities produce the most income and maximize your time in those areas.

Last:  What is the value of an online-generated lead?  Part IV – Putting it all together

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