Leads Have No Value

Leads Have No Value

The reality is, leads have no value. They have potential and they have an expense associated with them. 

But as a stand-alone, they have zero intrinsic value. 

Think about it. 

A stack of 100 leads as it sits is worth nothing. 

Out of 100 leads, 30% will be valid opportunities. 

Of the valid 30%, 10% will be ready and available right now (low hanging fruit). 

That leaves 20% that still need to be chased and nurtured into becoming paying client. 

Now if all you ever got was 100 leads then scrubbing the list and really working the 30% of your opportunities into clients wouldn’t be a big deal. 

But we all know that is not how it works. 

For example: In January you received 100 leads, remember you will connect with 10% of them even though 30% are valid or are qualified to work with you. 

That means 20% or 20 deals will be left in the stack of leads waiting to be contacted, qualified and turned into your client. 

Now February hits and you get an additional 100 new leads. The February leads follow the same math patterns that January did. And then before you know it March is here and she brought 100 new leads with her. 

Here is where the lead compounding issue begins, January’s 20% is still in play odds are it has been long forgotten and February’s is following the forgotten path fast. We have now lost those opportunities, odds are those potential clients have found another service provider and you are the owner of some very expensive toilet paper. We can’t ignore the fresh new leads, we need to get on those bad boys ASAP! We do not want them to go cold! After al,l we did just pay for them. 

The investment

There are two major investments in leads. First is the financial expense to generate them. This can be money (buying them, running ads, mailers…), or time (networking meetings, after-hours drink and mingles…). 

The second is the manpower/womanpower to followup with them. The risk here is burning out. Burn out only leaves money on the table. Money left on the table is why your lead generation efforts are an expense and not an investment. An investment maximizes your opportunities to generate revenue. An expense e does the opposite.

The return… It might be more accurate if we say “The potential return.”

A lead is only as good as the appointment it generates. Outside of that the value to a lead has the same value as stock from a company that has gone out of business. At best it is expensive toilet paper. 

Let’s run some numbers.

100 leads.

30% with proper nurturing will turn into paying clients.

10% is the low hanging fruit and these will close right away.

If 20% of the leads we invested in do not get worked properly they will turn into an expense.

100 leads (exclusive leads) $100/ea = $10,000 investment (right now we are investing).

10% will convert into business right away (low hanging fruit).

100 leads x 10% low hanging fruit = 10 new clients (not bad, right)?

10 clients x $3,000 revenue = $30,000. 

We grossed $3 on every dollar invested

Let’s stop and recognize why we would see this is a GREAT investment.

We invested $10k in leads and made $30k. We made $20k!!!! I would give you 10k three times a day if I was making 30k back, who in their right mind wouldn’t? And because of those returns, most people look at that and say, I would! And I would too! As I have and did for decades. Keep the leads coming in! I never stopped to understand that the majority of my return wasn’t being recognized. 

So let’s pause the celebration here and see how much money was just left on the table.

100 leads (exclusive leads) were generated for the month @ $100/ ea = $10,000 investment.

We closed 10% or 10 deals and grossed $30,000 return. So far so good…

We should be able to get 30% of the 100 leads to turn into clients. That leaves 20 more opportunities for the month on the table.

20 deal left behind @ $3,000 in revenue each we walked away from and additional $60,000 that month.

This is the exact moment your investment turned into an expense. We lost literally just lost a net $6 for every dollar invested or spent. STOP AND READ THAT AGAIN – We just lost NET $6 per dollar invested. 

In the first example we only net $2 for every dollar invested, right? We invested 10k we sold 30k in gross revenue leaving 20k net revenue. 20k net revenue \ 10k lead cost = $2 gross return on investment. The real return is in the 60k we didn’t recognize. We grossed $2 per $1 inevested where we should have a net ROI of $8 (our current $2 + the $6 net we left on the table due to no follow up).

For that month you walked away from $60,000 gross revenue.

Over 1 year you have left $720,000 on the table. Here’s the thing you essentially gave your competition $720,000 of your dollars. Those people in your lead stack didn’t decide because you didn’t followup properly to not buy. Instead, they bought from a competitor. This should make you Hulk mad! The $720k was yours and you left it on the table. 

Recap

You invested $10,000.

You made $30,000 (Gross 3 for 1. Net 2 for 1 ROI).

You let $60,000 walk (Net 6 for 1 ROI).

You should have made $90,000 (Net 8 for 1 ROI. The net 2 for 1 you got plus the net 6 you left).

Instead, you lost the lions share of $60,000 on your investment and odds are you didn’t even realize it. 

The solution

The solution is simple. Hire an in-house team to call each lead ensuring you are maximizing each opportunity or hire youinlocal.com to do it for you. Our in-house team will generate the leads, we will nurture each lead maximizing each opportunity enabling you to capture those lost dollars, we will verify and qualify each, lead and then we will schedule it on your calendar for you. All you have to do is show up and close the deal. 

youinlocal.com