Redefining the Marketing Dashboard

You’re marketing budget was just cut. Or perhaps your budget wasn’t nearly large enough to meet the high expectations of your sales team. Or even worse yet, maybe your budget was small, and just got smaller because of a cut. In any of these scenarios, you’ve got a pile of lead on your hands. To turn that lead into gold, you have to get smart about how you spend your marketing dollars. Measuring marketing effectiveness can literally make the difference between a boom and a bust year for the marketing department. To that end, the cost per qualified lead is one of the most critical marketing metrics worth measuring.

How to Calculate Cost per Qualified Lead

Cost per qualified lead= Total money spent on marketing campaign/Total # of qualified leads generated by that campaign

Why Measure Cost per Qualified Lead?

At the end of the day, marketing is measured by its ability to drive revenue, which means your metrics whenever possible should closely align with the sales organization. So what makes a lead qualified? That’s a discussion for an entirely different blog post, and is probably somewhat dependent on your sales team and your business. At a high level a qualified lead means that the prospect has some interest in your product or service. 

Now why bother measuring the cost to generate a single qualified lead? As a marketer, your lead generation goal is to generate both quality and quantity, but when push comes to shove, quality is always most important. And given that marketing budgets are increasingly shrinking, the desire to provide quality leads at a low cost point is paramount. So, cost per qualified lead can you help you separate the high performing campaigns from the weaker ones. 

The importance of Cost per Qualified Lead

Why not just use cost per lead as your metric (for details see my previous blog post on how, when, and why to use cost per lead)? Let’s use an illustrative to demonstrate the importance of calculating the cost per qualified lead. You ran two marketing programs last month, one was a brown bag lunch event where your average cost per lead was $5, and the other was a webinar where your cost per lead was $1. Let’s assume that they both generate 1000 leads (you spent $5000 for the brown bag lunch, and $1000 for the webinar). At first glance, you would think that the webinar was the more cost effective event (i.e., $1 per lead vs. $5 per lead). However, it turns out that the lunch generated 500 sales ready, qualified leads, whereas the webinar only generated 2 qualified leads. The cost per qualified lead for the event turned out to be $10 ($5000/500), compared to $500 for the webinar ($1000/2). For you to generate 500 qualified leads from a future webinar, you would need to spend $250,000 ($500 per qualified lead * 500 qualified leads)! So tracking and using cost per qualified lead actually reveals that the lunch was in fact the more cost effective event. Use metrics like cost per qualified lead to prioritize your marketing spend. It will be the only way you can turn that pile of lead into gold. 


If you’re interesting in seeing how Aperandi can automate the calculation and reporting of cost per lead, feel free to review information on our marketing dashboard.


This is the second post in a series of blog articles on Marketing Metrics that Matter:


Part 1: Cost per Lead Metrics: The How, When, and Why
Part 2: Cost per Qualified Lead: Turning Lead into Gold

Tags: calculating cost per qualified lead, Marketing Metrics

This entry was posted on Thursday, July 23rd, 2009 at 3:45 pm and is filed under Marketing Metrics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.