What is the cost of acquiring a prospect or a customer on your site? This question is at the heart of your Inbound Marketing strategy. Your campaigns have costs, be they financial, human or material, so you must be able to evaluate the profitability of each operation to adjust them better. This is the famous KING of which we hear so often! So, how to know the cost of acquiring a lead? Here are some avenues.
THE ADVANTAGE OF CALCULATING THE COST OF ACQUIRING A LEAD TO IDENTIFY YOUR ROI DIGITAL
The cost of acquisition is an indicator that allows you to evaluate the profitability of a digital marketing operation. It can be linked to a particular campaign or all of your Inbound Marketing actions and allows you to measure perfectly the return on investment or ROI of your various efforts regarding content creation, communication on social networks, automated marketing or even lead nurturing.
If it is known that the cost of acquiring prospects through digital marketing techniques is lower than through traditional marketing, it is pertinent to be able to precisely identify the costs generated by your leads , (Adwords, seo, social media …) and by recognizing their quality (how many of these leads actually become customers?). This will help you to define the rate of return on your efforts, but also to see how you can improve your strategy.
HOW TO CALCULATE THE COST OF ACQUIRING A LEAD IN INBOUND MARKETING?
There are different types of calculations depending on your goals and the campaigns analyzed. Thus, we can distinguish:
• The cost per acquisition (CPA)
• The cost per transformation (CPT)
• The cost per mile (CPM = cost evaluated on a single advertising poster from a base of 1000 views considered or audited)
• Cost per share
• The cost per lead (CPL)
• The cost per impression (CPI: useful for evaluating the profitability of an advertising poster), etc.
To make the calculation, it is necessary to take into account the specific aspects of each operation carried out in Inbound Marketing. To calculate the cost of acquiring a lead generated by a global campaign, you will have to calculate the total amount of your digital investments, taking into account all online expenses, the running costs of your site and the fees Related to the management of the personnel assigned to these missions.
Next, divide the total obtained by the number of Internet users who have completed the desired action (purchase, clicking on an advertisement, requesting a quotation, subscribing to the newsletter, downloading a white paper, etc.). It is possible to combine several data since a lead can come from different channels. This information is then very MACRO and points the interest of using an automation marketing solution like Hubspot directly.
We will discuss this in more detail in another article, but the more information we have, the easier it is to adapt the orientation of the actions carried out. With this tracking systems, You will know precisely what contacts become customers, how they discovered your website, and all the actions they have done before using your services or buying your products (Below: an example of a global Hubspot dashboard ). This type of tool will give you an extremely excellent and ideal level of information to progress.
HERE ARE SOME SIMPLE EXAMPLES TO BETTER UNDERSTAND
In a less automated and monitored environment (which may be yours), let’s imagine that your company has outsourced different aspects of its Inbound Marketing and thus identifies the different costs:
• Writing of contents: 3000 € / month
• Writing white papers: 1500 € / month
• Community Management: 2500 € / month
• Newsletter: 200 € / month
• Monitoring and lead nurturing: 1200 € / month
All digital activities amount to € 8400 / month in total. It receives about 90 requests per month, either by e-mail, via social networks or directly with a telephone number dedicated to digital activities. Each month it also records an average of 200 new entries in its newsletter, 30 calls, as well as 180 downloads of white papers. If we consider that all these contacts are leads regardless of their level of maturity, 500 opportunities are generated.
For example, quote requests are much more likely to become customers than newsletter entries…
If we reason in a very general way here is the cost of a lead resulting from digital marketing:
8400/500 = 16, 80 €
You can also calculate another key ROI indicator: the cost of acquiring a customer. If among its 500 leads, 35 become customers, the cost of acquiring a customer via the Inbound Marketing strategy is:
8400/35 = 240 €
BETTER UNDERSTANDING YOUR DIGITAL ROI
These simple examples give you an idea of how to analyze your digital ROI but keep in mind that an advanced monitoring solution (especially in the spending amounts presented here) makes sense when you say the word KING. There is also a particular effect of all these activities on your image and the activities that you realize today to participate in your SEO and your success of tomorrow! Elements that are difficult to measure on a daily basis.
Changing the cost of a lead or customer through digital activities should also decline month after month, year after year, to the extent you will strengthen your legitimacy and your positions.
The calculation of the cost of acquisition of lead makes it possible to measure the effectiveness and the in particular return on investment or ROI of your strategy Inbound Marketing. After analyzing these results, you will be able to readjust your communication channels, your editorial line, and your conversion tunnel to generate even more leads and boost your sales.
Also published on Medium.