Lead Generation: Evaluating Online Lead Generation Sources

At Gnosis Arts, our Internet Marketing methodology is experiment and data driven. Everything we do is evaluated in the light of certain metrics and experimntation. Two overarching metrics we focus on are: Cost Per Lead (CPL) and Return on Ad Spend (ROAS). As a result, we always want to know how effective a lead generation source is in delivering quality leads. We are always doing cost-benefit analysis of various online lead generation sources. In our analyss, we utilize four main metrics to evaluate the worth of a lead generation source. I'd like to share those with you in the hopes that it will help you thinl more clearly about your bottom line with respect to Internet marketing.

*Evaluating Lead Generation Sources: Four Metrics
The four metrics we use to perform cost-benefit analysis on lead generation sources are

1. Labor
2. Quality
3. Predictability
4. Cost

*Operationalizing These Metrics
For these metrics to posess any meaning, we must first define what we mean by each of these terms.

1. Labor Required
This is the amount of man hours required to generate a lead from the source in question. Some lead sources may require significantly more time and work to produce a lead than others.

2. Quality
The quality of a lead is the probability that the lead will turn into a prospect (not necessarily a sale). Sometimes a lead source produces a relatively high number of leads, but none of the leads become actual sales prospects. On the other hand, some lead sources may deliver a low volume of leads but a larger percentage of prospects.

3. Predictability
Predictability refers to how consistently a lead source delivers leads. Some lead sources may produce a high quality lead, but there is no discernible pattern or timeframe for when the lead source will produce a lead. You may have to work at it one day during one month, but two weeks during another month.

4. Cost
Cost is pretty straightforward. It is the amount of money you must put into a lead source to produce a lead. An example of this is Google Adwords. Some lead sources are relatively cheap, but may deliver lower quality leads, and vice versa. Other lead sources are free, and still others it may be difficult to measure cost at all.

Armed with these metrics, we are in a good position to evaluate our lead generation sources as well as our lead generation efforts. Here are a few examples to how you how to apply these metrics to specific lead sources.

In light of the following, the ideal lead source would be one that

*Requires little or no labor
*Delivers leads that more often convert to prospects than not
*Delivers leads in a consistent, predictable time frame
*Costs little or no money to produce a lead

* Examples

1. Craigslist
Craigslist features individuals and small businesses which need services we offer. It may take 1-2 hrs of labor to generate a lead. It may take us 5-7 days to generate a lead from Craigslist. 1 out of every 6 leads becomes a prospect. The cost is free.

Grade = B+/A-

2. Google Adwords
-Labor: Negligible, once ads are set up and tweaked
-Quality: Very High
-Predictability: very predictable.
-Cost: relatively expensive

Grade = B+

3. Elance
-Labor: extremely time intensive
-Quality: high
-Predictability: poor
-Cost: expensive

Grade = C-

4. Google Local
-Labor: Low to moderate
-Quality: High
-Predictability: depending upon the product or service offered, impressions and clicks are extremely regular
-Cost: free

Grade = B

5. Voicebroadcasting
-Labor: Low to moderate
-Quality: fair
-Predictability: Low
-Cost: Expensive

Grade = C-

6. Yahoo Search Marketing
-Labor: Negligible, onces ads are set up
-Quality: poor
-Predictability: poor
-Cost: moderate to high

Grade = D

7. LinkedIn
-Labor: low to moderate
-Quality: very high
-Predictability: ?
-Cost: little or nothing

Grade = B-

8. Twitter
-Labor: moderate
-Quality: poor to fair
-Predictability: poor
-Cost: free

Grade = C

C. Our free press release site
-Labor: negligible
-Quality: poor to fair
-Predictability: Extremely predictable
-Cost: free

Grade = B-

Keep in mind that a lead generation source may perform differently based on your unique products or services. You will want to evaluate a lead source based on yourown conditions. Also keep in mind that some lead sources' performance depends quite a bit on your individual approach use of the source. This is especially true of social media sites like Twitter or Facebook.

Also remember that, no matter how good a lead generation source is, if you don't have a product or service on the receiving end of the lead, one that delivers value to people, you won't generate any sales regardless. A lead source can only lead the horse to water, so to speak; your website has to encourage him to drink. Without good Conversion Rate Optimization, the value of any lead generation source is diminished.