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The LeadGen Formula

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Retention Radar

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Measuring the ROI of Your Lead Generation Efforts: A Guide for Small Businesses and Startups

September 19, 20231 min read

Introduction

You've put in the work to generate leads—now, how do you know if it's paying off? In this post, we'll break down how to measure the ROI of your lead generation efforts, ensuring that every pound spent translates into business growth. As always, for a tailored evaluation of your lead generation strategies, take our Lead Generation Quiz.

8 Reasons

Metric 1: Conversion Rate

This is the percentage of leads that convert into paying customers.

How to Measure: Take the number of new customers acquired and divide it by the number of leads, then multiply by 100.

Metric 2: Cost Per Lead (CPL)

This measures how cost-effective your lead generation campaigns are.

How to Measure: Divide the total amount spent on a campaign by the number of leads generated.

Metric 3: Lead to Close Ratio

This metric tells you how effective your sales process is in converting leads to customers.

How to Measure: Divide the number of closed sales by the number of leads generated and multiply by 100.

Metric 4: Customer Lifetime Value (CLV)

Understanding CLV will help you decide how much you can afford to spend on acquiring a new customer.

How to Measure: Estimate the total revenue you expect from a customer throughout their relationship with your business.

Metric 5: ROI Calculation

The bottom line—how much are you getting back compared to what you're spending?

How to Measure: Subtract the cost of lead generation from the revenue generated, then divide by the cost of lead generation. Multiply by 100 to get a percentage.

Conclusion

Understanding these metrics will provide you with a clear picture of how effective your lead generation efforts are. To get an individualized insight into how you can improve, don't forget to take our Lead Generation Quiz.

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