Whoa, powerful words. Hear me out.
We’ve been banging on about full-funnel optimisation for years now. And slowly but surely, more marketers are getting on board. But advertisers are still burning their cash to hit arbitrary and redundant quotas.
To be clear, I’m talking about the lower half of the funnel for lead-generation websites – not awareness activity (that’ll be the subject of another post).
What if you could generate more money, and reduce wasted time?
We frequently see businesses that are interested in lead volume and cost per lead (CPL), but in reality, businesses are actually more interested in the bottom line: cold hard cash. Well, once you can connect the dots, you can optimise towards that cash.
What can be measured can be improved
The most effective marketing is where you are optimising towards the same goal for which you are measuring success. So, if you want leads, then optimise towards leads. When you want leads, it would be unwise to optimise for website traffic (clicks to your website). This is because your ads would be shown to users most likely to click on your ad, which is not the same as users who are most likely to submit a form.
Here’s something I’ve decided to dub the conversion tracking ladder. But it’s not really a ladder because it’s upside down. It’s like a conversion funnel but with a bit more detail. How are you currently measuring success from your digital marketing?
- Website traffic (clicks to your website)
- Clicks on your form-submit button (and/or click on a phone number)
- Leads – Actual form submissions (and/or connected phone calls)
- Sales Qualified Leads (SQLs)
- Revenue and ROAS (Return on ad spend)
If you are already measuring revenue and ROAS and optimising towards revenue and ROAS, then well done to you. You have great digital consultants who have guided you well.
If you aren’t sure which step you’re on, then find out.
If you are anywhere between steps one and six, there is room for improvement.
Your strategy has worked well so far, so why change?
Some leads will always be cheaper than others. An agency can look great by generating lots of leads at a low CPL and therefore the marketing team is happy, and the sales team are satisfied with the quality of the leads, and some leads are converting to sales. Everyone is happy. Sure, some leads are a waste of time, but that’s OK, because some are also good quality, and the team are still closing deals. Great.
Earlier, I stated that showing ads to people who are most likely to click on ads is not the same as showing ads to people who are most likely to submit a form. The same is true for the next step: the people most likely to submit a form are not the same people most likely to convert into a sale… Some people are likely to submit your form, but less likely to convert into a customer. Going deeper still, the same is true for the value of the sale; some people are more likely to spend more than others.
In a way, it comes down to quite a simple question – would you rather have more leads or more sales?
What’s the catch?
There’s always a catch. You need a decent amount of data before you can begin to optimise effectively. This is the power of the conversion tracking ladder. If you don’t have enough conversions, then move up one step. In my experience, having just 20-30 conversions per month is enough. If you have 20-30 sales per month, optimise towards sales. If you don’t have that, but you do have 20-30 quotes per month, then optimise towards quotes. If you don’t have that, but you do have 20-30 SQLs, then optimise towards that.
Having fewer than 20-30 of your desired conversion isn’t a deal-breaker. In that situation, optimising towards the end goal (i.e. the sale) can still work, but it will mean a longer learning period and more uncertainty.
Instead, in that situation, you could optimise towards all of the steps of the ladder. To do this, you’ll calculate the average value of your business for each step of my conversion tracking ladder:
- A lead would have the lowest value;
- An SQL would have a higher value;
- A quote would have a higher value still;
- And a sale would have the highest value.
Where possible, use dynamic values from your CRM instead of static values – optimise your campaigns towards the value of your conversions.
We AB tested optimising towards sales. Here’s some data from one of our clients:
There were 8% fewer leads in the trial, and the CPL was 72% greater than the base campaign.
The number of sales increased by 106% in the trial.
Despite the CPL being higher, the cost per sale is 23% less than the control.
The revenue increased by 255% in the trial, and the ROAS increased by 125%.
I know, it’s OK. We generated fewer form-submits and the CPL shot up. If we were measuring success based on the number of leads or the CPL, then we failed massively. But actually, we generated over twice the sales and the cost per sale decreased. Significantly more revenue was also generated.
So… Would you rather have more leads or more sales?
Receiving fewer low-quality leads means that you free up resources in your sales team. The quality of your leads improves, and your sales team can spend more time with the better leads. Success rate increases, and revenue in turn increases.
Meanwhile, your competitors are left in the dust scratching their heads, wondering where all the good leads went. Spoiler alert: They went to you.
It’s all about connecting the dots. Most businesses already have the tools to track sales and revenue back to an ad. If it isn’t possible right now, it most likely will be possible with a bit of time and a sprinkle of effort.
We’ve been doing this for years. We’re well-equipped to answer your questions and guide you through the process.