By Ciara Brady on 20 Nov 2019
Wolfgang Bites: Watch - Why You Should Stop Optimising for Leads and Start Optimising for Customers
Wolfgang Bites: Read - Why You Should Stop Optimising for Leads and Start Optimising for Customers
In this weeks Wolfgang Bites Brendan explains why businesses who are optimising their digital strategy for leads, are actually optimising for the wrong KPI.
We all know what lead generation is. Let's represent it with a simple funnel. At the top of that funnel we've got leads, in the middle of the funnel you might do some qualifications on those leads and they are our marketing qualified leads. These are the leads we pass on to our sales team. Hopefully our sales team does the business and turns some of those leads into customers.
For a long time, people have been optimising their digital strategies at the very top of that funnel. They've been optimising for the highest number of leads. Their limiting factor is typically how much they can afford to pay for a lead. That's really a function of the value of a customer to that company and also the sales team's efficiency turning leads into customers.
Why is that the wrong strategy? Well, you're optimising at the top of that funnel. You're optimising for the highest number of leads, not the highest number of customers. That comes down to a really simple fallacy, which is that more leads equals more customers, and that's not always the case. If you're optimising at the top of that funnel, you might find that you're optimising for a high quantity of cheap leads, and cheap leads don't always result in a lot of customers.
It's really important that you start to understand the relationship between leads and customers. Closing that loop between leads and customers will become your secret weapon in evolving our digital strategy from lead gen to customer gen. So, how do you go about doing that? Well, every time somebody clicks on an ad they're assigned with a unique ad ID, and when somebody becomes a lead, that ID is associated with that lead.
If you're really smart about how you manage those IDs, when that lead becomes a customer you could also associate them with that ID. You can then send that information back into Google, or back into Facebook, and then you're in a position to see what keywords, or what ads or creative are generating customers, not just leads. You've now evolved your strategy from lead gen into customer gen.
It gets even more exciting if you can associate a revenue value with each of these customers, because you can also import that information. Now you're in a great position to see how much revenue you're generating from your activities. You've gone from lead to customer gen, to revenue. You're now optimising for return on ad spend.
We've worked on a number of projects with a number of clients doing just this. What we typically find is that low cost leads typically result in low value customers. By focusing on low cost leads, you'd be missing out on really high value customers. That can change the combination of the keywords you target or even the channels you use.
My advice is to stop focusing on optimising for leads and optimise for the most important thing, which are customers and revenue. Thanks a million!
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