We all know that a tightening economy means tightening budgets. The promise of online marketing is measurable ROI, which helps us to justify and/or fine-tune our marketing spend. Measuring ROI is straight-forward for e-commerce sites, but what about lead generation sites? When the goal of your campaign doesn’t involve an online purchase, how can you determine the revenue being generated?

Depending on your systems and sales process, you might be able to track sales in your CRM system back to specific campaigns. But if your sales cycle is very long, you might not have the luxury of waiting for this data. As pointed out by Blaine Mathieu, rapidly changing economic conditions promote survival of the fastest.

The good news is that a simple calculation and a small tweak to your Web analytics can enable you to calculate expected ROI even before the sales numbers are available.

The Calculation

First, you’ll need to calculate the value of a lead. Find out from historical sales figures the average order size, and multiply that by the percentage of Web leads that are closed by sales:

Lead Value = Avg Order * Closing Rate

So if your average sale is worth $1,000 and 20% of Web leads become customers, a lead is worth $200. If you have separate lead forms for different products or services, you can re-calculate this value for each form, which will make your results more accurate.

The Tweak

If you’re using Lyris HQ’s Web analytics to measure your lead generation site, you should already be familiar with the ability to designate site “goals” in the Funnel Report, which are then used to show “reached goal” data in various other reports. This feature also lets you assign revenue to each goal. Be sure to select the confirmation or “thank you” page rather than the form itself, select it as a goal and enter your calculated lead value as revenue.

When you do this, the “goals” become “conversions” throughout your analytics, and several revenue-related metrics appear. And if you have pay-per-click campaigns configured, you’ll also see metrics comparing cost with revenue, including ROAS (Return On Ad Spend), which is revenue divided by ad cost.

Of course, this is only an estimate of potential revenue. However, it can provide insight into budget decisions, and it can be especially useful in determining your maximum bids for specific search campaigns.

You can also use this technique to run scenarios. You might begin with a lead value based on past data, then re-calculate using a lower value if you believe economic conditions will reduce your average sale and/or closing rate.

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About the Author

Dan Miller is professional services and sales engineering manager at Lyris. He helps companies adopt data driven marketing techniques to improve their ROI.

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