Let's imagine your business provides specialized software solutions to other businesses, attracting around 10,000 visitors to your site monthly.
Let's consider your average deal value over a customer's lifetime is $10,000.
Assuming a 1% conversion rate from visitors to email leads, you're looking at 100 potential leads every month.
Out of these, if 15% qualify as strong leads, that leaves you with 15 promising opportunities.
And if you manage to successfully close 20% of these qualified leads, you're looking at 3 new clients each month.
Here’s a simple way to figure out what each email subscriber is worth to you
$10,000 x 1% x 15% x 20% = $3
This means every email lead could be valued at $3. To ensure profitability, aim for acquiring email leads at a cost of $0.50 to $1.00.
Uncertain about your figures? Add a buffer by aiming for a CAC that's six times lower, allowing for unexpected costs.
It's crucial to continuously analyse your sales funnel, looking for optimization opportunities at each stage since every improvement can significantly impact your results.
Wondering how to acquire email leads at such a low cost?
While challenging, strategies like running specialized B2B contests or leveraging email list rentals can be effective, especially with a well-defined target audience.
The smarter approach often lies in optimizing existing processes rather than chasing new, unproven tactics. Unfortunately, many businesses overlook the potential of refining what they already do well, focusing instead on adding new acquisition channels prematurely.
Let's revisit the funnel metrics with optimization in mind:
- CLTV = $10,000
- Monthly visitors = 10,000
- Email conversion rate = 1% leading to 100 email leads
- 15% are qualified, resulting in 15 strong prospects
- With a 20% close rate, you secure 3 new clients
- Each email lead's value = $3
- Target email lead acquisition cost (CPA/CAC) = $0.50 to $1.00
By enhancing your website's conversion rate and refining your email marketing efforts:
- CLTV remains at $10,000
- Improved conversion strategies increase email leads to 300 per month, with a 3% conversion rate
- 20% qualification rate boosts your potential clients to 60
- Maintaining a 20% close rate now means 12 new clients monthly
- The value per email lead jumps to $12
- And your target CPA/CAC adjusts to $2 to $4
This fourfold increase in lead value allows for a higher investment in acquiring each email lead, significantly expanding your marketing capabilities.
But don't stop there.
Regularly review your pricing strategy in line with your product or service enhancements, market demand, and operational costs. Consider periodic price adjustments to reflect the added value you provide.
Mastering your funnel metrics is key. Use simple tools like spreadsheets for daily tracking and focus on fine-tuning each stage for maximum efficiency. Once you've optimized your funnel, scale up your marketing efforts to amplify your success.
In essence, understanding and optimizing your lead generation investment is a dynamic, ongoing process that can significantly impact your business's growth and profitability.
Schedule a call with us today to benefit from our lead generation services and get 10% lifetime discount.
