Many businesses allocate lead dollars by cost/lead, rather than determining whether the lead is generating profitable customers.  This slide shows how to lay out lead profitability, to optimize for profitable customers.

Lead Optimization Analysis

The analysis generally requires that you pull reports for a reasonable period of time, which depends on your product.  The appropriate length of time will depend on several things:

• Lead volume: Period of time to have a big enough sample of leads across your vendors to make real decisions
• Time to conversion: Time it takes for the lead to convert to a sale.  Used to calculate lead conversion
• Customer lifetime value: Time to determine the overall value of that new customer to your business.  Used to calculate revenue/ household

The results of this analysis are usually helpful in determining which lead sources are the most profitable for you…which generally helps you to rank your lead sources or change the types of leads purchased from them.  This also can quickly to help you stop the losses from the worst sources right away, which can immediately improve the bottom line!

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