The Critical Importance Of Lead Validation In Internet Marketing

Written By Ted Grigg

If you bought a lottery ticket but didn't scratch it, would you start spending your jackpot? Of course, you wouldn't -- you need to know whether or not you actually won something first.

For a lot of direct marketers -- Internet marketers especially -- they're spending their winnings before they know if they won because they're not validating or grading the leads they're getting.

Lead generation websites and other direct marketing techniques can bring lots of inquiries, but many of those inquiries are not actual sales leads. They're things like customer service requests, incomplete form submissions or even wrong numbers. However, too many direct marketers lump all inquiries under the same category and think they're generating far more useful leads than they really are. Ultimately, they're putting their resources into the wrong places.

The greater the lead quality, the more likely the sales or closure rate. 

The following presentation illustrates just how crucial lead validation can be for Internet marketing campaigns -- or any other type of direct marketing effort. Without the complete picture of who your true sales leads are and where they're coming from, you won't be able to make the most of your campaign or optimize it to drive greater improvements. Follow this advice and you won't fall into the trap of spending your winnings before you know whether or not you've actually won.

The following slides from Aaron Wittersheim, Chief Operating Officer at Internet marketing agency Straight North, focuses on Internet marketing and improving sales results with an effective Internet response validation system. He also reveals some interesting statistics that will prove useful to all marketers.

The Importance of Lead Validation from StraightNorthIM

 I think that the above slide review misses a critical strategy in the lead validation process. To be a true sales lead that survives the validation process, those leads should prove a predisposition to buying the product or service.

Cost per sale and not the cost per lead should drive your lead generation strategy.

Sales lead validation must go beyond the described validation process. It's not enough to know that the lead represents true interest in your offering. The cost per qualified lead is defined as a lead that will likely convert to a sale. 

For example, if a  validated lead cost $10 each in a given channel or mix of channels, then a sales conversion rate of 10% equals a cost of $100 per sale.  Simply put, if one in 10 leads turns up a sale, then the cost per sale is $100.

Don't drive your program based on the $10 cost per lead. Expand or reduce your lead generation budget based on the cost per sale to $100 – assuming that CPS achieves your ROI requirements.

One client was generating over 700 B2B leads to month while converting less than one contract per month. This was unacceptable. All it did was frustrate the sales team.

Jeff Lenney goes into some detail about how internet affiliate marketers evaluate their costs based on the all important “cost per sale.”

Let me know your thoughts on the lead validation process and how you would modify it.

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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