Here’s an interesting “tidbit” that (candidly) surprised me and my sales team back when we were running the marketing for TMT full steam: 58% of the new customers we brought in were not what we considered “sweet spot” prospects.
Specifically, they could not be identified that way initially. We had to retarget them and use e-mail follow-up, good old-fashioned online investigation, and Google search to find out who they were. From there, we would append that data and continue to e-mail, mail, and call to follow up and develop their interest. Many use Gmail or similar when they first opt in, so we had to get them to provide more details on who they were. There’s a HUGE money lesson in this.
Too many businesses don’t think of leads as having value.
They see value only if the lead closes or is, at least, extremely interested in buying when they initially come in. This too-quick evaluation of leads causes them to neglect and fail to sufficiently follow up on a LOT of potential opportunities that are coming their way. It’s akin to the farmer who picks the ripe fruit once, abandoning the green ones developing on the vine because they aren’t ready to eat at that very moment.
The devaluing of leads starts with the problem that very few MSPs actually track their marketing metrics at all, and you can’t value what you can’t measure. They don’t know how many leads are coming in because they don’t utilize phone tracking or Google Analytics. They also don’t have all their webforms connected to a CRM, so leads flow in directly and are captured and tracked.
Because of this, they don’t know how many raw leads turn into appointments, how many appointments turn into legit opportunities (proposals), how many close and what the contract value of those customers are. They also don’t really know what the Customer Acquisition Costs (CAC) or Lifetime Value (LTV) of a client is. When you are ignorant of these key metrics, you can’t properly or intelligently value leads, make good value decisions, know what marketing is actually working (that may appear to be initially failing), and extract the highest ROI from your marketing investments.
But when a business owner starts to truly think and behave like an INVESTOR rather than a seller, seeing customers and leads as “assets,” a lot of good things happen. Let me give you an example…
Assume your average client is initially worth $24,000 a year. Over time, by doing a good job with your QBRs and cross-selling, you can get them up to $30,000 a year, along with special projects from time to time and referrals, making them worth $40,000 in year three. If we say they were worth $24K in year one, $30K in year two, and $40K in year three, that makes that asset worth $94,000. An asset that will continue to pay over the full time they are a client (LTV), but we’ll call it $94,000 to have a number to work with.
Let’s suppose you generate 10 leads a month with only 5 being qualified. Of the 5, 3 move to appointments and 2 go to the proposal stage, with 1 turning into a customer. Over a year, that would look like this:
-120 Raw Leads
-60 Qualified Leads
-36 First-Time Appointments (FTAs)
-24 Proposals
-12 Customers
-12 x $94,000 = $1,128,000
If the above numbers were true for you (and you have to determine YOUR numbers by meticulous tracking and going back in time), then EACH lead you generated is worth $9,400 ($1,128,000 ÷ 120). Now, I realize that emotionally you’re not buying it, but if you put your “Spock” brain on, you can see that this is 100% true and a perfectly logical way to assess the value of a lead.
What this exercise will (hopefully) reveal is that you don’t have a marketing or business model problem, but a cash-flow problem, meaning you don’t have sufficient funds to invest into marketing because you’re living “paycheck to paycheck.” For others, it may reveal that you are woefully underinvested into marketing and devaluing the leads you’re getting. It might also reveal that your sales process SUCKS and needs to be fixed BEFORE you start pumping leads into it.
And, of course, if you’re in urgent need of a new or returning client THIS WEEK to feed the wolves gathering outside your door, I realize this is not helpful or even welcome advice. That said, we all know a garden doesn’t produce crops overnight, so if you want to get to a point where you are making better-than-average gains and not living hand to mouth, you have to start thinking and behaving like an investor TODAY, being more careful and diligent about the capture, follow-up, care and communication with your list, and leads generated. There aren’t any real shortcuts to this, and you can’t go back in time to undo the neglect. All you can do is get started today behaving like an investor.
Even if you cannot afford to spend thousands on marketing due to a cash-flow problem and lack sufficient funds, if you know every lead coming in is worth $9,400, you can at the very least start being stricter about how you answer your phone and how leads are handled.
When you understand the true value of a lead, you’ll be far more diligent about your list cleaning, care, and maintenance. You’ll be more careful about dismissing leads as “not qualified” after your initial assessment. You’ll also be more disciplined in implementing drip marketing campaigns, both online and offline, so you can have a constant flow of maturing harvests.
But here’s an additional way to look at marketing conversion systems. Let’s suppose you tighten every screw in your inbound lead capture, follow-up, and sales process, treating leads like actual cash instead of electronic “tickets” that have no value.
Now, instead of 60% of your MQLs booking an appointment, we can get 80% to book with a faster, more strategic, and long-term follow-up.
Look what that ONE metric change does:
-120 Raw Leads
-60 Qualified Leads (MQLs)
-48 First-Time Appointments (FTAs)
-32 Proposals
-16 Customers
-16 x $94,000 = $1,504,000
That’s an increase of $376,000. If we continue to increase the close rate, average MRR (and therefore the value from $94,000 to $150,000, as an example), the ROI continues to go up.
Many people say that MSPs aren’t good at marketing because they’re techs, but even a tech can understand what I just mapped out. I think the bigger issue is that they don’t value marketing and sales—and haven’t connected the dots from what I’m saying here to the money in their pockets.
Related: Swipeable Webinar to Get More Leads for Your MSP Business
