Your business puts a lot of effort into generating converted Leads.
However, are they worth their salt?
Do the leads passed from Marketing to Sales contribute revenue?
In most businesses, it is only possible to answer these questions using anecdotal evidence.
Indeed, very often I find businesses are poor at tracking lead conversion metrics. They know how many leads convert to opportunities, but that’s pretty much it.
Unfortunately, this means they are unable to figure out how to optimize revenue from converted leads. They don’t know what is working and what is not.
This also means they do not realize when marketing and sales time waste time on non-productive leads.
However, to do this you need to monitor more than simply the number of converted leads.
Fortunately, lead conversion metrics are easy to implement.
I’ll show you seven lead conversion metrics your business should be tracking today.
To create the charts described in this blog post, simply download the free Lead Conversion Dashboard From GSP from the AppExchange.
One final thing before we move on. These metrics assume you have a solid lead conversion process in place. This includes a hand-off process from marketing to sales that ensures leads do not fall between the cracks. Use this blog post for advice on implementing a robust lead conversion process.
What is a Converted Lead?
Let us be clear what we are talking about here.
Lead conversion occurs when one person (often in Marketing) ‘converts’ an existing lead into an Account, Contact and Opportunity. The Opportunity passes to the sales team to begin the sales process. This defines a converted lead.
For example, a potential customer downloads an eBook. The prospect receives emails over time providing educational material and the relationship deepens.
The person eventually receives a qualification call. If the lead is ‘qualified’ then an opportunity is created and passed to a salesperson.
Contrast this with opportunities for existing customers. In these cases, the salesperson creates an Opportunity directly on the Account record.No lead is involved. The opportunity is linked to an existing customer or prospect Account.
Lead Conversion Metrics
Here are the seven lead conversion metrics I recommend.
1 – Contribution of Converted Leads
2 – Win Rates of Converted Leads
3 – Average Deal Size of Converted Leads
4 – Win Rates by Opportunity Owner
5 – Win Rates by Lead Owner
6 – Win Rates by Lead Source
7 – Win Rates by Campaign
Let us examine each lead conversion metric to understand how it contributes to increased revenue.
1 – Revenue Contribution of Converted Leads
This metric quantifies the contribution of converted leads. It shows the overall contribution of converted leads to total revenue.
The green column in the dashboard chart shows the $ revenue contribution of opportunities derived from converted leads.
The blue column is the revenue from opportunities created directly on existing Accounts.
Looking at the underlying report, we can see that overall, converted leads contribute 33% of revenue.
Here’s the key thing about this lead conversion report and chart.
It gives you context for the other lead conversion metrics that follow.
For example, whether the figure of 33% is good or bad depends upon the context of your business. If you are a new, start-up company, you might expect the contribution from converted leads to be higher.
In a well-established, mature company, the figure may be lower if a significant proportion of revenue comes from repeat business with existing customers.
Remember, you can adjust the report to analyse the numbers further. For example, there may be significant variations by geographical territory or industry.
Use the report and dashboard chart to identify a ratio that doesn’t ‘look right’ within the context of your business. Then review the seven lead conversion metrics to investigate further.
2 – Win Rates of Converted Leads versus Not Converted
In this first lead conversion metric, we’re comparing the win rate of opportunities that came from converted leads versus those opportunities created on existing Accounts.
Remember, a converted lead will result in a new Account.
An existing customer, and some prospects, will already exist as Accounts.
In this case, we are comparing opportunities that started life as a lead, with those opportunities that the salesperson linked to an existing customer or prospect.
The win rate defines the ratio of won versus lost deals in a given period.
In fact, we have two lead conversion metrics here.
- Win Rate by Count. This compares the number of deals won and lost.
- Win Rate by Amount. This compares the value of deals won and lost.
In our example, we can see that the win rates for converted leads is lower that the win rate for direct opportunities.
The chart also shows that for converted leads, the win rate by Amount is higher than the win rate by Count. This means a successful outcome on higher value deals is achieved more often compared to lower value deals.
The situation for opportunities not created from converted leads reverses.
A greater proportion of lower value deals are successfully won. We can see this because the win rate by Count is greater than the win rate by Amount.
In many ways, we might expect this.
Converted leads will usually relate to new customers. It’s reasonable to expect the win rate for new customers to be lower than the win rate for existing customers.
Similarly, many deals with existing customers may be for add-ons, repeat purchases or other regular orders that may have a lower value than first-time opportunities.
Think about these numbers in the context of your business.
Does a low win rate on opportunities from converted leads indicate that leads are not being properly qualified? Alternatively, are salespeople focusing too much on existing customers, where we naturally expect the win rate to be higher?
3 – Average Deal Size of Converted Leads
This lead conversion metric compares the average size of deals that came from converted leads with opportunities created directly on the Account.
In many businesses, it may be reasonable to expect the average deal size of opportunities from converted leads to be higher. This is because a significant proportion of opportunities on existing Accounts are smaller, repeat business deals.
In other businesses, the reverse may be true. For example, if your approach is ‘land-and-expand’, then new customer deals may be smaller, or even trials and prototypes.
Again, interpret the numbers in the context of your business. If appropriate, customize the report to examine this lead conversion metric by sales team, geography or other variable.
Compare Win Rate of Converted Leads with Opportunities
Download the FREE Dashboard from the AppExchange today
4 – Win Rate by Opportunity Owner
The lead conversion metric compares the win rate for different salespeople.
In our example, it shows that Geoff has a significantly higher win rate on converted leads compared to Lars.
Indeed, Geoff is successfully winning a greater proportion of opportunities that arose from converted leads (green bar) compared to opportunities created directly on the Account (blue bar).
There may be many reasons for this.
- Does Geoff follow up more proactively on converted leads?
- Does Geoff get fewer leads, but of much higher quality?
- Is Geoff paying insufficient attention to existing customers?
Like other lead conversion metrics, the figures do not tell us what management action to take. Rather, they tell us there is a variation in performance that is worthy of investigation.
It’s the outcome of that investigation that enables us to decide the right action.
Use this blog post for more advice on measuring sales team win rates.
5 – Win Rate by Lead Owner
The previous lead conversion metrics shows the win rate for converted lead and direct opportunities by opportunity owner.
Let us look now from a different perspective.
Many businesses have an inside sales team or other person responsible for making qualification calls to leads.
These people aim to create meetings for the sales rep, whether internally or field based.
Therefore, we need to understand how effective different inside sales reps are at creating good quality opportunities.
The lead conversion metric examines performance by lead owner.
A point to note. The win rate by Lead Owner metric shows the opportunity win rate based on Lead Owner at the time of conversion. This is not necessarily the person that converted the lead. However, we are assuming for the purposes of this lead conversion metric that the lead ‘owner’ and ‘converter’ are the same person.
In our example, we can see that a significantly higher proportion of the converted leads owned by Nick have a successful outcome to those owned by Tim.
Does this mean Nick is doing a better job of warming-up these leads as part of the qualification process? Is Tim converting too many, low quality leads? Alternatively, can Nick help to increase sales by lowering his ‘qualification threshold’ and increasing the number of leads he converts?
Again, we do not explicitly know the answer. However, we do now know the questions to ask.
6 – Win Rate by Lead Source
Assessing win rates by Lead Source and Campaign (next chart) are two further lead conversion metrics to determine the efficacy of converted Leads.
A quick recap on Lead Source.
Lead Source is a standard picklist field on the Lead. It records the originating source or channel of the Lead.
For example, typical Lead Source picklist values are Web, Trade Show, Purchased List, Phone Enquiry and so on.
When a lead is converted, the Lead Source carries through to the equivalent field on the opportunity. This means we can analyse opportunity outcome by lead source.
Remember, the chart and report are not showing the number of leads created by lead source. Rather, they show the outcome of opportunities from converted leads by each lead source.
In our example, some Leads Sources perform better. For example, phone and web enquiries have a significantly higher opportunity win rate compared to other lead sources.
All other things being equal, it will be worth our while working to increase the number of converted leads from these sources, compared to other lead sources.
7 – Converted Leads by Campaign
The previous lead conversion metric (win rate by Lead Source) tracks the outcome of converted leads by broad category.
We can get another perspective by measuring the outcome of converted leads by Campaign.
This lead conversion metric provides valuable insight into the value for money of different campaigns.
In our example, leads from the Tech Meeting perform significantly higher than other Campaigns. All other things being equal, running more of these campaigns is a worthwhile investment in time and money.
For help on using Campaigns review this blog, The Best Advice You Can Get on Salesforce Campaigns.
Install the Lead Conversion Dashboard From GSP for free from the AppExchange.
Assessing any aspect of sales and marketing performance means coming at the situation from multiple angles.
Understanding the contribution of converted leads is no exception.
The lead conversion metrics this blog post describes give you the tools to do that.
Start by quantifying the overall contribution of converted leads to overall revenue. That gives you a starting point and context.
Then review each lead conversion metric. Ask underlying questions about each. Interpret the metrics.
And use the answers to increase revenue.
Lead Conversion Metrics Webinar Recording
Watch this video with myself and Dan Bailey to see the lead conversion metrics in action. Dan and I also discuss best practices for converting leads and methods for getting feedback from sales to improve alignment with marketing.
GSP Lead Conversion Dashboard
To implement the dashboard charts and underlying reports described in this video and the webinar recording, simply install the free Lead Conversion Dashboard from the AppExchange.
There are some simple actions to activate the dashboard after you have installed it. Follow the step-by-step instructions in one of these videos to get this powerful dashboard working for you in your business:
And, of course, if you have any questions or need advice then Get In Touch. Without doubt, we’ll help you out.
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