As business development becomes less an art and more a science, it’s important for your team to set standards for how much you’re willing to spend to get customers.We noticed that most of our customers don’t know how much they’re paying for their Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs), two crucial KPIs for optimizing and maintaining a high quality sales pipeline. Once you know how much your MQL and SQL cost, you know how much budget you can allocate to your marketing projects. This blog will help you calculate how much you should spend to get your MQLs and SQLs.
To calculate how much you can pay for leads, you first need to know your Annual Contract Value. Your ACV measures how much a customer pays over a 12 month period. So, for example and to use an easy number, let’s say your ACV is $10,000.
- Anything between 20%-30% of your ACV is a good price to acquire customers (CAC).
- 20% of $10,000 = $2,000 for CAC (it includes marketing and sales costs)
- 10-20% of your CAC is what you should be paying for an SQL (a demo scheduled).
- 20% of $2,000 = $400 for an SQL
- 20-25% of your SQL is a good cost per MQL (a lead that downloads an ebook or gives you their email address)
- 20-25% of $400 = $80-100 for an MQL
When your company goes through this process, you’re much better equipped to decide if your prospecting process or your marketing campaigns are working or not. Once you have targets set you can quickly see if they cost too much and they're not getting you as many customers as they should. If what you’re doing is within your margins for leads and brings customers, but you can optimize it to improve. Or, if what you’re doing is well below your cost margins and brings you a lot of customers; either you’re sitting on a goldmine or you need to review your standards and lower them.
Once you have the ruler to measure by, you can start trying out new strategies and solutions like VOIQ to automate and scale sales calls which will save you time and improve your sales development. You can also explore different automations and APIs that you can integrate to accelerate your sales machine. If you still don’t know how much you’re paying for leads and if it’s worth it, it’s time to calculate it now. Best of luck!