Dave Yoho Associates offers a template to calculate lead costs. Using a home show booth marketing effort as an example (costs would include registration, delivery, the display, time to man the booth, and giveaways), walk through the steps below. The example makes assumptions on costs and job size for illustrative purposes.
According to Dave Yoho of Dave Yoho Associates of Fairfax, Va. ( www.daveyoho.com), a good lead cost for specialty remodelers is less than 12% of the cost of the marketing event or project. Full service remodelers should aim for lead costs of 7% or less.
(A) Cost of marketing project: $13,000
(B) Raw leads produced: 200
(C) Discards (non-owners, out of territory, etc.): 100
(D) Net leads (B - C): 100; % of (B): 50%; Cost per lead (A ÷ D): $130
(E) Leads issued (appts.): 75; % of (D): 75%; Cost per lead issued (A ÷ E): $173
(F) Presentations: 56; Cost per lead (A ÷ F): $232
(G) Gross sales made: 14; % of (F): 25%; % of (E): 18.6%
(H) Gross sales: $140,000; Marketing costs (event costs as a percentage of gross sales): 9.28%
(I) Net sales (less cancellations and credit rejects): 10, for $100,000; Marketing costs (event costs as a percentage of net sales): 13%
(J) Cost per lead (A ÷ 10 net sales): $1,300