December 5

The cost of salesperson generated leads


If you are like most businesspeople, you have a bias towards salesperson generated leads. After all, a salesperson can do many things that marketing, the Internet, or appointment setters cannot. However, if you calculate the true cost of a salesperson generated lead, you may find that their cost is exceptionally high. Worse yet, the weaker sales reps tend to have off-the-chart lead costs. The example spreadsheet below will help you determine the cost of salesperson generated leads and their effectiveness. Cost of lead

Value of a Lead
Example 1 Example 2
Avg Customer Sales/Year  $     10,000  $     20,000
Average Margin 50% 30%
Avg Years Customer Stays                     4                     2
   Value of Customer  $     20,000  $     12,000
Leads/Customer  5/1  10/1
    Value of a Lead  $        4,000  $        1,200
Cost of Salesperson Generated Leads
  Salesperson 1 Salesperson 2
Total New Leads Generated                   50                100
   Less:
      Trade shows/marketing/inbound                     5                     5
      % of referrals                    –                   10
Net New Leads                   45                   85
Total Salesperson Compensation  $     75,000  $   125,000
% of Compensation Allocated to LG 25% 50%
   Cost of Salesperson LG  $     18,750  $     62,500
Cost/Lead  $     416.67  $     735.29

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