Last updated on February 21st, 2025 at 04:16 am
Everyone is talking about making data-driven decisions.
But you need to first collect that data by tracking the right metrics.
Today we are going to discuss what metrics you should focus on if you want to optimize your lead generation strategy for maximum ROI.
Want to make the most out of your lead generation efforts?
Continue reading…
Lead Generation Overview
Okay, so before we get into lead generation tracking, let’s make sure that we are all on the same page when it comes to the basics of lead generation:
What is a Lead?
A lead is a potential customer who has:
- Expressed an interest in your product
- Gave you their contact details
Note that a person needs to meet both of these criteria in order to be considered a lead.
Meaning:
- Someone who has visited your website but hasn’t given you their contact details is not a lead.
- Someone whose contact details you have somehow obtained but who hasn’t expressed any interest in your product isn’t a lead either.
You need to be crystal clear on what the term “lead” means if you want to be effective at lead generation.
Keep in mind that any confusion regarding this will undermine your lead generation efforts.
What Determines Lead Quality?
It’s important to understand that not all leads are made equal.
Leads exist on a spectrum of quality:
- High-quality leads are most likely to convert to potential customers
- Medium-quality leads are less likely to convert to potential customers
- Low-quality leads are the least likely to convert to potential customers
If you are just starting out, you probably don’t have any sales data yet, so you won’t be able to accurately determine lead quality. It’s all guesswork at this stage. And that’s okay.
However, once that sales data starts coming in, you should begin looking for patterns that can help you figure out who the highest-quality leads are and how to attract more of them.
What is Lead Generation?
Lead generation is the process of converting potential customers into leads by persuading them to give you their contact details.
In theory, “contact details” might mean anything that can be used to contact them, but in practice, it almost always means getting the potential customer’s email address.
That being said, the goal of lead generation isn’t to collect as many email addresses as possible, it’s to get the contact details of your dream customers so that you could then sell them your products.
It’s important to understand that lead generation isn’t some isolated endeavor, it’s an essential business process that should always be viewed in the context of your business as a whole.
What is a Lead Generation Funnel?
Companies that generate leads online typically do so via lead generation funnels:
- You create a lead magnet
- You create a landing page for your lead magnet
- You drive traffic to that landing page
Once the potential customer gives you their email address, they enter your sales funnel and become a lead.
That’s where lead generation ends – the next step is to convert that lead into a paying customer.
The Lead Generation Funnel – What It Is & How To Build It
How Does Your Lead Generation Funnel Fit Into Your Sales Funnel?
We have already mentioned that you should always view lead generation in the context of your business as a whole.
The Value Ladder sales funnel can help you with that.
It has four stages:
- Bait – You offer the potential customer a lead magnet in exchange for their email address.
- Frontend – You offer the potential customer your least expensive and least valuable product.
- Middle – You offer the customer a more expensive and more valuable product.
- Backend – You offer the customer your most expensive and most valuable product.
Ideally, you should also offer a continuity program of some sort, meaning, a subscription product that generates recurring revenue.
As you can see, your lead generation funnel is the first stage of your Value Ladder sales funnel – the Bait stage.
What you need to understand is that everything that happens in the Bait stage has a cascading effect throughout the rest of the sales funnel.
That’s why when you are creating a lead generation strategy, you should always consider not only how it will play out in the Bait stage, but also in the Frontend, Middle, and Backend stages.
The main question you should be asking yourself is this:
Will these leads convert into paying customers and then into repeat customers?
We advise you to use your existing sales data to make these predictions, but if you don’t have any then you can simply use your common sense.
Can you imagine the person that downloads your lead magnet buying your Frontend, Middle, and Backend products?
Thinking about lead generation this way makes it much easier to resist the siren song of vanity metrics and focus on generating high-quality leads that actually convert.
What Metrics Should You be Tracking?
People often think that the only lead generation metric they should be tracking is the number of leads generated within a specific period of time.
Unfortunately, this metric by itself is pretty much useless, since it doesn’t give you enough information to see the full picture.
Here are some of the metrics that you need to track if you want to improve your lead generation strategy:
Lead Generation Metrics
- Lead magnet landing page traffic sources
- Lead magnet landing page unique visitors
- Lead magnet landing page conversion rate
- The number of leads generated
- Cost per lead (CPL)
Sales Funnel Metrics:
- The Bait stage conversion rate – landing page visitor to lead.
- The Frontend stage conversion rate – lead to paying customer.
- The Middle stage conversion rate-paying customer to repeat customer.
- The Backend stage conversion rate – repeat customer to purchasing your most expensive product.
- Sales funnel completion rate – lead to paying customer to repeat customer to purchasing your most expensive product. What percentage of leads go through your entire sales funnel?
Sales Metrics:
- Customer acquisition cost (CAC)
- Average order value (AOV)
- Customer lifetime value (CLV)
- Total sales
- Total revenue
- Total profit
Note that you should pick a specific time frame, then evaluate all these metrics within that time frame.
Say, you can pick the timeframe of a month, then analyze all these metrics each month, look for patterns, see if there’s an overall upward trajectory, etc.
And keep in mind that the most important metric of any business is profit – that’s what you should be paying the most attention to.
Are you seeing steady profit growth every month?
How to Optimize Your Lead Generation Strategy for Maximum ROI
Okay, so once you start tracking all those metrics, how can you then use that data to optimize your lead generation strategy?
Apply the 80/20 Principle
The Pareto principle, also known as the 80/20 principle, says that:
For many outcomes, approximately 80% of consequences come from 20% of the causes, meanwhile, the remaining 20% of the consequences come from 80% of the causes.
In the business context, this means that it’s likely that about 20% of your customers are bringing in about 80% of the revenue, meanwhile, the remaining 80% of your customers are bringing in only 20% of the revenue.
This suggests that you might be able to drastically increase your revenue by focusing on attracting more of these lucrative customers.
Here’s what we recommend you to do:
- Look at your sales data.
- Identify the 20% of your customers that are bringing in 80% of your revenue.
- Figure out what attributes these lucrative customers tend to have in common.
- Create a dream customer persona based on those attributes.
- Use that dream customer persona to create a lead generation strategy designed to attract more dream customers.
Note that the actual ratio might not be 80/20, so don’t get fixated on those specific numbers.
The point is that the minority of your customers are probably bringing in the majority of your revenue, so it makes sense to focus on attracting more customers like that.
Do More of What Already Works
Take a look at your current lead generation strategy:
Which lead generation campaign is producing the best results?
Start investing more time, more energy, and more money in that campaign. Double down on what already works!
Focus On Your Dream Customers, Ruthlessly Ignore Everyone Else
Now that you know who your dream customers are, you should start focusing solely on them in your lead generation efforts. Exclude everyone else.
For Example:
When Noah Kagan, the founder of AppSumo and Sumo, realized that his female email subscribers weren’t converting into paying customers, he stopped targeting women with his Facebook ads.
Here’s how he explains the reasoning behind this decision:
“It’s not that I don’t like women. I love them!
But the point is that they are not actually as interested in my content.
There’s probably someone who can better share that type of content with them.
So I target my audience which is males, 25-44.”
Excluding approximately 50% of the population from your marketing campaigns might seem crazy, but it’s probably safe to assume that it helped Noah increase his lead quality.
And why pay for leads that will probably never convert into paying customers? That wouldn’t make any sense, right?
So be unapologetic about lasering in on your dream customers and completely ignoring everyone else.
Add Upsells, Cross Sells, and Downsells to Your Offers
Once you manage to convert a potential customer into a lead, you want to make the most out of it.
You can increase both the average order value (AOV) and the customer lifetime value (CLV) by adding these extra offers to every core offer in your sales funnel:
- An upsell is an offer that is an upgrade to the one that the potential customer has already accepted (e.g. “Would you like to supersize that?”).
- A cross sell is an offer that is complementary to the one that the potential customer has already accepted (e.g. “Would you like fries with that?”).
- A downsell is an offer that is a downgrade to the one that the potential customer has already declined. Less value, lower price.
Learn more:
- What Is An Upsell? How Upselling Can Greatly Increase Profits
- 3 Cross Selling Strategies You Should Start Using
- What A Downsell Is & Why You Should Be Using One
Build Traffic-Generating Assets
We recommend you start promoting your lead magnet with paid advertising because that is the quickest way to get your free offer in front of your target audience.
However, you don’t want to be completely reliant on paid advertising forever, which is why we also advise you to invest in building traffic-generating assets such as:
- A social media following
- A YouTube channel
- A company blog
All that takes time – it won’t happen overnight.
Realistically, you should be prepared to invest at least 12-18 months into building these assets before you can expect them to become significant sources of traffic.
However, once these assets gain momentum, you will start getting “free” traffic to your lead generation landing page (assuming that you promote your lead magnet!).
Of course, it’s not actually free – you have invested time, energy, and money into it.
But the point is that when you have traffic-generating assets, you don’t need to pay for each and every visit to your lead magnet landing page anymore.
And that should help you decrease both your cost per lead (CPL) and your customer acquisition cost (CAC), thus allowing you to increase your profit margins.
Want Russell to Show You How to Build Your First Sales Funnel?
Implementing the advice that we shared in this article should help you become more effective at lead generation.
But you also need a system for converting those leads into paying customers and then into repeat customers – and that’s what the Value Ladder sales funnel is all about.
Let’s keep it real, though:
Building a sales funnel from scratch can seem like a daunting task.
That’s why we created our 5 Day Challenge where Russell walks you through it step-by-step.
You will learn how to:
- Generate unlimited leads
- Create your first lead magnet
- Build your first sales funnel
- Create a simple 6-email follow-up sequence
- And launch your funnel
…in just five days!
So don’t hesitate.