When Can You Actually Expect ROI From Your Lead Generation?: Part 2

Lead generation is never a magic bullet. A single push investment, no matter how large, does not lead to sustainable results…so when can you expect ROI?
Reading Time: 5 minutes

[continued from Part 1]

ROI Timing Factor #3: The Sales Cycle 

Every sales cycle is unique. It’s impossible to throw out an arbitrary line of just how long yours will be, just because so many individual factors can affect its length. 

According to a 2020 study by HubSpot, the average B2B sales cycle is just over 80 days. Meanwhile, a 2019 CSO study found that 75% of B2B companies have sales cycles of four months or more. However, beyond that generality, the variables will change depending on your situation. On the most basic level, bigger sales will require more sign-off, lengthening the sales cycle. But it’s more complex than that. Rather than depending on external best practices or averages, your own internal benchmarks will matter more than anything to determine exactly how long your sales cycle will be to bring in reliable ROI.

After building your initial lead gen engine and nurturing process, ask yourself:

  • How many leads does your engine bring in on a monthly basis?
  • How can you determine the quality of these leads and how does that quality affect the speed of the nurturing effort?
  • How many of your leads typically move to the next steps within your sales cycle?
  • After the initial call, how long does it take to nurture a lead to close? 
  • How many people are involved in the buying process for your average customer?
  • Is there a specific reason why your product or service stands out above others, and how much time do you need to hone in on that reason in your messaging?
  • Are you looking to sell your audience on a new solution to a previously unsolved problem, or a better alternative solution to one they already have in place?

Treating this step as a simple repeat or variance of the above two timing factors would be a mistake. The nurturing that happens during this stage is slightly different than the one described above; these audiences have already expressed a distinct interest in your offering, and have become sales-qualified, kicking in the official sales effort. 

This is the time to get specific. For existing efforts already in place, an in-depth sales analysis may help. If you are starting from scratch, create your sales process by mapping the journey, refining your customer persona, and aligning your resources and outreach with SQL needs. 

ROI Timing Factor #4: The Closing Ratio Impact

Finally, don’t underestimate the impact of your closing ratio when it comes to timing out your ROI. Closing ratio, at its simplest, is the percentage of sales-qualified leads that convert to customers. But this simple metric can mean so much more than that. 

Above all, this KPI describes the efficiency of your sales team. More efficient teams will close a higher percentage of leads, ultimately resulting in faster return on investment. Often, though, optimizing the closing ratio takes time to build towards reliable and consistent lead gen ROI.

According to research by HubSpot, the average sales close rate ranges between 15% and 30% in B2B industries. Within that range, highly competitive industries like finance range towards the lower end at 19%, while more segmented business and industrial software averages around 27%. 

If you’re already on the higher end of these averages, your time to ROI may be faster. But of course, these are once again averages that can be taken as guidelines, not as gospel. A few analytical steps can help you maximize your close rate to reduce your time to lead gen ROI:

  • Estimate your current close rate by dividing the number of closed leads in a given time frame by the total SQLs in your pipeline during that same time frame.
  • Determine close rate trends by varying the time frame to help you understand whether your close rate has increased or decreased over time.
  • Compare your close rate to industry averages, found through third party research, to build valuable context.
  • Break down your close rate by a number of variables such as individual sales reps, source of lead, time in the funnel, and audience segment.
  • Analyze close rate trends according to these variables to find opportunities for improvement across the board.

Following these steps allow you to find bottlenecks, lead gen and nurturing improvement opportunities, and more. You can then take a wide range of potential steps, optimized to your business’s unique situation and analyze, designed to maximize the potential of your closing efforts and your lead/revenue generation across the board.

A Holistic Approach Will Help You Anticipate ROI 

If there was a magic formula to reliable lead generation ROI, we would love to share it with our clients. Ultimately, though, it’s a highly customized process that depends largely on internal variables changing from client to client, audience to audience, and industry to industry.

Anticipating your ROI is thus about having a deep understanding of your own processes, as well as creating a formulaic approach to your sales cycle. You need to understand your own benchmarks, measure these benchmarks, and make tangible improvements to hit the benchmarks to avoid ROI becoming a guessing game.

That process doesn’t change, regardless of whether you are working with an external vendor. You need to understand what exactly you can anticipate based on the quality and number of leads provided, along with the closing rates based on your own projection. An outsourced lead generation engine may be faster to implement, but it’s colder leads may take longer to convert than warm leads and referrals.

In other words, context matters. When signing on to a new lead generation campaign, the big picture is absolutely vital. Too many variables play into the equation for instant results to be realistic. At its best, lead generation is a long-term strategy, setting you up for success both now and long into the future. What’s a few months to optimize the process when the benefits could pay off for years?

Connect with us on outsourcing your lead generation engine. Click here

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About Sapper Consulting

Sapper's sales prospecting team becomes a natural extension of your existing sales efforts, helping you find new leads that are a great fit for your business.

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