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Use Lead Conversion Rate to Measure the Quality of Leads

May 2, 2023


A Beginner’s Guide for Beauty/Wellness/Fitness Businesses

Lead quality is an important concept for any business owner to understand. It refers to the potential of a lead to result in a successful purchase, or “close” in sales terminology. Today’s post is for new beauty, wellness, and fitness owners. We’ll discuss lead quality – what it is, how to measure it, and how to improve it.

Why is Lead Quality Important?

Knowing how to measure the quality of leads can help you craft your marketing and sales strategies. High-quality leads tend to have more buying power and are better at converting compared to low-quality leads. A well-measured lead quality index can provide helpful insight into what lead generation strategies are effective when targeting certain prospects. When assessing lead quality, it’s important for your marketing team to remember that no two prospects or customers are alike. Your approach might need to be tailored or adapted in order for your lead generation process to achieve your goals. 

For example, understanding customer buying behavior and signals is essential for measuring lead quality effectively. Tracking key data points such as past purchases, time spent on website pages, interaction with email campaigns, etc., can provide insight into what types of offers may be the most successful in turning a marketing qualified lead (MQL) into a sales qualified lead (SQL) and ultimately a closed win.

Additionally, having an automated scoring system set up can greatly reduce manual effort that would otherwise require someone pouring over long lists of potential clients one by one, making it easier and quicker to identify qualified leads.

Action Item: Identify if your CRM or marketing software has analytics and reporting functions that can help measure lead quality.

Tracking lead quality allows businesses to tailor their marketing strategies and content in order to target potential customers that are more likely to make a purchase. Analyzing lead quality enables your marketing team to better optimize their campaigns and allocate resources strategically among marketing channels, allowing them to maximize ROI and efficiently acquire high-quality leads for sustainable growth. 

It also allows the team to make adjustments when necessary, such as making changes to website designs or developing new strategies tailored specifically for certain demographics or stages in the sales funnel.

Not only can this help boost efficiency in increasing the volume of both funnel and sales leads, it also helps a business understand how prospects and target customers interact with the company’s offerings. Knowing how well marketing methods drive lead conversion can give any business the edge in developing a successful lead generation strategy.

Cost Per Lead vs. Conversion Rate

Many companies use cost per lead (CPL) as a metric to measure the effectiveness of their marketing campaigns. The concept behind CPL is simple: it’s the cost of generating one lead. For example, if you spend $1,000 on a marketing campaign and generate 100 leads, your CPL is $10 per lead.

However, while CPL is a useful metric, it’s not necessarily the most accurate way to measure the effectiveness of your marketing efforts. Here are a few reasons why:

  • CPL doesn’t take into account the quality of the leads. As discussed, not all leads are created equal. Some leads are more likely to convert into paying customers than others. For example, a lead who has expressed a strong interest in your product or service is likely to be more valuable than a lead who stumbled upon your website by accident. However, CPL treats all leads as if they are equally valuable.
  • CPL doesn’t measure whether your marketing efforts are reaching your target audience. Promotions like Facebook ads and email marketing could generate a high volume of leads, but if those leads aren’t part of your target audience, they’re unlikely to convert into paying customers. CPL doesn’t measure whether your marketing efforts are effectively reaching your target audience or marketing tactics and their relationship with leads.
  • CPL doesn’t measure conversion rate. Conversion rate is a much better indicator of the quality of your leads and the effectiveness of your lead generation efforts. Conversion rate is the percentage of leads who become paying customers. By measuring conversion rate, you can see whether your marketing efforts are generating high-quality leads (called “qualified leads” in marketing speak) that are likely to convert into paying customers. It helps you target your marketing budget and shapes your content marketing strategy.
  • CPL can be misleading. For example, if you run a Facebook ad campaign that generates a lot of marketing funnel leads, but few of those leads actually convert into paying customers, your CPL may be low, but your conversion rate may be low as well. In this case, it’s better to focus on improving your conversion rate rather than just generating more leads.

Tools to Measure Lead Quality

There are a variety of tools that small businesses can use to track and measure the quality of their sales leads. Here are a few options:

Customer Relationship Management (CRM) software

A CRM system can help you keep track of your leads, manage your sales pipeline, and measure conversion rates. There are many CRM options available, including Salesforce, Hubspot, and Zoho.

Lead Scoring Tools

Lead scoring tools allow you to assign a score to each lead based on their level of engagement and likelihood to convert. This can help you prioritize your leads and focus on the ones that are most likely to become customers. Some popular lead scoring tools include LeadSquared and Leadfeeder. By assigning a score to each lead based on their level of engagement and the actions they take, you can prioritize those leads that are most likely to convert. Lead scoring also helps you identify which content marketing channels such as social media marketing or email marketing are producing high-quality leads, so you can focus your efforts on those channels for maximum results.

Web Analytics Tools

Web analytics tools like Google Analytics can help you track the behavior of your website visitors and identify which pages and content are most effective at generating leads. You can also use these tools to measure conversion rates and track the effectiveness of your marketing campaigns.

Email Marketing Software:

mail marketing software like Mailchimp or Constant Contact can help you track open rates, click-through rates and conversion rates for your email campaigns. By analyzing this data, you can identify which messages and campaigns are resonating with your audience and adjust your strategy accordingly.

Call Tracking Software

Call tracking software like CallRail or RingCentral can help you track which marketing campaigns are generating phone calls and measure the effectiveness of your call handling processes. You can also use call tracking data to identify which leads are most likely to convert into customers.

By using these tools, small businesses can gain valuable insights into the quality of their sales leads and optimize their sales processes for greater success. You may find that leads from certain channels are more likely to convert than others. For example, leads from social media may convert at a higher rate than those from email or Google ads. This will give you an idea of where your efforts should be focused in order to drive the most conversions.

It’s also important to consider the different stages of the customer journey and how leads interact with your business at each stage. For example, are you seeing more conversions from leads who have been exposed to multiple pieces of marketing content, or from those who only saw one? Understanding these patterns can help you fine-tune your campaigns for maximum efficiency.

Tips for Improving Lead Quality

If you are looking to improve lead quality, there are several effective tips and strategies that will help you reach your goal. Firstly, it is important to clearly define what defines a qualified lead, as this will help you better measure lead quality levels over time.

Create Customer Profiles (Buyer Personas)

If you haven’t created customer profiles (or personas) or mapped the customer journey, you need to do this first. A customer profile, also called a buyer persona, is a detailed description of your ideal customer profile (ICP). You may have one or several customer profiles depending on the number of products and services your company offers.

Action Item: Create one or more customer profiles.

Start by writing down everything you know about your ideal customer. This includes demographic details (eg, age, gender, income) and more personal details such as their interests, concerns, challenges and buyer motivations. Get feedback from colleagues who interact with customers.

Map the Customer Journey

The customer journey (or buyer journey) is a detailed roadmap of the process a lead goes through to become a customer and, hopefully, a long-term loyal customer. The customer journey is closely related to the sales funnel, though the sales funnel is more focused on marketing methods and the path and time to conversion. As with customer profiles, marketing departments may create one or several customer lifetime journeys. 

Action Item: Identify your marketing channels or traffic sources and the possible path of leads into customers.

Identify Retargeting Opportunities

Additionally, consider remarketing strategies as a way of attracting more leads and obtaining more conversions. Only 2% of website visitors convert on the first visit. Retargeting marketing is the practice of showing banner ads to those who have visited your website before.

In a recent survey, 46% of SEO professionals said they believed retargeting was the most underused marketing strategy available. And retargeted customers are three times more likely to click on your ad than visitors who haven’t interacted with your brand before. (Invesp)

Action Item: Make a list of underperforming products and services and possible channels for retargeting.

Expand Marketing Channels and Tactics

There are many creative ways to get leads for fitness, beauty, and wellness businesses beyond traditional advertising methods. One effective way is to offer a free trial or consultation, which allows potential clients to experience your services before committing. Another strategy is to partner with other local businesses in your industry or related fields and cross-promote each other’s services to your respective audiences. Utilizing social media platforms like Instagram and Facebook to showcase your work, promote specials, and engage with potential clients is also a great way to generate leads. Finally, hosting community events or participating in local festivals and markets can increase brand awareness and attract new leads to your business. By exploring these creative options, fitness, beauty, and wellness businesses can generate new leads and grow their client base in unique ways.

Don’t Forget to Engage Existing Customers

Retaining existing customers is crucial for the long-term success of any fitness, wellness, or beauty business. Consider offering personalized experiences that cater to their individual needs and preferences. This can include custom workout plans or skincare regimens based on their specific goals and skin types. Consistent communication is also key to customer retention, whether it be through regular check-ins, special offers, or personalized messages. Creating a loyalty program that rewards customers for their continued patronage is another great way to retain existing customers. Additionally, providing exceptional customer service, addressing customer concerns in a timely and professional manner, and going above and beyond to exceed their expectations can create a lasting impression and help keep them coming back. By focusing on personalized experiences, consistent communication, loyalty programs, and exceptional customer service, fitness, wellness, and beauty businesses can retain existing customers and create a loyal customer base.

How Self-Service SMS Booking Can Increase Lead Conversion Rates

As mentioned, the prospect or client experience is essential for lead conversion and retention. Think about all the touchpoints a potential customer has with your business, from first hearing about you to signing up for a service or product. How can you make sure they have a pleasant and seamless experience? It’s important to test different elements of your marketing strategy and customer service initiatives to ensure that you are creating an environment that encourages each lead to book their first appointment and soon become a loyal, repeat customer.

AI-powered communications tools can be a great way to help streamline the customer experience and improve conversion rates. These tools allow customers to self-schedule appointments via text, providing them with an easy, hassle-free way to book and manage their appointments. By utilizing AI, you can also provide timely responses to customer inquiries and make sure that questions are answered quickly, making the customer experience more enjoyable. Additionally, you can use AI-powered tools to track lead conversion rates over time so that you can be sure that your efforts are making an impact. This will give you valuable insights into which marketing strategies are working and which need to be adjusted or improved.

In this video, a TrueLark client explains how immediate lead follow-up boosted conversions: How a Wellness Business Achieved a 30% Lead Conversion Rate.

Final Thoughts

In conclusion, while CPL is a useful metric to track, it’s not the most accurate way for a marketing team to measure the effectiveness of your marketing efforts. Conversion rate is a better indicator of the quality over quantity and whether your marketing dollars are being strategically targeted. By focusing on conversion rate, you can optimize your marketing efforts and sales strategy to generate higher-quality leads that are more likely to convert into paying customers.