To understand Lead Maximization, one must first understand what we like to call the mechanical economy of lead maximization. Or, if you prefer, Lead Maximization Theory (on which this paper is based). Essentially, the mechanical economy of lead maximization is a set of truisms. Similar to Geometry Theorems, Lead Max Theorems define a set of assumptions and then a corresponding equation and diagram demonstrating the relationships between variables. For most of us, it has been a while since having to struggle with geometry. We pretty much hated the subject and, like many, have tried our best to suppress the awful experience of having to learn about Pythagoras. Nonetheless, we’ll go slowly, because there is a real, tangible, and meaningful application for anyone with a website.
Lead Capture Ratio is the amount of traffic your site must receive in order to generate one lead. For example, if you receive on lead for every 238 visitors, your Lead Capture Ratio would be 238:1 (or .42%)
For every 238 hits to our site, we capture one lead (or receive a website inquiry).
When people are looking to get more leads, they typically default to their intuitive sense that; all things being equal, the more traffic that a given site gets (i.e. the more “hits” it receives), the more leads the site will generate.
The mechanics of why this is true are represented below. As traffic goes up, leads go up as well – Even when the Lead Capture Ratio remains the same. So, if we double the traffic to our site to 776 hits, the site will generate, on average, 2 leads instead of one. If we triple the traffic, we will receive 3 leads, and so on.
This is why Search Engine Marketing (whether SEO or PPC) works – because if you change nothing about your site at all and drive more traffic to the site, you will receive more leads.
But there is yet another approach to cranking up the leads you receive from your website. Examining the chart below, we can see that, all things being equal, if we increase our Lead Capture Ratio and leave our traffic numbers untouched (that is, our hits remain static) we will receive more leads. As such, if we double our Lead Capture Ratio to .84 and the number of hits the site receives remains unchanged at 238, the site will generate, on average, 2 leads.
Of course, nothing says our options have to be restricted to increasing traffic or increasing our lead capture ratio. That is to say, one can do both.
Likewise, while SEO and PPC are the two primary ways of driving more traffic to a given site – at least they’re the two ways that come to mind first for interactive marketers – there are also many other ways you can and should be routing more traffic to your website. We will talk about that in more in detail later. The point here is that there is no hard-fast rule forcing you to choose between driving more traffic and increasing your Lead Capture Ratio.
In fact, as demonstrated below there is good reason to attempt both objectives simultaneously.
Now, before you say, “I am convinced, let’s do both,” we have to remind you of The Goal! And here is why: depending on your situation – the product or service you sell, the competitive landscape online, the disposition of your current website, and your preparedness/ability to convert the leads you get from your website – depending on these factors, among others, it may make more sense to focus on one objective over the other. It might make sense, in some cases, to put all of your efforts into driving more traffic. Or, it might make sense at this time to devote all of your immediate efforts on increasing your Lead Capture Ratio.
Here’s what we mean: let’s say you have $2000 to spend. You come to us and say, “I have $2000 to spend. And I can’t wait to spend it on improving my web ROI.” Hey, we are allowed to dream, are we not? Okay. So, we take a look at your site and find that . . . well, we find that there is a substantial amount of improvement to be made toward the end of improving your Lead Capture Ratio. We also find that your site is ranking fairly well in the search engines for the keywords (terms) that people looking for your services are using to search for them. It seems your vendor has done a pretty decent job of the basics as far as Search Engine Optimization is concerned. Nonetheless, we also research the PPC opportunity and what $2000 is likely to yield for you as far as a return. What we find is that you are in an incredibly competitive market (which comes as no news to you). So, we recommend you to avoid PPC for now and invest your budget in improving your Lead Capture Ratio.
The point we are making is that when we consider budgets, we do not do so in a vacuum. No matter how much you have to devote to increasing your web ROI, it is crucial to work with a company that is going to spend your money wisely. And each case is unique, requiring professional research and analysis.
If you go to a company that focuses on Search Engine Optimization, they will usually try their best to sell you SEO, even if SEO is decidedly not where your money is best spent. Likewise, if you approach a PPC shop, they will push you towards PPC. When is the last time you visited a car dealership and they tried to sell you a motorcycle?
Similarly, let’s say you approach an agency that has never even heard of the terms “Lead Capture Ratio” or “Lead Capture Optimization.” Yet you notice they offer top-notch design services as well as SEO and PPC (even though in the real world agencies are terrible at SEM in general). What is the likelihood they are going to know where your money is best spent? They have no reference to even evaluate where you will get the most bang for your buck – much less recommend the best path for you to take to increase your web ROI.
The Goal is to make money. This means you need to make sure you are spending your resources on those activities which offer highest-return. Anything less is detrimental to the health of your business.
But before we get too far, we also need to examine another truism of Lead Maximization – specifically – if the goal is profitability (netting more profit), then we would be remiss not to explore the following:
Presuming your site has decent traffic and is capturing leads, all things being equal, increasing your sales conversion ratio will result in more sales-related dollars. And assuming that you are not selling at a net loss, increased profits will result.