Using CPQ To Make That Basket
From hundreds of candidates, the NCAA tournament committee has found what it believes to be the 65 most deserving. Wouldn't it be nice if your lead program could be like the tournament -- evaluating scores of prospects around the country to come up with the most likely customers? Or better yet -- the 16 or 8 or 4 best?
Honing your marketing program to generate your own equivalent of the Sweet Sixteen is what performance-based cost-per-lead (CPL) programs - and cost-per -qualified-lead (CPQ) programs, in particular -- are all about.
And just as people around the country are making bets on the NCAA tourney, so too are marketers putting their money down on CPL and CPQ programs. Marketers have begun giving CPL a growing piece of their online advertising pie in hopes that getting more prospect information will lead to greater efficiency than anonymous click-based programs.
Specific to CPQ, in exchange for the marketer providing something of value (e.g. education), the consumer at minimum provides contact information plus agreement to be contacted. CPL can work for mass and targeted products alike. But for niche products, CPQ may offer the most potential.
Because CPQ is new to most marketers, I find myself answering many of the same questions. Here are "Final Four" FAQs:
What kind of products and services are best served by qualified leads programs?
CPQ helps marketers seeking targets with tightly defined criteria. These elusive consumers are difficult to find through traditional media, and they can often be inefficient to convert through co-reg and other mass lead gen approaches. For example, if you're looking for investors with experience trading options spreads or wine drinkers who can afford $50 per bottle, you'd have to sift through too many dead-end leads before you find the few that are truly in your sweet spot.
Enter CPQ: pay only for those who meet your criteria and want to hear from you. That really reduces the waste. Products and services that have shown the most promise thus far from CPQ include investment services, travel, pharma, business technology, high-end consumer electronics and advanced education.
Aren't CPQ leads expensive?
It may seem that way, when you compare a rate of $3 per lead to one of $30 per lead, but ultimately what matters most is the total cost of acquiring a new customer, not the lead. If you buy 1000 co-reg leads at $3 each but convert only two of these to customers, you're paying $1500 for each acquisition. But if you pay only based on leads whose qualifications relate directly to the drivers of your business (e.g. income, category experience), your close rate should be much higher. It's not uncommon to see a high percentage convert. So let's say you get 100 leads @ $30. If you convert 5%, the cost of each acquisition falls to $600.
How do I know the right questions to ask?
All you need to know is your target. If you can very specifically outline the characteristics of your ideal customer, CPQ programs can find them. And with CPQ, the old direct response maxim always makes sense: test, test, test. If you have several targeting variables you would like to investigate, CPQ programs are the ideal laboratory to find the right qualifiers. With testing, you can refine your targeting criteria with questions that find the right consumers, marrying these criteria with offers to motivate a response.
How do I measure success?
CPQ and CPL programs can be measured in both tangible (ROI) and intangible (efficiency and morale improvements) ways. On the tangible side, it is easy to compare lead costs and conversion rates for all online advertising spends. Simply calculate the total costs for your leads, and divide by the number of customers generated.
You can also track individual leads to measure the lifetime value of that customer. Common sense says that a well-qualified prospect over time will lead to more business than more random leads, which would tend to be one-time customers. In addition, try to include other correlated costs, including how many fewer calls or mailings you need to make that conversion happen, and even how turnover in your sales team might decrease as a result of giving them better leads.