Using Lead-Velocity Rates to Inform Your Growth Strategy
06.04.2018 / Posted in Articles, Measurement
Metrics attract us all. Numbers feel like hard-data ways to assess performance. And they are—but only when measured correctly and only when the measures are used correctly.
We love metrics at FrogDog, and we tie all our marketing efforts to measures of success. One valuable metric—when used the right way—is the lead-velocity rate.
Here’s what to know about making lead-velocity rates work for you.
Lead Velocity 101
The lead-velocity rate (LVR) compares the current month’s number of leads to the previous month’s number of leads. This helps companies assess the effectiveness of marketing efforts tied directly to lead generation and to overall marketing efforts that affect your target audience’s awareness and understanding of your company.
Here’s a quick visual of the typical lead-velocity rate formula:
What the Numbers Mean
You can’t measure once and take much from the information. Companies need to measure lead-velocity rates over time to understand what their numbers mean, and they need to assess the changes within the context of the overall marketing programs in play. As with every metric, you can only understand what LVR means when you understand its influencing factors.
For example, did your company choose to reposition in the marketplace overall or for a specific product or service line? Did you increase your investment in lead-generation efforts, providing a larger budget for pay-per-click or pay-per-impression advertising? Did your marketing team just finish a large lead-generating event that will naturally skew one month’s numbers?
To help ensure the metric gives you valuable information and that you can more accurately develop a narrative around what its changes over time tell you, consider sectioning your LVR measurements among different markets and product lines.
If you’ve entered a new market, you can’t expect a rapid lead-velocity rate in the initial months, when you’re building a baseline of awareness and understanding. Dumping this market into your overall metric and considering it alongside marketing investments—which will, naturally, have increased due to the cost of new-market entry—will not give you a fair understanding of marketing’s performance.
Also, if your marketing team adjusts a marketing initiative for a specific product line, you can better assess how the tweak performed by separating out the lead-velocity rate for that specific offering.
Using Lead Velocity Rate to Adjust Your Marketing
You cannot use any metric to inform your efforts if you haven’t laid some groundwork before you begin to measure. To effectively use lead velocity to adjust your marketing, you must start with the following structure in place:
- Define your goals: Identify your goals for marketing and ensure that your team is aware of exactly what you want to accomplish. Further, identify your goals for using this metric. What specifically do you want to learn? Is it how a new marketing tactic influenced results? How a new market has performed for lead-generation after a set amount of budget spent? You need longitudinal data to answer these questions.
- Identify your lead data: From where will you gather your source data, and when will you gather it? Create data-formatting standards so that you look at the same numbers in the same way each time.
- Set processes: As you begin, set a timeline that outlines when you will pause to assess the results of the metric and develop adjustments to your marketing efforts based on what you learn.
Where to Start with Lead-Velocity Rates
Of course, all this assumes you have a marketing plan in place, which assumes you have a marketing strategy—which assumes that you understand your target audiences and your key messages.
(If you don’t, call FrogDog STAT.)