Sales leads are junk. Leads aren’t a valuable business metric. They don’t mean anything. So, don’t give them any weight in decision making.

I was in a car crash. My car was so badly damaged that the insurance company considered it a total loss. I can’t live my life (without major change) without a car. So, I needed to buy a new one.

My family and I decided on a budget and a feature list. We were in the market for something like a Honda Accord or Toyota Camry. This is a huge market segment, literally every major auto manufacturer sells a car that’s similar.

What does this have to do with sales leads?

I went to 9 different car dealerships shopping for a car. I was only intending to buy 1 car. 8 of these dealerships got a sales lead that didn’t go anywhere. 1 got a sales lead, a sale, and revenue.

1 dealer got value, the other 8 got a junk metric, the “lead.”

Sales leads are important, you need them in order to eventually make a sale. But if you’re making decisions based on the number of leads, or some perceived quality of leads, you’re doing yourself a disservice. Leads only matter if they can be converted into sales. If you have a horrible conversion ratio, adding 1 or 10 or 100 more leads doesn’t really mean anything.

You have a horrible conversion ratio! You do. Everyone does.

People love to window shop. They love to dream of buying things. It’s fun. All these people are sales leads. Most of them won’t turn into sales, just like I visited 8 different car dealerships and didn’t buy their cars even though I needed to buy a car!

Many people visiting a car dealership may not need to buy a car. They’d like to buy a car. These leads most likely will have even worse conversion ratios than I was when shopping. Most people have a car that already “works” and buying a new one is a luxury.

So if a business boasts about their sales lead numbers, tell them to shut up. Tell them to show you revenues, profits, conversion ratios, or any other metric. Sales leads are junk. Everybody has leads, what matters is converting them into money. That’s where the value is.


25 June 2012