Check out the following chart, and see if you can answer this question: Why would the cost per lead for large companies be more than double than that for all firms with less than $500 million in revenue?
Shouldn’t a larger company have more brand recognition, more efficient marketing processes, and be acquiring far more leads-per-dollar spent than smaller, lesser-known, more inefficient companies? What am I missing here?
- How to Allocate Your Marketing Budget
- Digital Marketing Budgets Set to Explode
- Credit Union Guide to Setting Marketing Budgets
These Numbers Just Ain’t Right
The $272 per lead number in financial services is simply not possible. Here’s the logic:
- Across the 6,000 credit unions in the US, the average asset size is about $1.2 billion, and the average number of members is about 103, 000. (Yes, I understand that the standard deviation on that average is huge.)
- Let’s say the average credit union adds 10,000 members in 2017. That’s a 9.8% growth rate. Not unreasonable at all.
- If the average credit union had a lead conversion rate of 50%, that would mean it generated 20,000 leads. Maybe there are credit unions out there converting 50% of leads, I don’t know. Personally, I think that number is astronomically high. If you disagree, please let me know… I’m all ears.
- At $272 per lead, HubSpot says this “average credit union” spent $5.4 million on lead generation.
- On average, banks and credit unions spend about 0.1% of assets on marketing. For our average credit union, that works out to a marketing budget of $1.2 million.
Based on these assumptions, if Hubspot’s cost per lead was right, the average credit union is spending 4.5 times its total marketing budget to generate leads. Folks, even if that credit union was converting 100% of its leads, it would still be spending twice the average budget on lead generation.
The cost per lead numbers from Hubspot simply aren’t right. I say, “Take ’em back, Hubspot!”