Understanding the value of a lead can be confusing when it’s your first time delving into the space.  Ultimately the value of a lead varies company by company so we want to provide some clarity into the process and give a clear roadmap for how to grow your business through lead acquisition from Hotel Tech Report.

What are leads and how are they different from emails in my database?

Lots of marketers today still think that leads are emails in their marketing databases.  Most hotel tech companies have upwards of 75,000 emails in their databases but it’s important not to confuse those for leads because contact information is very different from purchase intent.  Leads are also different from bulk purchasing contacts from 3rd parties because each lead is actively in the market for your products and services.

Many of the people watching your webinars are product users and others are just curious hoteliers but only a very small percentage of them are qualified in-market buyers actively looking for a solution. HTR leads are qualified, verified and in-market buyers looking for your specific product/service and are looking to adopt in the next 12-months.

On Hotel Tech Report there are 2 kinds of leads: direct intent and category intent (aka matched leads).  

  • Direct intent leads have been persuaded by HTR content that your product is a good fit and have consequently requested to connect with you.  These leads are valuable because they convert at high rates when acted on quickly and with persistence.
  • Category intent leads have come to HTR for advice about which solutions they should use in a category but may not yet be aware of your brand.  These leads are valuable because this is a segment of buyers who are actively in the market but may not yet be aware of your solution.  While these leads take longer to close, they are usually the most coveted leads for businesses because they give your company an opportunity to close deals with buyers who may not have even been considering your company.

What is the difference between lead purchasing and affiliate commissions to resellers?

Resellers can come in a few different shapes and sizes such as app marketplaces and physical resellers.  In this section we’ll talk about how to compare the ROI of HTR leads to deals that you close through these other channels.

App marketplaces like BookingSuite typically charge hotel tech companies 15-20% of the total contract value on products sold through their channels.  Let’s say that our imaginary company called HotelMaven sells software to hotels for $500/month and customers usually stick around for an average of 5 years.  That means each contract is worth $500 x 60 months (5 years) or $30,000 to our business.  On a contract of that size, app marketplaces will typically charge $4,500-6,000 per contract they bring to us.

How does this compare to lead purchasing?  Assume that for HotelMaven we want to test whether resellers are more profitable than our arrangement with those resellers - here’s the simple math behind the calculation.  All we have to do is take the total commission over the contract value ($6,000 per above) and divide it by our average lead cost on HTR - which we’ll assume is $25 (the average price during HTR’s beta program).

When we divide 6,000 by 25 we come out to 240 leads.  What does that number mean? 

It means that if 1 out of every 239 leads my company buys from HTR converts into a deal, then HTR is a more profitable acquisition channel than my reseller and app marketplace relationships.  There are of course other factors to consider such as the long term value of leads that didn’t close and the risk that comes with paying for leads upfront vs. only paying on closed deals but the goal of this section is to illustrate how you should be thinking about leads internally when benchmarking against other acquisition channels.

How should I compare Hotel Tech Report leads to other paid acquisition channels like LinkedIn and Google Adwords?

During our beta program Hotel Tech Report leads are offered at flat low pricing making them the most cost effective way to acquire qualified buyers for your products and services.  Every lead is manually verified as a hotelier and verifies to us that they are an in market buyer for hotel tech in your category.

Before jumping into comparisons with other channels we’ll want to understand what our maximum willingness to pay for a lead should be across any channel.  There are lots of ways to value leads and we’ve put together a calculator to help you easily calculate the value value of a lead to your business.  This calculator outputs the maximum price that you should pay for a lead but you always want to pay less than that number no matter what channel you’re marketing on.

Want to compare Hotel Tech Report lead pricing to your other marketing initiatives?  Here are a few examples: 

  • Paid advertising ($60-$200/qualified lead): For this method we’ll start by looking at our cost of acquisition on paid advertising networks.  Let’s say we purchase clicks on Google for $5/click (CPC).  We’ll then look at the conversion rate to a lead on your website.  Industry standard is 3-8% meaning that your cost per lead on your website is $62-166.
  • Conferences & Events (~$200-$300/qualified lead): If you spend $15k on a conference booth and $10k on travel for your team for travel and entertainment your all in cost for a single event is $25,000.  Assuming that you gather 100 leads at that conference - you’ve just spend $250/lead.

Here’s a great article we came across about lead pricing benchmarks through a quick Google search.  Salesforce, Hubspot and other marketing automation firms have great content about the subject so set aside some time to do your homework!

How much should I budget for leads?

Lead acquisition focuses further down the purchase funnel relative to PPC or CPM advertising; however, it’s still a form of advertising and rarely will you succeed when experimenting with very small budgets.  That’s not to say it doesn’t happen - we’ve had a handful of vendors close their very first deal on HTR but you need to have patience and take a long term analytical view to succeed with lead generation.  We recommend that vendors start with at least 100 leads to help them understand their actual cost of acquisition and ROI.

We recommend that companies budget for lead acquisition by comping to the largest single event that they attend throughout the year.  

For example, if your company spends $50,000 to Exhibit at HITEC and that’s your biggest event of the year, you should allocate $4,100/month (50k/12) for lead generation activities throughout the year.  

Unlike events that are increasingly populated by vendors and the same buyers each year, you’re guaranteed to find new in market buyers with lead generation activities and they are a sustainable source of new opportunities.  Adding to that, you’ll only pay for leads generated and your digital presence isn’t perishable or localized in that it lives on forever to continue generating leads for you and has global reach 24 hours/day.

How should I approach leads once I’ve purchased them?

Approaching leads takes experimentation but the rule of thumb here is to avoid being overly promotional of your products and services.  

Unlike demos booked on your own website, companies have the most success when reaching out as a helping hand during the purchase process.  Start by introducing yourself and letting the buyer know that you are here as a helpful resource while they’re researching the market.  

You should also be direct and give them an option to schedule time on your calendar but that shouldn’t be the primary introduction - just as you wouldn’t open a conversation at a trade show by asking a prospect to lock in a time with you.

Most importantly, make sure that you follow up more than once.  People are busy and hoteliers are even busier - emails slip through the cracks all the time so don’t get discouraged waiting for a response to your first email.  

According to recent research, 80% of sales need five follow-ups, but almost 50% of people only send one (Quick Sprout).  Have patience, be persistent and experiment with different outreach approaches to achieve long term success.

Related article: How should my team followup with matched leads?

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