The online lead gen supply curve

I’ve had a number of people ask me about my approach to online lead generation. It has been a prominent element of a number of my projects, such as LoanSurfer and Ideaforest. Now, with Brill Street, it is again a core part of our strategy. I enjoy lead gen for a number of reasons: it’s measurable and highly analytical, results in rapid feedback cycles, offers many opportunities for optimization, and can create substantial value.

One of the most important concepts in lead generation is the supply curve. If you’ve ever taken macroeconomics, you know what I’m talking about. Here’s an example supply curve:

If you look at the chart, you’ll realize it is nothing more than a scale rank ordering of lead generation initiatives by unit acquisition cost. I had to create this one manually because Excel doesn’t offer this as a chart type. Apparently Mr. Excel offers a VBA supply curve chart maker, but I’m writing this on my Mac Pro so that’s not an option.

Creating the online lead generation supply curve

How do you create a supply curve for lead generation? Well, first you have to start with the data. Here’s the sample data used to create the above chart:

Enter your initiatives into Excel, with unit cost and results. Then order by unit cost. The chart is just an arrangement of blocks of initiatives laid out from lowest unit cost to highest unit cost. The height of each block represents the unit cost of acquiring a conversion. The width of each block is the quantity of conversions acquiring using that method.

Using the online lead generation supply curve

What good is an supply curve for online lead generation? Well, it tells us a lot of things in a very simple to digest manner. Here are a few key insights:

• The total area of each block represents total spending for an initiative
• The height of each block tells us the efficiency of each initiative
• Duh: Wide flat boxes = good. Tall thin boxes = bad.
• The distance from the vertical axis to a given point on the horizontal axis is a total dollar amount spent
• We can set a moving forward budget by setting a limit along the horizontal axis (anything to the right is over-budget)
• We can set a maximum conversion cost by setting a limit along the vertical axis (anything above is too expensive)

Whenever I’m working through a lead generation strategy, this is one of the key views I use to determine how to allocate resources and create moving forward budgets. Also, by tracking the evolution of supply charts you can learn a great deal about evolutions in the efficacy of your online marketing efforts. Perhaps I’ll cover how to derive some of those insights into another post.