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The cost of lead conversion into sales

October 05, 2023
6 min.
Views: 381

In marketing, a "lead" is a term that denotes a potential buyer or their initial interaction with the company. It occurs when a potential client fills out a specific form on the website, calls by phone, or sends an email. The inquiry expresses interest in a product or service and provides personal information for further communication. The company receives the request, processes it, and takes sequential actions to move towards a transaction.

The process of turning a potential client into an actual customer is called "lead conversion into sales".

From the client's perspective, the beginning of cooperation may seem relatively easy. However, to create simplicity and structure in communication, the agency puts in a considerable amount of effort. It allocates and distributes the time resources of employees, which are paid from its own budget. Moreover, the actual contract negotiation takes more than just one working day. After all, for a conscientious contractor, the key is to fully understand the customer's needs and propose solutions that truly meet them.

For clarity, let's go through our pre-sales chain and explain how the pre-sale of IT services proceeds and how much it costs to convert a lead (client) before starting work.

The cost of lead conversion directly depends on the working format. Our digital agency offers four main types of collaboration, each with its own sales stages.

  1. Outstaffing.
  2. Outsourcing.
  3. Project Work (Fixed-Price).
  4. Part-Time (hourly technical support).

Let's explore the most complex and interesting format – project work in its classical sense. Often, this format requires a deeper immersion, thorough work, assessment, and coordination

Introduction to the client

During the initial contact, we gather all the necessary information about the client, the project's goals, its key tasks, and if needed, we enter into a Non-Disclosure Agreement (NDA). Following this, we request all available information about the project. This may include the following materials:

  • functional requirements,
  • design layouts,
  • technical specifications.

Often, the client sends only layouts and/or functional requirements, but the more details we have, the better, of course. All received materials are sent for review to the development department. Studying them takes anywhere from 3 to 16 hours

Online Meeting

After getting acquainted with the project, we initiate an online meeting with the client. During our discussion, we delve into details and gather as much data as possible to prepare a cost estimate for the work.

Depending on the project's scope and the number of questions that arise, it may be necessary to create a technical specification (TS), which can extend the lead conversion time. The development of the TS is a separate paid service. 

Estimation Process

The cost of development and its timeframe are the client's primary concerns. If we have all the necessary information, a clear understanding of the client and their goals, we immediately proceed to the estimation.

In our calculations, it's crucial to outline the main project intervals and decompose the necessary tasks to the smallest detail, not overlooking any algorithm or entity. Typical stages include: 

  • design,
  • backend development,
  • API,
  • layout,
  • frontend development. 

An equally important aspect is accounting for risks and allocating resources for them. No matter how detailed the technical specifications or design layouts are, unexpected challenges, or "pitfalls", can arise, which are challenging to anticipate in the early stages.

The time required for estimating directly depends on the project's complexity and scale, ranging from 4 hours to 3 days

Approval of the Estimate, Sending the Proposal / Reevaluation 

Initially, specialists from the development department create the estimate, and then it undergoes additional scrutiny by our sales manager. The manager compiles and sends the commercial proposal to the client. If the client is ready for collaboration, wants to discuss the details, or resolve any contentious issues, we schedule an online call. During this call, we present the project, discuss the work plan, and reach a consensus. The approval process may lead to a situation where it's necessary to streamline the estimate to the MVP version of the product. Such a reevaluation takes from 2 to 8 hours.

When the pre-sale process logically concludes, we enter a waiting mode for the client's final response and contract signing. They either immediately say "yes," and we commence development, or they return with a decision later. This could take several weeks or even months, especially when seeking approval from higher management regarding the scope of work. But let's move from words to numbers.

The cost of lead conversion into sales for an IT company is calculated using a simple formula: time spent multiplied by the specialist's rate. In total:

  • minimum: 31,000 rubles,
  • maximum: 117,000 rubles.

However, even the maximum pre-sale amount is not a limit but merely a starting point for large-scale projects. We'll delve into the details of estimate reevaluation separately and share other interesting situations that occur before the contract is signed. Stay tuned for the release of our new article in the "Client Experience" series. 

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Publication author:

Lubov Azarnova