Rethinking the Role of Touchpoints in Lead Conversion

In marketing, it is often posited that a lead typically requires eight or more touchpoints before making a purchase decision. The intuitive reaction to this statistic is to adopt it as a benchmark, striving to reduce the average number of touchpoints if your current figure exceeds this threshold. However, this approach may be fundamentally flawed. The accuracy of the "eight touchpoints" metric is questionable, and there is a compelling argument for increasing rather than decreasing the average number of touchpoints to improve your lead conversion.

Marketo found that companies that excel at lead nurturing generate 50% more sales-ready leads at 33% lower cost. Meanwhile, The Annuitas Group found that nurtured leads make 47% larger purchases than non-nurtured leads.

Clearly lead nurturing is a worthwhile endeavor, and we should expect multiple touchpoints along the buyer journey to optimize your lead conversion, but over-optimizing touchpoints per sale can be perilous.

The Misuse of Touchpoints as a Metric in Lead Conversion

The notion of touchpoints per sale is frequently employed as a justification for marketing budgets. This creates a perverse incentive: those seeking larger budgets may inflate the required number of touchpoints to justify their efforts, while budget holders may pressure teams to reduce this figure as a way to reduce expenses.

The oft-quoted eight touchpoints per sale is an average of averages, derived from surveys of various companies. There is no standard for what is considered a touchpoint or how the average is calculated — for example, whether the average includes non customers or leads in the middle of the marketing pipeline. This aggregated figure can obscure significant variations among individual businesses. For some, the actual number could be markedly higher or lower.

Determining the Optimal Number of Touchpoints

The critical question for any company is not what the industry average is, but what the optimal number of touchpoints is for their specific context. Counterintuitively, the answer may be that more touchpoints are better, provided the return on ad spend (ROAS) remains positive and profitable.

Consider a scenario where you invest $1,000 in marketing, achieving a 200% ROAS. If an additional $1,000 investment would double the average touchpoints and reduce ROAS to 150%, should you proceed? The answer is unequivocally yes. The extra spend generates revenue that would otherwise be unattainable, even though key performance indicators (KPIs) appear to deteriorate.

Beyond Immediate ROAS

Even at a break-even ROAS, additional touchpoints can yield long-term benefits. ROAS often overlooks future revenue from repeat customers. Moreover, those repeatedly exposed to your marketing without immediate lead conversion still hold value. A portion of this audience will eventually purchase due to the awareness built, potentially becoming repeat customers.

Striking a Balance in Marketing Optimization

An alternative optimization strategy involves maintaining a fixed marketing budget while working to reduce touchpoints per sale. Enhancing creative content can play a pivotal role here. Ensuring that lead-generation creatives attract the right audience, providing contextually relevant content, and nudging prospects along the buyer's journey can lower the required number of touchpoints. Once this is achieved, scaling ad spend to the new maximum level of profitability becomes a viable strategy.

Key Insights

1. Lead Nurturing Enhances Revenue: Effective lead nurturing translates to increased revenue per customer.

2. Multiple Touchpoints Are Essential: On average, leads require more than one touchpoint before purchasing.

3. Maximize Touchpoints Profitably: The number of touchpoints per sale should be maximized as long as ROAS remains profitable.

Marketing teams should continuously expand their outreach until touchpoints per sale approach the edge of profitability. Following this, optimizing creative efforts to reduce touchpoints is advisable. This iterative process of expansion and optimization should be repeated to sustain and enhance marketing efficacy.

In summary, rethinking the role and optimization of touchpoints can lead to more strategic and profitable marketing practices, driving long-term growth and customer loyalty.