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In most sales-led B2B organizations, a significant proportion of marketing investment goes toward generating leads for Sales to pursue. You'd therefore expect businesses to spend considerable time understanding what those leads are worth.
Yet much of the conversation still comes down to cost per lead (CPL).
That's an efficiency measure. The more important question is one of effectiveness: how likely is Sales to convert that lead into revenue, and what will it cost to do so?
As Dale W. Harrison explains, generating leads that Sales has little chance of converting doesn't just waste marketing budget. It creates additional work for an already expensive resource.
In Episode 2 of Revenue Dynamics: Marketing, Sales, and the Economics of B2B Growth, Dale and Jamie Hendrie build on Episode 1's discussion of moving from intent data to marketing effectiveness, examining the true economics of B2B lead generation and why cheaper leads aren't necessarily better leads.
Why cheaper leads aren't necessarily better value
Marketing teams have limited control over what they pay to reach an audience. Most digital advertising operates through auctions, where prices reflect how much competing advertisers are prepared to spend.
Jamie illustrates the competitive pressure with an analysis of target-account lists from ten businesses operating in the same category. Around 84% of the accounts appeared across multiple lists.
These businesses were effectively competing to reach the same prospects, driving up media costs.
When acquisition costs rise, cheaper advertising can become attractive. But the price of an impression tells you relatively little about its value if you don't know who's actually seeing it.
The difference between CPM and effective CPM
Dale argues that marketers need to account for invalid traffic when comparing media channels.
Low-cost programmatic inventory can appear attractive, but some impressions and website visits may come from bots rather than genuine prospects. The amount of invalid traffic can vary considerably between channels and campaigns.
That doesn't automatically make every channel with significant bot activity a poor investment.
Dale uses Reddit as an example. Even allowing for substantial invalid traffic, a relatively low CPM can make it attractive for reaching a targeted audience.
If a campaign costs $4.50 CPM and half the impressions are invalid, its effective CPM for valid impressions is approximately $9. That may still represent better value than a more expensive alternative.
The point is to understand what you're paying for, rather than simply choosing the lowest advertised price.
And even genuine impressions can be wasted if the people seeing the ads have little chance of becoming customers. Poor targeting can consume budget just as effectively as invalid traffic.
Where the real cost of a lead sits
Media costs are only the beginning.
Long-running Gartner benchmarks cited by Dale suggest that only around 5–6% of MQLs are accepted by Sales, with approximately 1% ultimately becoming closed-won customers.
Those figures highlight the importance of what happens after a lead is generated.
Sales effort changes the economics
Dale estimates that acquiring a lead through Marketing can cost 100 to 1,000 times less than the Sales effort required to close it.
A lead might cost $40 to generate, for example, while pursuing the opportunity could consume $4,000, $6,000 or even $10,000 in Sales resources.
That makes the cost of generating the lead a relatively small part of the investment.
Dale describes a company whose Marketing team repeatedly targeted government accounts. The potential deals were large, but complex procurement processes meant they required five to ten times more Sales effort than other opportunities.
Once those costs were considered, the accounts became far less attractive.
Every hour spent pursuing an opportunity that is unlikely to close is also an hour that could have been invested elsewhere.
That's why Marketing and Sales need to be evaluated as part of the same commercial process. A low CPL can look impressive on a dashboard while creating substantial costs further down the funnel.
Why your ICP is an investment decision
For Jamie, this became particularly clear after Inbox Insight, now The Insight Collective, took private equity investment in 2021.
One of the early instructions was to narrow the Ideal Customer Profile (ICP).
Initially, that seemed counterintuitive. Surely targeting more companies meant creating more opportunities?
But the objective wasn't to maximize the number of accounts Marketing could reach. It was to concentrate resources where the business had the greatest chance of generating a profitable return.
The ICP therefore became a much more important commercial decision.
Focus on the accounts you can actually win
This is where Dale's concept of Buyer–Seller Fit comes into the discussion.
An account might regularly buy products in your category without being likely to buy from your company. Buyers have preferences, existing relationships and expectations about the suppliers they're prepared to work with.
The seller's capabilities matter, too. Winning complex government or enterprise contracts requires experience, resources and expertise that aren't equally distributed across Sales organizations.
A useful ICP should therefore reflect the types of customers a business has demonstrated it can win and serve effectively.
That means examining historical wins and losses, rather than simply creating a wish list of attractive accounts.
Learn from the accounts you lost
Many targeting tools work by finding companies that resemble your existing customers. But a characteristic shared by your winners only becomes useful if it helps distinguish them from your losses.
Dale's deliberately absurd example is that almost every closed-won account has vowels in its name. Finding more companies with vowels doesn't help if the same characteristic appears among the accounts you failed to win.
The useful patterns are those associated with different commercial outcomes.
By comparing successful and unsuccessful opportunities, businesses can identify where they have a stronger chance of winning and use that evidence to improve their ICP, targeting and lead qualification.
As Jamie explains, the aim is to build on the advantage a business has already developed through its previous Marketing and Sales investment.
What should Marketing actually qualify?
This raises another question: how much of the qualification process should Marketing be responsible for?
Much of conventional lead scoring attempts to identify when someone is ready to buy. Behavioral signals, engagement scores and intent data are used to estimate whether an account is actively considering a purchase.
But buying decisions often involve private conversations, internal stakeholders and procurement processes that marketers cannot reliably observe.
Dale and Jamie argue that Marketing should concentrate on identifying accounts the business has a realistic chance of winning, rather than claiming to know exactly when those accounts will buy.
Leave buying conversations to Sales
The BDR function exists, in part, to establish whether an opportunity is worth an Account Executive's time.
That involves speaking directly with prospects, understanding their circumstances and assessing whether there's a genuine opportunity to pursue.
If Marketing has already identified accounts with strong Buyer–Seller Fit, BDRs can focus on establishing their current circumstances and readiness to engage.
Prospects who aren't ready shouldn't necessarily be discarded. They may still be valuable future customers, particularly if the business maintains a relevant presence until they're ready to consider a purchase.
The distinction is between identifying accounts worth pursuing and establishing when a conversation makes commercial sense.
Marketing can contribute to both, but behavioral data alone shouldn't be expected to replace the judgment and information gained through direct Sales conversations.
A lead is only valuable if it's worth pursuing
For Dale and Jamie, the way forward starts with a more focused understanding of the market.
Which companies are likely to buy the category? Which are willing to consider a business like yours? And where does your Sales organization have the strongest ability to win?
Those questions should inform the ICP, which in turn shapes targeting, qualification and the allocation of Sales resources.
Marketing also has a longer-term role in reaching future buyers. As Dale puts it, the goal is to maximize the number of future consideration sets in which your brand appears.
That means maintaining visibility among the right accounts, even when they aren't currently buying, so the business has a stronger chance of being considered when the opportunity arises.
Ultimately, the objective isn't to generate the greatest number of leads at the lowest possible cost. It's to generate opportunities that justify the Sales investment required to pursue them.
A cheaper lead was never the goal. The goal is a lead worth working.
That's also the thinking behind the Next-Gen MQL, which uses historical commercial evidence to help businesses identify where Sales effort is most likely to generate a worthwhile return.
