The Real Cost of Delay

Time is money, and delays to anything in business can have financial consequences. As marketers, we know that a lead generation campaign delayed by even a few days can result in missed opportunities. But can we actually put a number to the opportunity cost?

Yes, you absolutely can as long as you have the following:

• Campaign lead goal
• Campaign duration
• Your lead-to-sale conversion rate
• Lifetime Value (LTV) or Average Contract Value (ACV), preferably the former
• Your average sales cycle

Take the following scenario, for example:

Imagine a lead generation campaign that experiences a 15-day delay. Within those 15 days, you could have generated 150 quality leads. With a conversion rate of 3%, this would translate into 4.5 sales. And considering an average lifetime customer value (LTV) of $100,000, the potential revenue from these leads would amount to $450,000.

Of course, we’ll still have an opportunity to close those deals. We’ll just have to wait 15 days to start the sales cycle. So what’s the real cost, here? Let’s assume we have a 180-day sales cycle. We’ve cost ourselves 15 days, or 8.33% of the sales cycle for all of those leads. So, we can estimate that the revenue delayed due to this campaign delay is worth 8.33% of $450,000, or $37,500 

One might argue that $37,500 isn't a significant amount in the grand scheme of things, especially for an Enterprise business. But now, let's consider the bigger picture. If similar delays occur across 20 campaigns throughout the year, we're looking at a staggering $750,000 in revenue left untapped.

Ouch.

This example serves as a powerful reminder of the critical importance of speed-to-market. Launching campaigns late directly affects sales activity, resulting in delayed revenue. Even if you're not currently the market leader, the opportunity to win more revenue and capture additional market share lies partially in your ability to be more efficient than your competition.

But first start by seeing where you stand on speed-to-market! What’s your average difference in campaign start date versus average start date, and what’s the opportunity cost of that delay? 

Metrics You Need to Start:

• Campaign Goal: 900 Leads
• Campaign Duration: 90 Days
• Average Delay: 15 Days
• Lead-to-sale Conversion Rate: 3%
• Lifetime Value (LTV): $100,000
• Average Sales Cycle: 180-Days

Step 1: How many leads can be generated per day, on average?

Campaign Goal / Campaign Duration = 1,000 Leads / 90 Days = 10 Leads per Day

Step 2: How many leads could have been generated during the delay?

Leads per Day X Total Delay = 10 Leads X 15 Days = 150 Leads

Step 3: How many sales could have been generated by those leads? 

Total Leads Delayed X Lead-to-Sale Conversion Rate = 150 Leads X 3% = 4.5 Sales Delayed‍

Step 4: What’s the value of those sales?‍

Total Sales Delayed X LTV = 4.5 Sales X $100,000 = $450,000 Possible LTV Delayed‍

Step 5: What percentage of the sales cycle has been lost for these potential sales? 

Total Delay / Average Sales Cycle = 15 Days / 180 Days = 8.33% of Sales Cycle Delayed‍

Step 6: What revenue is now at risk?

% of Sales Cycle Delayed X Possible LTV Delayed = 8.33% X $450,000 = $37,500

Correcting a speed-to-market problem alone, can be a big boost to your bottom line. As our own first party research has shown, it takes 44 days on average for B2B Enterprises and Agencies to get a lead generation campaign into market. Forty. Four. Days. The scenario above isn’t just an example; it’s very real. 

It’s likely that, if your getting bogged down in the GTM process, too, one of these areas is to blame:

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Before you can correct the issue, do your own assessment. Here are 8 questions for your team that you can begin with:

1. How long are each of these steps taking your internal and/or agency team(s)? 
2. Why is it taking longer than a single day to develop an RFP and disseminate it to all potential vendors/partners? Can we streamline that somehow?
3. Why waste time negotiating with vendors/partners, when that behavior only trains them to provide you a higher price the first time?
4. If you agree with the above, then why give longer than 24 hours to respond to an RFP? Can you ask the vendors why they need longer? 
5. Why are we wasting time collecting and compiling RFPs in excel sheets? Is there a better way? (Feel free to send me a note if you want to know the answer!) 
6. Why (really why?!) are we still operating in a system that requires an IO with the same terms and conditions to be signed off on for EVERY campaign? Can’t that be streamline somehow?
7. If you’re assets aren’t ready before the start of the lead generation campaign, who should be held responsible for that lost revenue? 
8. What is the value of the “Kickoff Call” and why is your attendance required before your lead generation partner will start the campaign?

Exploring the answers to these simple questions, will help you find broken or even unnecessary processes. Solving just a few can easily boost your company’s revenue performance. Time is money!

Happy Quota Hitting!

Karl Van Buren

Co-Founder & CEO, Audyence