The New Benchmark To Sales Success: Net Sales Per Lead Issued

Many residential remodeling and home improvement contractors evaluate their lead generation partner's performance based on set rate and ROI, and these are important metrics to review.  But perhaps an even more vital metric to be tracking is Net Sales per Lead Issued, or NSLI.

The leading contracting firms in the industry monitor this number closely, and here's why you should, too.

This metric can give you a great deal of useful information for improving not only your lead-generation activities but also insights into your lead-setting and sales processes.

How to Calculate Net Sales per Lead Issued (NSLI)

The formula for figuring out NSLI is fairly easy.

Here's an example: In January, you received 20 leads from your lead generation partner and closed $100,000 in sales on those leads. The net sales per lead issued in this example would be $5,000.

How Tracking NSLI Can Help Your Business?

#1 It lets you compare the actual cost of your leads with the actual revenue those leads generated.

You are very busy running your home improvement business, you need a simple and accurate measure of the return on your investment in lead generation partners.

Let's look at two examples:

If you pay $10 per lead and purchase 500 leads, your total investment is $5,000. From those leads, you close 20 deals worth $2,500 each, generating $50,000 in sales. That works out to an NSLI of $100 per lead.

500 leads. $100 each in value. Looks affordable, but requires volume and effort.

However, let's say in our second example, you pay $100 per lead and receive 50 leads. The same $5,000 investment produces 20 deals worth $2,500 each, again totaling $50,000 in sales. This time, your NSLI is $1,000 per lead.

50 leads. $1,000 each in value. Higher cost upfront, but fewer leads processed and more efficient.

Note: These numbers are for demonstration purposes. Your actual numbers might differ significantly.*

Plus, in example 1 your sales team did significantly more work - calling old or recycled leads, or uninterested consumers who have likely had hundreds of phone calls, texts and emails already.

They had to connect with 500 consumers instead of just the 50 pre-qualified leads in example 2. When you consider the cost of your sales efforts, your loss in example 1 would be even greater.  

#2 NSLI can uncover weaknesses in your sales process

Focusing on total revenue rather than fixed or close rates, NSLI offers a quick way to pinpoint process bottlenecks post-lead acquisition.

Relying only on appointment-to-sale ratios may steer sales teams towards seemingly easier-to-close leads but who may end up being price-sensitive or indecisive prospects. This could lead to potentially neglecting more challenging but valuable opportunities.

Once NSLI's importance is understood by the team, sales reps will tend to focus more closely on leads that seem challenging but also may provide a greater reward and begin to treat each lead as a prized asset.

When this happens, sales effort increases, and reps try harder to reschedule missed appointments and to maximize every interaction. By incentivizing lead focus, NSLI helps shift sales behavior.

NSLI also serves as a tool for capturing essential insights into individual reps' performance, for example, identifying those consistently achieving higher sales prices or excelling in upselling. 

What NSLI benchmarks are best to use?

Figuring out the benchmarks for NSLI is not one-size-fits-all - it’s all about your specific business, and you’ll have to take some time to figure out what makes sense.

Factors such as the nature of your product, its pricing, where your leads come from, and their quality will influence the most sensible benchmarks for your contracting business.

The first crucial step is to start gathering data to help you build an overall picture of your lead-to-sale system. As you get more precise information over time, the puzzle pieces will start to come into focus. Your tailored benchmarks will become clear, and you’ll know where to direct your salespeople’s focus and efforts.

Lead generation partners like HomeBuddy can help you optimize your NSLI for your business.  They work with hundreds of contractors in the Home Services industry, and with their in-depth reporting tools, they can help you understand your NSLI metrics.