Understanding Lead Generation
Lead generation is different from other forms of marketing such as advertising campaigns because it requires a specific action or direct response from the targeted prospects such as a click of an ad, phone call or store visit. It is also about quality rather than quantity.
A steady and efficient lead generation process minimizes the possibility of running out of potential customers and mitigates the risk of periodic dips in sales. A lead generation process that is consistent and effective provides a steady stream of qualified leads, and avoids wasting money on meaningless and ineffective marketing activities that not only cost a lot of money but generate little or no results.
With an effective lead generation process in place, you’ll have the ability to influence a great number of potential customers, assess their quality and generate more tangible results.
If you have an efficient lead generation process in place, you’ll know:
- how many potential customers you’re likely to generate from a specific marketing activity such as a telemarketing campaign or a PPC campaign on social media or search engine;
- your most cost-effective marketing activities;
- which marketing activities generate the best results;
- how much a prospective customer costs; and
- the amount of time required to find potential customers of varying readiness-to-buy levels
Lead Generation – What Is It?
Lead generation at its most basic, is a marketing tactic that has the ultimate objective of identifying prospective customers, acquiring their contact details and qualifying their likelihood of becoming actual customers in advance of making a sales call.
Prospective customers found through this activity are generally known as leads, and must that have actively demonstrated some level of interest in the goods and services offered.
What is a Lead and why are they important?
A lead is in essence, a prospective customer who has shown an interest in the type of products or services you sell, and has provided their contact information. In other words, they are people with a very real likelihood of becoming a customer, and go far beyond people on a mailing or contact list of names, email addresses and contact numbers. Those are NOT leads, even though they are sold as such.
People who have responded to a specific marketing activity or have inquired about a particular product or services are not necessarily leads because an inquiry does not mean that the person or company is ready, willing or able to buy. For example, consider a situation where you sell training courses that cost far more than the average but you have not included the cost of your training courses on your PPC ad or website.
The prospect has not been qualified because you have no idea what his or her budget might be. If aeh or she is not looking at anything in your price range, then even though they may have expressed a real interest in your products, they cannot be a lead because that person is not likely to ever become a customer. Of course you will have to communicate with individuals who provide their contact details because some of those people could turn out to be strong leads. However, this confusion can be easily avoided by simply adding the cost of your training course to your ad or website.
Furthermore, if the inquiry is from someone that is not the decision maker or does not have the authority to purchase, that person is not a lead, even though they might be influential in the buying process.
In short, a person or business is only a lead when they have expressed a real interest in your business, and in the products or services that you sell knowing exactly how much it will cost, have the authority to make a decision about the buying process, and are ready, willing and able to buy your products or services. It is important to note however, that they do not necessarily have to be in the latter stages of the buying cycle in order for them to be considered leads, as long as they are qualified.
It is important to note however, that different companies will have varying interpretations of what they consider to be a lead. For example, for some companies, a person who likes their Facebook page or downloads their eBook and subscribes to the newsletter is considered a lead. Yet other companies may be much more discerning in their definition of a lead, and may only consider prospects to be leads if they have been qualified, have a budget and have expressed a willingness to buy.
Characteristics of Leads:
According to the Benchmark Report on Lead Generation 2015-2016, the following actions identify a lead:
- An incoming call regarding products or services: 62%
- An agreement to a business meeting: 60%
- A request for a call from a sales manager: 45%
- Requests via e-mail, fax or feedback forms: 38%
- Downloads of white papers, case studies or other company marketing pieces: 32%
- Response to a direct mail: 32%
- Interest identified through telemarketing: 29%
- Visit to event, booth or webinar: 17%
- Click on advertising in social media: 10%
- Website visitor: 10%
- A social network activity (like, share): 8%
- Subscription to a newsletter: 8%
Leads are critically important to any business, and they have unlimited potential for you as far as your business is concerned because of their potential lifetime value. A lead that turns into a buyer is highly engaged with your brand, and offers the potential to become a repeat customer in future.
What’s the difference between a prospect and a lead?
A prospect is sometimes a good lead. Other times a lead can be a prospect who has expressed interest in your product or service, knowing exactly what they cost. Sometimes a prospect and a lead are exactly the same thing. This confusion breeds a complete lack of clarity. The answer is simple. A lead is someone who has contacted you, while a prospect is someone you have corresponded with.
Although not always this simple, using, and keeping to, this definition allows you, as a business owner, to use these sometimes confusing terms more clearly and with some consistency.
In the typical sales funnel, leads provide contact information in return for content. This is the initial contact. These leads become prospects when a lead expands the scope of this initial contact by expressing further interest in your product or service. This can occur, for example, when they take advantage of an offer for additional content farther down your sales funnel. In summary, leads become prospects and prospects become opportunities for conversion into sale.
The Importance of Lead Generation
No matter what the method, lead generation is the fuel that fires the engine of any business. Without interest and awareness on the part of the general public of what a business is, does, and sells, there can be no sales. Without sales, there is no business. It’s that simple. Some business owners fail to fully understand the importance of this extremely simple concept.
One major mistake that many marketers make is that they view lead volume as the primary objective. In fact, quality is much more important than quantity. More is not necessarily better, and delivering a high volume of low quality leads can be just as bad as delivering very few leads.