A definition of Lead Generation
The processes and steps that are taken to identify and nurture potential clients or customers for a business’s services or products.
The goal of lead generation is to create a sales pipeline.
Creating a sales pipeline ensures a continual flow of leads into the business that can be converted into paying customers.
A sales pipeline is essential to ensuring the viability and long term growth of any business.
Understanding what conversion means is very important.
What % of your leads convert into customers?
The starting point is to create a lead generation system for your business.
What is a lead generation system?
A lead generation programme is where you create a system or process that generates leads that are directed to your sales team to ‘close’ – that is to make a sale.
It is important that whatever ongoing investment is made into a lead generation programme, that its success is measured.
This need not be complicated.
For example, if you generate 20 leads per month and manage to close 5, you have a 25% win ratio. This is also known as conversion rate – how many of your leads will convert into sales.
If it costs £10.00 to generate each lead, then it costs £40.00 per sale.
This is because it takes 4 leads to generate one sale.
From this example, we can see the importance of lead generation to the business and can draw a couple of insights.
- If we increase the number of leads, then we will increase sales.
- If we increase the win ratio we increase sales.
How to improve lead generation
What we have shown so far is the importance of generating a high volume of leads.
A start-up business usually tries out different marketing campaigns to generate leads and usually goes for a ‘scatter gun’ approach whereby marketing spend goes into approaching as many businesses as possible. (e.g. a newspaper ad)
Whilst these approaches can generate leads, they tend to be of lower quality and less likely to convert into a sale.
A lead generation programme helps generate qualified leads. These are leads that are much more likely to buy from you.
Salespeople can disagree on what is a qualified lead
A salesperson prides themselves on their ability to close a deal and by their nature are competitive with other salespeople and want to post the best win ratio.
Many conversations and disagreements can occur in even the smallest teams about what constitutes a qualified lead.
It is understandable that if a salesman is not performing as well as they could, ‘ blame’ may be put on marketing for not generating high-quality leads.
It is important as part of a lead generation programme to identify what is a qualified lead for the business.
What does a lead generation system look like?
There are some simple steps to building a lead generation programme.
Here are some steps you should use:-
1. Define what is a ‘lead’ in your business
It will differ from company to company but a good way to begin is by considering which businesses that you would like to do business with.
These could be by market or product or specific business that you have identified. If the companies are not in contact with you – they could be considered prospects.
If they display buying behaviour for example requested a product demo or downloaded a brochure they could be considered as a lead. The potential to buy helps you identify the leads from just prospects or ‘browsers’.
2. Get the sales team onboard
If lead generation could be considered a function of marketing, the sales team must be fully on board – as it will ultimately be their goal to convert leads into sales.
I am generating leads – what do I do next?
Generating leads is just one part of your lead generation programme.
Having a process in place with steps of how to manage leads through your business is essential. Think of this as lead management.
What is Lead Management?
A Lead Management System gives you complete control and visibility of all leads in your business.
It should include what the steps are for each lead on its journey to its conclusion it is either ‘won’ (a sale) or ‘lost’ (no sale)
This is sometimes called a ‘sales pipeline’ or ‘sales funnel’
A small business could track leads management in a spreadsheet for example, but for much better management and tracking we recommend using a CRM.
A CRM will give a clear view of the stages of all leads in their journey through your business. Even if you are starting with one lead, as your business grows you will be glad you started with a CRM.
What does a sales pipeline look like?
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