Lead Generation: What You Need to Know to Have Success
Lead Generation – or “lead gen” – is a term that gets thrown around a lot in the world of digital marketing. People consistently use it as a synonym for “business development” or “customer acquisition.” Lead gen is the essential practice of driving potential new business prospects to the top of your buyer funnel, who are then nurtured and moved along the lead path to eventual purchase by a sales team.
Related: What is Lead Generation?
The reason lead generation is specified in this nature is because of that last crucial piece; the marketing strategy is largely responsible for producing a cost-efficient new prospect acquisition that is of high quality so that the sales team on the client side is set up for success, and to ensure that they are not wasting time on leads that have little to no likelihood of closing. In the past, agencies and digital marketers used to be able to get away with driving a high volume of poor quality leads for what appeared to be a low CPL (cost per lead). Then, when results would not come to fruition, they would turn around and blame the sales team. However, that simply will not fly in the modern age of digital.
Today, there are measurement tools, best practices, and KPI’s that need to be considered in the lead generation process from the marketing side to ensure that campaigns are setting the sales team up for success, and inherently driving additional value to the client’s bottom line.
This article will not talk so much about the basics that you need to know, but rather explain some of the factors that are most often overlooked or disregarded in the lead generation process that, if executed upon correctly, will drive your strategy to new heights.
1) Close Rate
In the past, there was what seemed to be an existential battle between Sales and Marketing. In the traditional sense, they played much more singular roles that were more separate from one another. But today, that has all changed. The buyer funnel that online marketers utilize to attract those leads essentially mimics the traditional sales process by first “prospecting” these leads and pre-qualifying them, so that a qualified sales team member does not need to spend their time doing that. Since that is the case, understanding the “close rate” of your sales team is of the greatest importance.
Why? Glad you asked.
Understanding your sales team’s close rate helps you as a marketer or business owner back into the right number of qualified leads that need to be driven to your sales team (easy math) to get an ROI on your strategy. If you as a business have a sales goal for the quarter, most of the time you have a lead total that is associated with that goal. Why have a lead total? Within a reasonable amount of variability, you are confident that your team has a certain propensity to transition a good amount of those leads into closed customers. That propensity to drive bottom line revenue from leads that come in the “door” is your close rate. Knowing your close rate at a granular level helps your marketing team understand what your volume of qualified leads is.
2) Proper Navigation and Data Analysis in Your CRM
The next important piece is navigating your sales CRM (Customer Relationship Management). In today’s day and age, especially if you are a business owner, let alone a marketer, this should be your proverbial “data Bible.” This is the case as all of the real, tangible feedback on how your campaigns are going are housed inside here in the form of Pipeline Opportunities, Closed Won Leads, Closed Lost Leads, and Closed Won Revenue. This tells your marketing team whether the leads they’re generating are the right leads.
The “right” leads, if you’re a business owner, are the only leads you care about, and are the only ones a good, consultative agency or marketing team should care about too. Who gives a rip if the lead volume is up if none of them are turning into bottom-line revenue for your business. As a result, you will ultimately suffer an ROI loss on your campaigns, and in some cases, have to answer to some very skeptical board members or executives come year-end.
Navigating your CRM, especially as a marketer, is important to this cause. Not only does it provide feedback on what not to do, but it gives you feedback on what is working. This allows you to bridge your data within UI’s such as Google Ads, Facebook, DSP platforms, etc. and optimize your campaigns not just off of what the engines are telling you is successful, but off of what is driving bottom-line revenue for the business.
To live and die by these numbers in an effective way requires proper empowerment and enablement to do so from the business side as well.
3) Average Customer LTV
Understanding Average Customer LTV (Lifetime Value) in addition to your Close Rate help to inform some of your granular KPI’s. Here’s what I mean — let’s say that you are a company that works off of a subscription model. Further, once someone signs up with you, the data shows that they remain a paying customer for 3 years.
On top of that, you work on a monthly payment model (commonly referred to as MRR or Monthly Recurring Revenue) of $100 per month. Easy math shows us that 36 x $100 = $3600, so you can assume that on average, a closed customer is worth about $3,600 over the course of their lifetime.
If a closed customer is worth about $3600 in their lifetime, and the close rate for your business sits at 50%, you can back into the profitable CPL number that you need to hit and optimize towards in your campaigns. By knowing how often a lead is closed, it helps when backing into the right volume total. Even further, by knowing how much a lead is worth, it helps you understand how much you need to pay for each of those leads to make money on them.
All three of these facets are crucially important for a successful lead generation campaign. Whether you’re a business owner or marketer, it is important for you to be paying attention to each and every one of these and incorporating the findings into your campaigns.
Knowing these factors, optimizing off of them, and having a proficiency at consistently tweaking based on the real-time data you see in your CRM, are what separates a highly successful campaign from a moderately successful one.
Aim for the former, and not the latter.