All businesses, from large corporations to small sole proprietorships, have one thing in common: They all need customers that buy what they sell. And one of the best ways for a business to get new customers is to generate leads. You could say that leads, people who have expressed an interest in what the company has to offer, and lead generation are the lifeblood of any business. Think about it, why do businesses advertise? Why do they offer coupons? Why do they have a sign or a website? They do all of these things in order to attract potential customers. In fact, most of the functions of a business are related, either directly or indirectly, to the primary function of getting and keeping customers, and that all starts with lead generation.
Different businesses need different types of customers. For instance, some businesses are looking for other businesses to purchase their products or services. These are known as B2B (Business-To-Business) companies and they are looking for business leads. And other types of businesses sell only to consumers and are known as B2C (Business-To-Consumer) companies, which are looking for residential leads There is also a third type of business that can sell their products or services to both businesses and consumers, for instance a bank, an insurance agency or a law firm. Each of these different business types needs to generate leads from different sources.
OK, so how do businesses generate leads? There are a variety of ways that they can do this. Some lead generation methods are online, some are offline. Some are general and passive, while others are targeted and active. For instance, if a business puts an ad on a large billboard, it will be seen by thousands of people every day but only a small percentage will be potential customers and an even smaller (much smaller) percentage of those people will call the company to inquire about their product or service. This is an example of a general, passive, offline method of lead generation. It can also be very costly. Sometimes, marketing and advertising people justify the cost of this type of advertising by claiming that it is helping to build the company “brand” so that when a potential customer has a need, they might remember seeing the billboard and may call that company. This is also very hard to measure because a person who eventually calls a company may not even remember where he saw the company advertised, or may have seen it advertised in several places (newspaper, TV, billboard, etc).
An example of a very active, targeted approach to lead generation is what is known as “cold calling” or “canvassing”, which is when the business identifies who their potential customers are and then proactively goes out to talk to them directly. For instance, a house painting company could send a sales person to all of the houses in a nice neighborhood that have peeling paint and ask the homeowner if they would like to get a quote on having their house painted. The only cost to the business is the time of the salesperson and gas for the car. In this case, the business identified who is its ideal customer by the following criteria:
- They have to be a homeowner (that’s why they knock on doors of single-family homes)
- They have to have money to spend (that’s why they only go to nice neighborhoods)
- They must have a need (that’s why the salesperson only goes to houses with peeling paint)
Let’s turn this completely around and assume that the business owner sends out a rookie salesperson who doesn’t know the elements of an ideal customer. In this scenario, the rookie salesperson could be going to apartment buildings, ringing the doorbells of all the tenants. He would end up with a lot of people that don’t care if the building gets painted, have no authority to have the work done, and do not have the discretionary income to pay for the work even if they wanted it done.
This is a good example of what happens when a business decides to market directly to a segment of the population by purchasing a list of people or businesses from a marketing list company, like SalesGenie, Coles or ReferenceUSA. The business will give the list broker a list of all of the criteria that they think will make for an ideal customer. This could include things like, in the case of a B2C company, age, marital status, gender, zip code, homeowner status, income, etc. Then the list broker will filter its list of contacts and only give the business a list that meets all of these requirements. Now the business knows that the people it is approaching are, for the most part, potential customers. A great example of this would be a real estate broker that is selling low-priced condos that are ideal for first-time home buyers. The real estate broker will want to target young married couples that are currently renting in an area close to the condos. The list could also include only dual income earners to ensure that they have enough income to make the payments on the condo. This list would generate high quality residential leads for the real estate broker.
How would this work for a B2B company? Let’s say that a company is selling computer networking services to small businesses that aren’t large enough to have their own IT department. This networking business could ask the mailing list broker to filter for companies of more than 5 but less than 25 employees, with annual volume of $1.0 – $5.0 million and industries that typically have a staff of employees that uses computers. Soliciting a 250-person firm with revenues of $25.0 million wouldn’t work because they already have their own IT department. And soliciting the local convenience store would be just as fruitless because there are not enough computer users in the company to warrant networking services. This is why it is so important for the business to identify the correct criteria so that the list broker can provide accurate data to the business, resulting in the best possible business leads.
Some mailing list companies will offer an assurance that their their data is 90% accurate, which might sound pretty good, but it means that the business will end up paying for a certain number of records that are inaccurate in one or several ways, and it is not uncommon for for some of the data to be completely wrong (companies out of business, consumers no longer living, etc.). However, there are some list companies (not many) that offer a 100% connect rate on their lists, so that if some of the data is not accurate or out of date, the list company will replace every one of the inaccurate records. Forward-thinking list companies like this help to alleviate the fears that many business owners may have about paying for bad data.
How are these marketing lists used? These lists provide the backbone of a direct selling campaign that might include mailers that are followed up on with cold calling or telemarketing. Even in this high-tech age of the internet where leads are supposed to magically jump out of your computer, direct selling is still one of the most effective ways to generate leads and should always be included in a company’s marketing mix along with all of the other offline forms of lead generation, such as radio ads, TV commercials, coupons and print advertising. In addition to generating potential customers quickly, a direct selling campaign, using a targeted marketing list, can provide a list of “warm” leads, people who may have an interest some day but who aren’t ready to buy right now. This is where offline and online marketing work well together. After securing the potential customer’s information (including email address) and their permission, the business can put them on a “drip” campaign (also known as nurture marketing) which might include e-newsletters and special offers designed to keep the leads warm until they are ready to buy. One very important thing to keep in mind in a drip campaign is to make sure that the information that is being sent is something that the prospect will want to read, which might just be helpful tips or some other useful information, and should not always be a sales pitch.
Let’s talk about the difference between business leads and residential leads. Residential leads are usually individuals or a married couples that have expressed a need for the product or service that the company offers. They are much easier to identify and to contact, and the sales cycle is usually very short, typically days or weeks at the most. Business leads, however, are a very different story. Within the company there are usually several people involved in the buying decision, each with their own agenda, which means that the sales cycle is usually much longer with a lot of potential hazards along the way. It is for this reason that a good business marketing list will include names of executives from several departments who will be involved in making the buying decisions for the company. For instance, if a company is selling sales training, it will naturally want to target Sales Managers. But there are other people in the company that will also be affected, like the head of manufacturing who has to figure out how to fill all of the new orders that will be coming in, and the customer service supervisor who has to train more people to handle the new business, and finally the finance manager who has to find the money to pay for the training in the first place.
Lead generation is a numbers game. The more contacts a business makes, the higher the chances that some of the leads will turn into actual paying customers. But as shown in this article, if the quality of the contacts is low, even if the business is cold calling a million contacts a day, the chances that those contacts will become leads and then eventually customers is also very low.