Lead generation, is reaching AND engaging people enough for them to willingly give you their information.
Lead generation is one of the most important metrics for organisations who have a longer sales cycle (the time it takes to sell their product or service). However only looking at lead generation can mean you might be taking your eye off the ball. You’ll need to also measure the conversion rate to valid leads, to help you understand the quality of the leads you are generating.
Key takeaways- Lead Generation
Top 3 tips for Lead Generation
See our checklist
1. Define the marketing lead generation funnel and set the targets you need by starting with revenue and working backwards to number of website visitors.
2. Create your lead generation marketing budget by using the targets set. The overall number of visitors multiplied by you cost per click, will give you your overall budget, but break this down further by stage of the funnel.
3. Aim to create one lead generation funnel for each of your products/service. Then combine them at the end to get your overall targets and budget. If you try to do it for all products, you might miss your targets is the average sales/deal value varies by product.
Lead Generation
The What, Why and How
What is it?
Lead generation is the creation of new conversations with prospects or individuals you did not previously have a relationship with.
Although lead generation is typically creating new conversations with people, the real goal is to convert those leads into meaningful conversations, sometimes called opportunities.
Hubspot, a marketing and CRM automation software business, have a good guide for getting started with lead generation, available here
Why create a funnel?
To understand the value of lead generation you will need to understand the steps your leads go through before becoming a customer.
This is called creating a lead funnel. Why is this important?
By creating a lead funnel you will be able understand how many leads you need to engage with before you get to a sale. This overall process will help you with your marketing budgeting.
It will also allow you to understand the effectiveness of your sales process and if there are areas which are underperforming.
How to create my lead funnel
To create your funnels you will need to split the task into two sections:
To be able to build your lead target funnel firstly you will need to understand the target revenue you have been set and the average value of each deal. This will give you the number of deals you need to close over a specific time period. Once you have the number of deals, you will be able to work backwards to identify how many visitors you will need on your website to deliver that amount of revenue. To learn how to create your own lead target funnel click here.
To create your lead budget funnel you will need to start at the other end of the funnel. Look at the total number of visitors you need and multiply this by the average cost per click.(CPC). This will provide you with you overall required budget you need to deliver the volume of visitors. To learn how to create your own lead budget funnel click here.
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Learn how to set your own lead targets in 4 simple steps.
See our quick 3 minute video guide to creating your lead generation targets.
Preparing to set your lead generation targets
In the image we have outlined the 4 steps you need to go through to creating your lead generation targets. Each of the 4 steps need to be completed in order, starting with the target revenue the organisation wants to generate.
1
Define your revenue target. Do this for a single product as it will make it more robust for the number of leads you will need to get.
2
Take the average deal value for one of your products, rather than all of them. That way you will have a more accurate number of deals to achieve.
3
Take the number of deals and work back to the number of sales opportunities needed based on deal win rate.
4
From sales opportunities work back to required number of qualified leads (from opportunity conversion rate), leads (from qualified lead rate) and overall number of visitors (from lead conversion rate) .
EXAMPLE: Understanding your lead generation targets
In the graphic we have mapped out an example end to end lead generation funnel, from initial website visit through to sale. This outlines the target numbers a business would need to achieve to hit a target revenue of £2.5M with an average deal value of £50,000.
1
50 deals are required to deliver the revenue target. In this example the target is £2.5M and the average deal value is £50,000.
2
100 sales opportunities are required to deliver 50 deals based on the 50% deal conversion rate.
3
250 qualified leads are required based on a 40% conversion rate to sales opportunity.
4
Number of leads needed to ensure there is the right number of qualified leads, based on a 20% qualified lead conversion rate.
5
The number of visitors needed to generate the required number of leads, based on the lead conversion rate of 5%.
On the go?
Listen to our 4 step audio guide on how to define your lead generation targets
Learn more about the Lead Generation funnel
The 4 stages of lead generation to sale
Lead creation
What is it?
The creation of leads from visitors to the website. A lead is created when a visitor provides their details.
What do we want our leads to do next?
To provide their details and match with the ideal organisation or job role. Or continue to express interest by engaging further.
Lead qualification
What is it?
A process to evaluate each new lead which has been created to see if they are genuine, and worth engaging further.
What do we want our leads to do next?
To have a clear business problem, which can be met by the business. Furthermore the qualified lead has a budget available and is ready to explore how the business can help support them.
Sales Opportunity
What is it?
The qualified lead has been engaged by the sales team, there is a valid business problem and budget available.
What do we want our leads to do next?
Continue to engage with the sales team to a point where they buy the product or service from the business.
Won deal
What is it?
A sale has been won and the opportunity has been converted into a deal.
Need to engage your leads and offer them something different?
See our lead qualification tool
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Test drive our lead qualification software.
The demo is for Budgeting and Marketing but it could be created for any topic. Learn more about it here.
Learn what your lead marketing budget needs to be in 5 easy steps.
See our 3 minute video walkthrough to creating your lead generation budget.
Getting ready to creating your lead generation marketing budget
In the picture we have defined the 5 steps you need to have considered to ensure you can create your marketing budget for lead generation. Each of the 5 steps need to be completed in sequence, starting with the number of visitors required, which will help you define your overall marketing budget.
1
This will provide you with the overall marketing budget you will need to put in place to deliver the target number of sales deals.
2
Here you will be able to calculate the cost per lead and how much you should be paying (in marketing spend) to acquire new leads.
3
This is the cost per qualified lead and should be set as a target if paying to acquire warm/validated leads.
4
This is the cost for each opportunity. Some opportunities will be bigger than others, but can be used as a gauge to understand how much you can pay per opportunity.
5
The total cost per won deal. This needs to be less than the total deal value less sales comission and other costs.
EXAMPLE: Understanding your lead generation budget
In the image we have outlined out an example budget funnel. From the number of website visitors through to completed sales. This outlines the target costs through the funnel to ensure the business is profitable and not over spending on acquired leads.
1
The cost per click, paid for marketing media to get a visitor to the website. In this example it is £5. The total budget is therefore £5 x 25,000 visitors = £125,000.
2
This is the cost to acquire each lead, which is £100. This is calculated as £125,000 budget / 1250 leads.
3
This is the cost for each qualified lead, which is £500. This is calculated as £125,000 budget / 250 qualified leads.
4
This is the cost for each sales opportunity, which is £1,250. This is calculated as £125,000 budget / 100 sales opportunities.
5
This is the cost of each closed deal, excluding commission, which is £2,500. This is calculated as £125,000 budget / 50 deals.
On the go?
Listen to our 5 step audio how-to on defining your lead generation budget
Want to learn how to make your lead generation a success?
4 tactics to help your boost your leads into sales
Lead generation strategies
Coming soon
Why read it?
Find out about the different ways organisations use to create leads. Understand about the types of campaigns and assets they create to engage with their prospective audience.
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Lead generation marketing
Why read it?
Discover the different type of assets marketers create and the media they use to reach their prospective audiences. Learn how to measure you lead generation marketing campaigns and get to that magic cost per lead.
Read more
Sales lead generation
Coming soon
Why read it?
Read about the steps and best practice sales led organisations put in place to ensure they get the best quality leads. Learn about lead scoring, why it is important and how marketers use it to validate lead quality before handing over to the sales teams.
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Lead generation services
Coming soon
Why read it?
Learn about the different lead generation services there. Discover the different tools people use to generate leads and to optimise their sales funnel.
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People also ask . . .
What is a lead generation process?
A lead generation process is the way in which your organisation generates leads, before handing them over to the sales team.
The most important part of your lead generation process is how you validate your leads. Generating leads is great, however if 95% of your leads are irrelevant then you will need to re-evaluate how you qualify your leads.
Where should I focus to generate more sales?
Your first task is to map out your lead generation funnel. Once you have this you will be able to understand the conversion rates between each of the stages of your funnel.
As a general rule of thumb the lower down the funnel you get, the higher the conversion rate.
If you find the “cost per” in your funnel is too high (i.e. higher than the sale after commission) you might find that part of the funnel is not working and needs to be improved.
We find the lead qualification part of the process is the one where a lot of the effort pays off. Ensuring the right leads are passed onto the sales team is critical.
How do you generate b2b leads?
Coming soon
How do you get high quality leads?
You need to understand the following 3 things:
- Are you attracting the right organisation? Is this the audience you typically win or your product or service helps?
- Are you engaging with the person? Is the person you are talking to the right person? Are they the budget holder or an influencer in the process.
- Can you solve their problems? Do the issues the lead face meet the problems you are offering to solve. Are they at the right level of maturity which your organisation typically works with?
What should my ideal cost per lead (CPL) be?
Your Cost per lead will vary based on the product you are selling.
If you create your lead generation budgeting funnel you will be able to see the cost of your leads all the way down to the cost of a sale.
If the cost of the sale is too high then you either have an issue converting the leads OR you are paying too much for your leads.
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Recommended Reading
Below is some recommended lead generation content, we have picked out. This content is mixture of tools to help and articles which help understand more about lead generation in digital.
Define: Conversion rate – Read about a critical metric for measuring the number of people who take action on your website. Learn how to diagnose conversion rate and understand how conversion rate impacts your cost per acquisition.
Define: Cost per Acquisition – Read about how you can measure your marketing effectiveness in one simple metric. Learn how to calculate your own Cost per acquisition and common things which cause a high cost per acquisition. Even use our tool to benchmark yourself against your peers.
Discover: Experience our lead generation assessment tool – See our lead generation tool in action. We have built an example for the topic “Marketing budgeting”. The demo will allow you to see your maturity level, compare yourself and get personalised plan to improve. This tool can be deployed for any topic.