Lead generation is an outcome of marketing activities. Different types of marketing (such as publishing content, creating social campaigns, or sharing insights to engage your audience) can be directed toward the specific outcome of bringing more leads into the pipeline to be pursued as potential sales.
Measuring lead generation quantitatively is appealing for many reasons. The number of leads generated is easy to communicate with various stakeholders, and it is easy to measure progress over time. The number of leads generated shouldn’t be disregarded entirely, but it is only part of the picture and not the most important part, either.
Focusing on the quantity of leads generated can provide a false sense of progress, as increasing the number of leads in the pipeline does not necessarily mean that conversion or revenue will improve proportionally. A commitment to quality leads requires a greater investment of time and resources and could result in fewer leads generated, but high-quality leads will have a disproportionate impact on long-term success.
Marketers have widely adopted traditional lead generation metrics because leads are easily quantifiable and easy to set goals against. How many people did X: submit a form, schedule a demo, attend a webinar - whatever the definition of a lead entails, the answer is a number.
Once a baseline is established, ongoing success can be measured by fluctuations in the numbers: how many more individuals did X this month (or quarter, or year?)
The number of leads generated is a commonly accepted metric for success because it is easy to measure and understand. It also addresses the marketing-to-sales handoff: marketing provides X leads to sales. Using this logic, one would think that increasing the number of leads provided should cause a proportionate increase in overall sales.
However, many businesses have found that this is not true. An increase in leads generated does not guarantee a proportional increase in revenue. Why is that?
The quantity of leads should not be entirely disregarded. It can still provide basic insight as to the effectiveness of marketing efforts, but it is only a part of the equation — not the answer. The number of leads generated alone cannot drive a sustainable, long-term marketing strategy, particularly in B2B businesses with a long sales cycle and large group buying decisions.
Instead of focusing only on lead quantity, marketing must evolve a better understanding of quality.
Looking beyond the number of leads means focusing on the quality of leads. But how do you define a high-quality lead? To start, think of leads in terms of strategic outcomes for the business. A high-quality lead will become a customer (conversion), increase revenue (contribution), and remain a customer for the long run (retention.)
If you are focused on lead quantity alone, observation ends when the leads are handed off to sales. To measure the quality of leads, it is critical to follow the lead through the entire customer lifecycle.
Analyzing the quality of leads takes more effort, but it provides deeper insights into customer behavior, which can then be used to refine the ideal customer profile. Tracking conversion, contribution, and retention provides the context for actionable insights that drive sustainable growth.
Contextual lead generation can be a challenge. To track lead quality, businesses must change the definition of success and put the right tools in place to support new measures of success. These include:
Judging leads by quantity rather than quality is one of the main factors in the sales-marketing disconnect. Marketing points to the number of leads generated, so a failure to convert leads is a failure of sales. Sales focuses on the quality of leads, so a failure to convert is a failure of marketing.
To take a new view of lead generation, sales and marketing must be aligned on measures of success in lead generation — understanding that a long-term relationship is the goal and that a long-term strategy is required.
Measuring lead generation success by looking at outcomes like conversion, contribution, and retention means that there must be transparency across all activities throughout the customer lifecycle. This includes transparent communication between marketing, sales, and customer service/account management. This is enabled by utilizing a single, comprehensive CRM so that information can be shared freely between individuals and departments.
Once the tools are in place to measure success, it is time to consider initial strategies. What activities can marketing undertake to improve the quality of leads generated, according to the new measures of success?
If the goal is to generate a higher number of leads, communication is the same as persuasion. The focus is on convincing individuals to take whatever step is required. However, changing goals to finding the right leads — ones that will become long-term, sustainable customer relationships — means changing the tone of communication.
Instead of being transactional and persuasive, communication should be focused on education, inspiration, and engagement.
The same approach to building long-term relationships with external customers can be used to build alignment, improve transparency, and communicate effectively with internal stakeholders.
Engage employees from other departments with clear messaging and ensure they know the company’s value proposition. Communicate with consistency, authenticity, and empathy across the company and drive marketing support throughout.
Lead generation is at the heart of digital marketing and business growth. By improving the quantity and quality of leads using a sustainable, iterative strategy, your business is poised for scalable growth.
To this end, we have conducted our own research into buyer behavior and the challenges marketers face to gain insight that can help businesses accelerate the sales cycle and provide better information across the entire buyer journey. Key insights include:
44% of businesses struggle with lead gen. Some have a fluctuating pipeline with peaks and troughs throughout the year. Others either sometimes or never have the ability to generate enough leads to meet sales goals.
While ‘one-to-one outreach’ had a slightly higher number of responses (41%) as the most effective lead gen strategy, ‘speaking to buyer challenges in messaging’ was a close second, at 38%. Ideally, at Ironpaper we recommend that a lead gen strategy includes both of these efforts.
43% of businesses that consider themselves successful at lead nurturing measure lead effectiveness through ROI. Creating a transparent buyer’s journey can help with attribution so that it is possible to tie marketing efforts to eventual revenues.