Lead Generation

Take the lead

Lead generation is a sport in which you lead with offense. You cannot wait for leads to fall into the lap of your sales team, because the vast majority of the customer journey happens as a prospect conducts online research prior to speaking with a sales representative.

Only 19% of buyers want to connect with a salesperson during the awareness stage of their buying process.

Additionally, you cannot assume that your brand marketing has earned you a spot among the few companies that your prospects plan to research. This is especially important because the niche and customized offerings of many B2B businesses can mean that your buyers may have never heard of you or don’t understand what you offer.

Lead generation and nurturing is critical to most B2B businesses. The long sales cycle, larger-value transactions, complex selling processes, negotiated pricing, and multiple decision-makers require you to be much more strategic in your approach to lead generation and to develop valuable content that maintains engagement and moves the prospect through the buyer journey.

A lot has to happen after a prospect becomes a lead … but this is where things start.

Now Is The Time

There has never been a better time to be a B2B marketer responsible for lead generation. The range of available tools to target, nurture, convert, measure, and optimize your campaigns is greater than ever. This abundance opens up doors for a wide variety of strategic approaches and creative thinking to generate more leads for your business.

First, there is much more data at our disposal today. The vast amount of first-party data from your website, apps, and CRM can be combined with second- and third-party data to generate robust customer insights and highly targeted advertising campaigns. Many marketers are looking at signals such as intent and engagement data to find and reach anonymous prospects who are most likely to convert to a lead. Anonymous prospects who exhibit in-market behaviors can be tracked and retargeted with nurture campaigns that turn them into known lead prospects who can be converted into customers.

Second, the channels we use today are much more optimized for lead generation. Badge scanners at trade shows, virtual event platforms, social media ads optimized for lead generation, in-platform forms inside ads and emails … all these and a host of other tools that improve conversion. Tools that touch every part of your buyers’ journey. And because it’s all electronic, we can leverage modern marketing automation tools to continue the conversation with new leads in real time.

Third, the available data is much easier to leverage for lead generation and customer management. CRMs have been around for many years to help businesses maintain and store customer records. More recent is the adoption of marketing automation platforms that serve as the engines to leverage that data — automating and scaling various marketing tasks.

It all adds up to deeper knowledge about your prospects, leading to better targeting, easier conversion, and more personalized follow-up.

ARE YOU A LEAD?

You guessed it, this guide is a lead generation tool. If you find the information useful, we hope you consider reaching out to us to help with your next complex marketing challenge.

BECOME A LEAD TODAY!

Offense vs. Defense

Even the highest-performing businesses experience some level of customer attrition, so lead generation is necessary just to maintain current business levels. But before you start developing a program to generate net new leads, it is important to take a step back to assess the business situation: Do you need to play offense — generating new leads — or do you need to play defense — working harder to keep the customers you already have.

Maybe you already have a bank of leads from previous activities that haven’t been followed up on. In this instance, you might focus on nurturing existing leads. Or maybe you have a large number of contracts coming up for renewal and should focus on keeping and growing those customers. Or perhaps more competitors have entered the market and are slowly siphoning off your existing customer base. In these cases, you might want to focus on broader customer retention efforts.

If you are able to look beyond your immediate business situation, it’s important to think through your customer management strategy. The goal of customer management is to grow profitably by acquiring, retaining, and developing the right customers.

It’s Okay To End a Relationship

If a customer doesn’t value your company offering or provide a proper margin, consider letting them go. That’s right, fire them. Think to yourself, “What’s the real cost of keeping them?” Don’t make hasty or dramatic decisions of course, but thinking strategically about the value of your current customer relationships is vital. For low-value customers, increasing your pricing or reducing the service and support might just be the right approach.

DIFFERENT STAGES, DIFFERENT STRATEGIES

Acquire

This is where effective lead generation programs play their role. Use first- and third-party data to profile your ideal customers and look-alike modeling to find more of them to target with your communications. And then reel in your target audience with compelling content and offers.

Retain

Retention is driven by customer satisfaction and loyalty. It is about defending and keeping your existing customer base. Improving your retention by 5% can increase company revenue by 25-95%.

Make sure you have engagement strategies and proper feedback loops in place to optimize and enhance your offerings to keep your existing customer base. Net Promoter Score is a great way to keep a pulse on retention as it measures the willingness of customers to recommend a company’s products and services.

Develop

Developing existing customers is key because acquiring a new customer is anywhere from five to 25 times more expensive than retaining one. So consider developing the customers you have instead through cross-sell and upsell opportunities. Talk with your customers to identify unmet needs and, when possible leverage predictive modeling and segmentation tools to match the right cross-sell and upsell offerings with the right audience.

It is a careful balance to determine how much money and effort you should spend on each of these. The more you know about your customers, the easier it is to make informed offensive and defensive decisions.

Bad leads lead you astray.

Not all leads are created equal. You don’t want to waste time and resources on the wrong opportunities. Instead, you want to identify the right prospects that are likely to convert into valuable customers for your business.

You may consider a number of factors in order to determine who the right prospects are. You might identify which types of companies bring in the highest average revenues/profit, have the shortest sales cycle, or aren’t as easily served by competitors. It is important to take the time to generate insights into your best customer segments, so you can seek to acquire more just like them.

Defining an ideal customer profile can align your organization around which categories and accounts to target. With that profile, sales and marketing (as well as the rest of the organization) will have a good picture of who you need to target to win big. And sales will be less likely to let leads fall through the cracks since they have helped define and prioritize the audience.

Demand Gen or ABM? That is the question.

Both demand gen and account-based-marketing (ABM) complement the awareness and reputation-building efforts driven by your brand communications. Deciding which one is right for you depends on the characteristics of your organization, who you aim to serve, your budget, and your goals.

There are few key differences between the two approaches when considering the right mix for your business.

Demand Gen

More emphasis on inbound marketing and a traditional approach. Involves casting a larger net with your campaign and pulling in as many prospects as possible through valuable content and offers.
Typically targets the entire addressable market (i.e. industry, job title, etc.)
Measure of success is volume of marketing qualified leads generated
Content is tailored to a generalized target audience
Two-part approach with a handoff from marketing to sales

Account-Based Marketing

It is a business initiative and not just a marketing initiative.
Requires a shift from a lead-centric mentality to an account-centric mentality — focused on a specific list of named accounts and the buying decision-makers or committees within.
Measuring success is more comprehensive: looking at key performance measures such as contact expansion, account engagement/meetings, sourced pipeline, and improved deal velocity.
Content is personalized and thus requires content that speaks to specific needs.
Ongoing orchestration between marketing and sales

How much should a lead cost?

A number of inputs can help answer that ever-present question. Knowing your ultimate revenue goal and anticipated customer churn is a good starting point to determine how much new business you actually need to reach your growth goals. Once you have that number, you can look at your average sale and key conversion metrics at various stages of the funnel to figure out how many net new leads you’ll need to generate.

But calculating the number of leads is only half the battle. The other half is determining how much you need to spend to generate those leads. There are a few ways to think through how much you’ll need to spend. One way is to look at your historical acquisition costs. The other way is to use customer lifetime value to inform how much you should be willing to spend.

Historical Acquisition Costs

Hopefully, you have enough historical data to provide you with an average cost per lead. However, it isn’t always easy to calculate an accurate number because it can be difficult to isolate acquisition spending from total marketing spend and to precisely separate all organic leads from paid leads.

HOW MUCH SHOULD YOU SPEND ON A LEAD?

Want an even quicker calculation for customer lifetime value? Give this a try:

Average order size (in $)

# of repeat transactions (anually)

Average length of retention (in years)

Customer Lifetime Value (CLV)

Additionally, it can be more important to focus on lead quality. Concentrate on the leads that convert at a higher rate and will ultimately deliver increased profits to your company. Lead quality is important because dwelling on cost per lead can encourage quick wins that might not be sustainable (e.g., generating 100 trade show “leads” from a business card drawing for free swag). Paying closer attention to lead conversion metrics and to your average customer acquisition cost helps address this concern.

Customer Lifetime Value

The other lens to take into account is not what acquisition has historically cost you, but what you should be willing to spend to acquire a new customer. Customer lifetime value helps inform many business decisions, and one of those is how much a company should be willing to spend in order to acquire a new customer. Customer lifetime value gives you a budget ceiling: you want the value you receive from a customer to be greater than the cost to acquire that customer.

In B2B firms, the average cost per order is typically higher and the length of the relationship longer than in B2C, so customer lifetime value calculations can be quite eye-opening for B2B marketing and sales professionals. A simple formula to calculate this value is:

Annual profit contribution per customer

Average number of years they remain a customer

Initial cost of customer acquisition

For example, if a company generates $10,000 profit each year per customer with an average customer lifetime of five years and a customer acquisition cost of $8,000 for each customer, the customer lifetime value is $10,000 x 5 - $8,000 = $42,000.

That means the company should be willing to invest up to that amount to acquire a new customer, including the lead generation budget that makes up a portion of the customer acquisition cost.

There are more complex customer lifetime value formulas that take into account churn rate, time value of money, etc. The book Marketing Metrics has a great chapter on Customer Profitability if you’d like to read more.

It’s time to play offense.

There has never been a better time to go on the offensive and generate qualified leads for your company. The ability to leverage the vast amount of data being captured and the abundance of channels and tactics optimized for lead generation has never been greater.

Every day Two Rivers Marketing helps B2B marketing professionals like you define and execute their lead generation programs — from content to conversion to retention. Two Rivers Marketing also brings additional martech and analytics experts to the table to get the most out of our clients’ valuable data. We’d love to learn more about your current lead generation efforts to see how we might help.

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