Lead generation is a set of tactics used to attract potential customers and move them into your sales funnel. It involves engaging prospects, capturing their interest, and nurturing them into customers. Small businesses use a range of strategies for generating leads from inbound marketing to prospecting—and even purchasing verified lead lists.
How Lead Generation Works
Lead generation works by creating a mechanism to generate interest in your product or service. This can be done through inbound lead generation where you create an ad, blog posts, videos, or other engaging content which prompts a prospect to contact you. It could also be done through outbound lead generation where you proactively conduct outreach and contact members of your audience.
Did you know? While initial outreach can be done by phone or through interaction on social media, 80% of buyers prefer to be first contacted by email, according to the RAIN Group Center for Sales Research. However, to help ensure your introduction messages get seen instead of getting sent to junk folders, check out our article on introduction sales emails.
Generating leads typically follows a simple process involving attracting potential customers, capturing their information, and moving them through a lead qualification or lead nurturing process. This is true whether you generate most of your leads through digital advertising, organic search, or in-person interactions.
Learn more about lead qualification, how it works, and how to capture the most qualified leads in this comprehensive article about lead qualification.
Strategies & Tactics for Lead Generation
Most sales management strategies for lead generation fall into two categories: inbound and outbound campaigns. The goal is the same, but the strategies look very different. Inbound lead generation involves using organic methods to attract leads, while outbound methods involve prospecting and paid advertising. Inbound strategies involve leads finding you, while outbound strategies involve going out and finding customers.
Let’s look at these two categories and examples of strategies for each:
Inbound Lead Generation
Inbound strategies for generating leads are primarily focused on making it likely that potential customers will find you when they search online or ask for a recommendation. For example, when a customer searches for a business like yours in your area, you want to be the first result they find. One of the reasons inbound lead generation is considered such a valuable strategy is that the leads have already established that they are interested and have a need.
The primary tactics for inbound lead generation include:
- Organic search: Over half of all internet traffic is driven by organic search, which means that if you want to generate leads online, it’s crucial to your strategy. This involves optimizing your website and content to help it rank highly and be easily found.
- Word of mouth: Organic word of mouth is when people talk about your products and services naturally without any strategic action from you and you get potential customers inquiring about your business because of the reputation you’ve built.
- Referrals: Referrals are usually a more passive form of lead generation since you can’t control when someone asks a friend for a recommendation. However, you can be intentional about motivating your existing customers to refer their friends. Learn more about how to create an effective referral program in this article.
- Contact forms: It’s easy to overlook, but one of your most valuable forms of generating inbound leads from visitors on your website is to have an easy-to-find contact form that gives the lead an opportunity to let you know they are interested.
- Paid search advertising: While advertising in general is usually considered more of an outbound strategy, search advertising straddles the divide because it targets customers who are looking for a product or service via search.
- Content marketing: While this ties into organic search, it also involves creating content such as blog posts, podcasts, webinars, and e-books that can also be shared via social media and other channels.
Download our comprehensive Sales Management e-book to learn how to create and lead a high-performing sales team that effectively generates and qualifies the best leads.
Outbound Lead Generation
Outbound strategies for generating leads are when you reach out to prospects to find leads. Advertising is a classic example of outbound lead generation because the potential lead isn’t necessarily interested in your product at the moment they see the ad, but your goal is to make them aware of your business and provide them with an incentive to connect with you. In that sense, you are reaching out to the lead, instead of having them come to you.
A few of the most common outbound lead generation tactics include:
- Cold calling: Cold calling involves making outbound calls to people you don’t know. However, many sales reps find the process intimidating. Our beginner’s guide to cold calling is a great resource with tips for making this tactic even more effective.
- Cold email: Similar to cold calling, cold emailing happens when outbound email campaigns are crafted and sent. Email lists can be purchased or you can have an agency send emails on your behalf from an email database they own with the same target audience.
- Buying leads: Buying leads is part of lead generation in the sense that it’s the starting point for generating leads. You buy lists that match the characteristics of your target audience Then, you generate leads by calling or emailing the people on the list, and those interested in your products or services become your leads.
- Trade shows: Paying for the opportunity to exhibit at an event where a large number of your potential customers are likely to be is another common form of outbound lead generation. In this case, the goal is to raise awareness and collect the information of as many leads as possible.
- Advertising: Advertising is one of the most common tactics used to generate leads. It’s a form of content that prompts your target audience to enter your sales funnel based on the content of your ad.
Lead Generation vs Prospecting
One of the most common forms of outbound lead generation is prospecting. This involves a salesperson gathering a list of potential customers, either within a given area or specific industry, and then reaching out to make an introduction in an attempt to spark interest. For example, real estate agents will often prospect in a given neighborhood, passing out their business cards or leaving a flyer, hoping to generate new listings in the future.
Companies will often also provide sales professionals with a list of potential leads, and the salesperson will then determine which leads appear to fit the target audience and reach out directly. As an example, prospecting might mean making a series of cold calls to a contact list. It could also mean walking down the main street of your town and introducing yourself to the businesses located there.
Lead Generation Examples
While lead generation looks different based on factors that range from the product or service you sell, the industry and market you serve, or your target customer, the most important aspect is that you choose a lead generation strategy that fits. That means devising a plan to attract the attention of the right audience and then capture their interest and information for future outreach.
Here are a few examples of ways you can generate leads:
The Free Offer
Creating a free offer can work both online or in person. However, it’s commonly associated with businesses that attract potential leads online. This can be associated with organic search, social marketing, or even advertising. The idea is to either offer a free trial of your product or service, or to offer some additional value through a digital asset. Both of these allow you to capture the information of an individual who may be interested in your products and services.
The Social Media Campaign
Social media has huge potential for generating leads. As you work to develop a following, you are essentially generating possible leads that can be nurtured and developed into customers. Social media also gives you the ability to target your lead generation efforts by focusing on individuals who have already expressed at least some interest in your business. Once you have done that, you can use tactics such as content marketing to convert those followers into leads.
The Email Newsletter
Often, if you have a site with helpful content about your product or service, you can generate leads by creating a subscription to that content via email. Visitors to your site can sign up for your email list, which provides you with information about individuals who may be interested in your product or service. In this case, you would create email marketing campaigns designed to further generate their interest and move them closer to making a purchase.
Lead Generation Best Practices
There are several best practices of lead generation to consider when putting together your own strategy. They include:
- Knowing your target audience
- Being able to identify where you can find them and how you can get their attention
- Using software with adequate data storage and organization tools
- Robust follow-up with potential prospects
Below are lead generation best practices to consider before creating your strategy:
Know Your Target Audience
Before you start putting a system in place for generating leads, one of the most important best practices is to know your target audience. This means creating and understanding customer personas that you can use to dial in your lead generation efforts. Taking the time to get this right allows you to attract the right type of leads, which have a greater likelihood of becoming customers.
Add Value to Your Potential Customer
One of the best ways to generate leads is to communicate to a potential customer that you understand their needs and are able to help meet them. Do this by providing value to them even before they are a customer. Provide helpful resources or educational content that helps them do their job better or makes their life easier. This creates interest and affection towards your company, which often results in new leads.
Create a Repeatable Process
Whichever method you choose for generating leads, one key is that you set up a repeatable process that you can use over and over. As you dial in your lead generation strategy, write down the steps, or implement workflows and software that will help automate the process and keep leads moving into your sales funnel.
Use Lead Generation Tools
When you’re generating leads, you’ll need adequate software, such as customer relationship management (CRM) software or a database, to house the leads you’ve captured and to manage your communication with them throughout your sales cycle. We’ve provided an overview of the types of software you should consider, but it’s definitely a best practice to put in place the tools you need to effectively and efficiently attract and capture leads.
Follow-up Quickly With Qualified Leads
We’ll discuss lead qualification more, but one of the most important principles of lead generation is that timeliness matters. If your lead has expressed interest and given you their information, it’s because they are at least considering a purchase. This means you should always follow up within a reasonable amount of time. If you don’t, there’s a good chance they’ll find a competitor to meet their needs.
Make It Easy to Contact You
Your contact information should be easy to locate no matter how a lead finds your business. If it’s through your website, that should include both an email address and phone number so that a potential lead can reach out. Having a contact form is another great way to capture information since it allows you to have leads provide additional information. Contact forms can also be connected directly to your CRM to streamline your lead generation process.
Lead Generation Metrics
In order to measure the effectiveness of your efforts, it’s important to establish lead generation metrics early on. One of the things your CRM or business management software can help you with is keeping track of where your best leads come from. You can look at the costs associated with those leads and the amount of business you’ve brought in from them. Your CRM software can help you identify key metrics and generate insightful reports.
Here are a few reports and metrics to keep in mind for measuring lead generation effectiveness:
- Email metrics report: If you’re using email campaigns, make sure you use an email metrics report that tracks click-through rates, measures links clicked, and open rates.
- Phone reports: For phone outreach, generate a phone report that has talk time to measure how long you’re engaging the prospects and the percentage of good phone numbers to get a feel for the quality of the data.
- Qualified-to-unqualified leads ratio: To see how qualified your leads are, calculate the percentage of leads that are qualified versus those that are not.
- Actionable-vs-non-actionable leads: Sometimes if you’re purchasing leads, you may get some with incorrect phone numbers and other contact details.
- Leads-to-sales ratio (conversion rate): Calculating your conversion rate or the percentage of leads that resulted in a sale or other action, like event attendance or downloading an e-book, gives you an idea of how likely your lead source is to take action or make a purchase.
- Leads-to-opportunities: This metric also lets you know the percentage of your leads that actually turn into opportunities. So if you get leads from trade shows and some are better at leading to opportunities than others, you may want to reconsider the trade shows you attend.
- Opportunities-to-deals won: Another important metric is the percentage of deals won to opportunities. This will tell you how serious your prospects are.
- Return on investment (ROI): You’ll definitely want to measure return on investment. It’s important to know how much money you’re generating compared to the amount of money you’re spending on leads
- Cost-per-click (CPC): If you’re generating leads from online ads, you’ll want to know what your cost per click is to see if the ad is worth what you’re spending.
- Cost-per-lead (CPL): This metric is important because you’ll want to keep track of the amount of money you’re spending per lead. Some leads can cost as little as a few pennies per lead, and others as much as a few hundred dollars per lead.
Industry-specific Lead Generation
Every industry has its own proven methods for generating leads. Some rely on inbound strategies, where they create content such as blog posts or videos to get prospects into their sales funnels. Others rely more heavily on cold outreach methods like cold calls or email outreach to generate leads. Most companies use a combination of approaches.
Example Lead Generation Strategies by Industry
Educational webinar series on specific sector topics that move prospects along the sales funnel
Ad for a consumer product
Outreach email to iPhone and Apple product users featuring an app to take better photos
Webinar featuring the difference you could make with a specific degree, such as a law degree
Live event discussing retirement strategies
Ad featuring a luxury condo as a second home
Video on the top 10 reasons to visit a travel destination
These are a few examples of lead generation strategies available to salespeople. However, the strategies listed can be combined with others and serve more than one industry or sector. You can check out our more comprehensive guide on lead generation strategies by industry for more information about this topic.
Lead Generation Tools & Providers
There is no shortage of lead generation software tools that help you to generate, capture, and store leads. There are also many providers available to help you get the most out of your leads. These tools range from CRMs with lead capture forms and calling features to email service providers with landing pages and mass email capabilities.
Below are a few of the tools and providers you should consider:
1. A CRM
Using a customer relationship management (CRM) tool will help you organize and qualify the leads you generate, and make it easy to keep track of your efforts to convert them to customers. Most CRMs include lead and customer management tools that allow you to create contact profiles, score leads based on their interactions with your sales team, and track deals that move through your sales pipeline.
For example, Salesforce CRM is a robust CRM with email capabilities and analytics. It also features a free lead form creator in the Essentials package that syncs with your CRM, making it easier to capture qualified leads right off your website or social media. Visit Salesforce today to get started.
2. A CMS
Using a content management system (CMS) can help you create a website that attracts leads through content marketing. Specifically, it allows you to create landing pages that you can use to capture leads and send them to your CRM or an email marketing tool. While it’s possible to use third-party services for this purpose, having your website built on a CMS makes it easy to regularly create and update content that helps you generate leads.
For example, Squarespace is a tool for creating everything from simple landing pages to fully featured ecommerce sites. It helps you generate leads by making it easy to build a beautiful website that is highly customizable to fit any business or industry. The cover page feature is perfect for creating a simple, one-page website that can be used as a landing page for attracting leads. Visit Squarespace to get started.
3. Verified Lead Services
Services that offer business leads range from buying segmented lists of email contacts to advanced tools that identify prospects based on social media profiles, saving both prospecting time and effort. Generally, these services allow you to search for leads by industry, title, location, or company, and provide you with the ability to download a list of contacts that are confirmed to be accurate. Learn more about where to find the best business leads in this article.
UpLead is a “real-time verified B2B database” that allows you to buy leads that it has verified and import them directly into your CRM. That means that it confirms the contact information is valid, which increases the chances that you’ll be able to make a connection. UpLead verifies these contacts upon export, so that you don’t end up with large lists of bounced emails or take a hit to your sender reputation due to bad email addresses. Visit UpLead to get started.
4. A Webchat Tool
There’s little more frustrating than filling out a contact form on a website and waiting forever to hear back from a company. However, there are services that allow you to bring the conversation right into text messaging, creating a better user experience for your potential customers.
For example, Podium offers a free service called Podium Starter. It allows you to simply add a piece of code to your website, and prospects can message you instantly, without having to know your personal cell phone number. Visit their website today to learn more about how Podium can help you connect with the most leads.
Frequently Asked Questions (FAQs)
Is lead generation a sales or marketing function?
Lead generation is both a sales and marketing function. In most companies, marketing is responsible for lead generation and lead maintenance. However, because there is a wide range of tools that make it easier for sales to generate leads, sales is a critical part of lead generation and should work in tandem with the marketing team.
How much should I expect to spend to acquire qualified leads?
Your expected acquisition costs depend on your industry. Some industries have a cost per lead of a few pennies while others can spend several hundred dollars per lead. Usually the more specialized the niche, the more it costs to acquire qualified leads.
Lead generation involves your strategies for creating interest in your company’s products and services. We’ve outlined best practices and tools for generating leads, methods to ensure you get the most out of your efforts, and metrics you should use to measure effectiveness. Use this guide to craft the most effective generation strategy for your small business and convert leads into loyal customers.