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. 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 content that prompts your ideal customer to contact you. It could also be done through outbound lead generation where you proactively do outreach and contact members of your ideal audience by making phone calls, sending emails, or mass social media outreach.
Generating leads usually follows a simple process that involves attracting potential customers, capturing their information, and moving them through some kind of qualification or lead nurturing process. This is true whether you generate most of your leads through digital advertising, organic search, or in-person interactions. The key is to understand the action steps for each of those three elements.
That’s because, unless your business is highly transactional, your sales process depends on a consistent process for generating leads. This is often the responsibility of your marketing team, but also depends on a seamless process that connects whatever method you use to attract interest with the tools you have in place for capturing and nurturing that interest.
Strategies & Tactics for Lead Generation
Most 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 advertising. Said another way, 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.
- Content marketing: While this ties into organic search, it also involves creating content like blog posts, podcasts, webinars, and e-books that can also be shared via social media and other channels.
- 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.
- 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.
- 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.
- 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.
Outbound Lead Generation
Outbound strategies for generating leads are when you reach out en masse to try 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 is where outbound calls are made to people you don’t know. The most effective cold calls are to those who are part of your target audience, such as a list of accounting firms or construction companies if you sell products into these types of organizations.
- Cold email: Similar to cold calling, cold emailing is where outbound email campaigns are developed 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 and from there, you generate leads by calling or emailing the people on the list. Those interested in your offering 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 what’s in 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 often will 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 their information for future follow up.
Here are a few examples of ways you can consider generating leads:
The Free Offer
Creating a free offer can easily work both online or in person. However, it’s commonly associated with businesses that attract potential leads online. This can be done by either 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 company.
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 like content marketing to then 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 you should consider when putting together your own strategies. They include knowing your target audience, being able to identify where you can find them, and knowing how you can get their attention. Other best practices include having software with adequate data storage, the ability to follow up, and that allows for lead capture.
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 buyer 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 that 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. You can do that by providing value to them even before they are a customer. Provide helpful resources or educational content that helps them better do their job or manage their life. 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 like a CRM or a database to house the leads you’ve captured and to manage your communications with them throughout your sales cycle. We’ve actually provided an overview of the types of software you should consider, but it’s definitely a best practice to implement 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 his or her 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 different company 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, it should include both an email address and phone number that a potential lead can reach out through. 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.
One of the most important best practices in lead generation is understanding how to qualify leads. This is important because you or your sales team can waste a lot of time chasing leads that, upon review, will likely never convert. Leads should be qualified at the very beginning of the process so that by the time you or your sales team gets the leads to follow up on, you’ll be talking to someone who is willing and able to purchase your products and services.
Suppose you have a sales cycle that typically lasts a few months. You were given a list of leads that matched characteristics of your target audience. If you don’t take the time to qualify them, or make sure they had the ability and the authority to purchase your product or service, you could end up nurturing a lead for several months only to find out that there was someone else who made the decisions. This is time that could have been spent with a qualified prospect.
Lead Generation Metrics
In order to measure the effectiveness of your efforts, it’s important to establish lead generation metrics and key performance indicators (KPIs) 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 reports that will assist you.
Here are a few reports and metrics to keep in mind for measuring lead generation effectiveness:
- Email metrics report: If you are sending out emails, you’ll want an email metrics report that tracks click-through rates, measures links clicked in the emails, and tracks open rates, which measure the percentage of recipients who opened the emails.
- Phone report: For phone outreach or inbound efforts, you should generate a phone report that includes 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 good the leads are, you’ll want to calculate the percentage of leads that are qualified versus ones that are not.
- Actionable vs non-actionable leads: Sometimes, if you’re purchasing leads, you may get some with bad phone numbers and other contact details. Calculating the percentage that are good also gives you an idea of the quality of the leads.
- 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, while others cost as much as a few hundred dollars per lead.
This list isn’t meant to be comprehensive, but will help you get started with measuring your lead generation efforts. These are the core metrics you should pay attention to, as they will help guide you in making lead investment and lead generation activity decisions.
Why Lead Generation Matters
Lead generation is how you bring new sales opportunities into your business, which means it’s how your business grows and increases revenue. With that in mind, it’s easy to see why it matters to your business. In addition, developing a targeted strategy for generating leads can help you maximize your efforts and keep them focused on the types of leads that are most likely to become customers.
Here are a few benefits of an intentional lead generation strategy:
- Targeted leads to pursue: One advantage is having targeted leads to pursue. The more targeted your leads are, the better your chances are at making sales in less time than if you were pursuing leads that were not targeted.
- Increased sales: Lead generation refers to creating a significant number of leads. More leads, especially if they’re high-quality leads, result in more sales.
- Strategic planning: Lead generation involves strategic planning, which forces you to have a plan in place for converting, nurturing, and storing your leads. This leads to a better prospect experience and gives you a better chance at making a sale.
While a lead generation strategy certainly requires an investment of time and energy, it isn’t hard to see how that investment is worth it. The cost to your business in terms of time spent on building a process, and the software and tools required to execute on your plan, might seem like a lot until you consider that a well-thought-out strategy will deliver a consistent positive return on that investment.
Lead Generation Terms & Concepts
There are a few terms and concepts you should make yourself familiar with as you learn more about lead generation. Some of these terms and concepts include business-to-business (B2B) leads, which are leads generated for B2B sales, and content marketing, which is using content like articles, videos, and blog posts to attract prospects.
Here are a few terms and their definitions you should familiarize yourself with:
- Business-to-business (B2B) leads: These are leads that are generated for business-to-business sales and are decision-makers who make purchases for their companies.
- Business-to-consumer (B2C) leads: Consumer leads who are individuals buying personal items for themselves and their families.
- Prospecting: Prospecting is when salespeople attend in-person events or do cold canvassing and make connections with people who may be able to purchase their products.
- Content marketing: The use of content like articles, white papers, and videos to prompt leads to enter a sales funnel.
- Sales funnel: A representation of the customer journey from becoming aware of who you are to becoming a loyal customer.
- Call-to-action (CTA): Verbiage on sales collateral that prompts prospects or leads to take a specific action that you want them to take.
- Pipeline stages: The stages your sales team guides customers through. It represents the sales activities necessary to build relationships to the point where leads turn into customers.
- Outreach: The method of reaching out to prospects by phone, email, social media, or other channels.
Industry-specific Lead Generation
Every industry has its own proven methods for generating leads. Some rely on inbound strategies where they create content like blog posts or videos to get prospects into their sales funnels. Others rely on cold outreach methods like cold calls or email outreach to generate leads, and some 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 users featuring an app to take better photos
Webinar featuring the difference you could make with a specific degree like 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.
Lead Generation Tools & Providers
There are a ton of lead generation software tools that help you to generate, capture, and store leads. There are also many tool providers 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:
Using a customer relationship management (CRM) tool will help you organize and qualify the leads you generate, making 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, HubSpot is a free CRM that allows you to capture leads from your website, create targeted email campaigns to nurture their interest in your product or service, identify the highest-quality leads, and move sales opportunities through your pipeline. While HubSpot also includes advanced marketing and sales tools, the free version is a great option for many businesses that just need core customer management features. Visit HubSpot for more information.
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 for more information.
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 have been confirmed to be accurate.
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 for more information.
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 are more tools that make it easier for sales to generate leads, sales is becoming more involved.
How much should I spend to acquire 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 for the leads.
Is lead generation worth it?
This really depends on your sales goals and what you’re trying to achieve. In general, it’s well worth the time, effort, and cost because it forces you to focus on a high number of very targeted leads instead of one-offs that may or may not be qualified to buy your products.
Lead generation is how you go about creating interest in your company’s products and services. Here we’ve outlined strategies for generating leads, best practices to ensure you get the most out of your efforts, and metrics you should use to measure effectiveness. With the information presented, you should be in a position to create your own lead generation strategies.