7 min read time
When you work in a B2B sales and marketing environment, you’re basically playing a numbers game. Every action can ultimately be broken down to reveal a ‘figure’ – some of which you’ll want to be big and others small.
These figures can be useful in several different ways, from helping to measure your progress, to tracking KPIs and targets, and proving the return on investment.
One such number is cost per lead (CPL). It can be worked out by taking the total amount you spend on marketing - or an individual tactic - and dividing it by the number of leads that were generated. This will show you how cost-effective an activity is being, so you can adjust and make more informed plans moving forward.
However, its use as a metric has been the subject of some debate among sales and marketing teams, where discussion tends to focus on what a good lead actually is. And that’s not necessarily a bad thing. It’s only going to be cost-effective to generate hundreds of leads, if a percentage of those leads go on to become paying customers. Lots of the wrong type of leads, who are never going to be converted, are of zero benefit to anyone.
To be ultra successful, you need to ensure that every stage of the buyer journey is as strong as it can be. That means generating the best leads in the first place, nurturing them on effectively and then passing only the hottest ones over to sales to be converted.
The challenge lies in finding that all-important sweet spot, between what you’re spending and the results being achieved. To help you, here we’ve taken a closer look at 5 key areas of the sales process:
What makes a good lead?
How to generate good leads
Inbound versus outbound marketing lead generation
Using content marketing and inbound marketing to reduce CPL
The bigger picture – improving your sales velocity
What makes a good lead?
Leads are at the heart of everything in the B2B world and what makes a good lead is the number one question that business to business marketers need to address.
When things aren’t going so well, it can sometimes become a bit of a blame game. Sales may complain that the leads being generated by marketing aren't worth the paper they’re written on. While marketing may say that the sales team just isn’t selling.
What needs to happen is for the two teams to sit down together to talk about how leads are being generated and managed. The discussion should cover everything, from the type of leads you want, to the qualification process and when leads should be passed over to sales. By agreeing what will happen at every stage and looking for ways to improve what you’re doing, you’ll end up with a far stronger strategy. Crucially, everyone will be in alignment and working together to achieve the same goals.
There are some important distinctions that need to be made between the type of contact and leads you are generating through your online activities:
1. Web visits
This refers to anyone who visits your website. Your web traffic will generally be anonymous and you won’t know much about it, other than the total number of visits you’ve had. (Of course, if you use Lead Forensics then you’ll know a whole lot more, as you’ll be able to identify the companies who visited, plus access relevant contact information).
This is a website visitor who has identified themselves, such as by filling out a form on your website to download an ‘offer’. Usually you’ll just have their first name and an email address at this stage, but it is a unique contact you can add to your database.
3. Marketing qualified leads (MQL)
These are leads who fit a particular target market to some degree. They may be identified by your buyer personas and/or fill other predetermined criteria. In other words, these are leads who already look a lot like they are a good sales lead.
4. Sales qualified leads (SQL)
While MQLs may look good on paper, they only become a SQL when they show some signs of intent to make an actual purchase. They will have demonstrated they have a clear interest in your product or service, and like what you have to offer.
These are the leads that the sales team is actively engaging with and who there is a strong opportunity to do business with.
The question of when sales should make contact with a new lead is as issue that’s as hotly debated as the question of what makes a good lead. The answer is, it will depend on many different variables.
If you aren't sure what to do for the best, then experiment, test, adjust and retest. Keep working until you find the perfect mix for your individual organization.
Once you've determined what makes a good lead, the next step is to decide how best to start generating them.
How to generate good leads
On our blog, we’ve covered loads of ways to generate leads, both offline and online. (And of course, how to combine the two). This includes inbound methods such as content marketing, whose popularity has grown massively in recent years, particularly within B2B organizations.
Traditionally, business to business marketing was all about outbound methods, such as cold calling, exhibiting at trade shows, direct marketing and media advertising. These are tactics which go out and push to get in front of a potential customer. They disrupt and interrupt and according to Wordstream, some organizations still spend as much as 90% of their marketing budgets on them, with many tactics costing a considerable amount.
Inbound marketing on the other hand, is about helping a potential customer to find you and come to you when they have a need you can help with. Content marketing often plays a key role in this and while needing an initial investment to get up and running, can quickly produce a positive ROI. As a strategy, it’s here to stay and is one which is working hard for marketers across all industries and company types.
Cost comparison outbound vs inbound
In their State of Inbound Marketing Survey of 2014 Hubpost compared the cost per lead achieved by both outbound and inbound marketing:
Around 3,000 companies of all sizes and industries took part in the survey and the results are pretty conclusive:
- Using inbound marketing reduced the cost per lead for businesses of all sizes
- For small to medium sized companies, it led to a reduction in cost per lead of up to 68%
One of the main reasons for this is that using automation means leads can be more easily segmented out and nurtured along. You can then focus your time and efforts on only the really good leads, which will be far more cost effective.
In reality, sending out an email has no real cost. Once it is written and set up it can be sent to an infinite number of email addresses, without incurring further costs.
Content marketing is also more of an investment than a running cost, because once you have created your content it will continue to produce results for you automatically.
Increasing sales velocity
When it comes to the bigger picture, spending time analyzing what you can do to increase your overall sales velocity can prove a very valuable exercise. This is the ultimate gauge of your success – how quickly you are managing to turn a lead into a customer. And when we're talking about reducing the cost per lead, there is no ignoring it.
You need to be generating the right type of leads for the lowest possible cost, then converting them as quickly as possible into paying customers.
To take your results up a gear, all teams need to be working together to optimize the entire sales pathway, ensuring that every possible conversion is being capitalized on. Don’t forget those with responsibility for your social media output. They too should be sitting in on discussions about lead conversion optimization, because they are having conversations with potential and existing clients. They will be able to do a much better job if they have intel they can work with provided by the sales department.
What questions are prospects really asking? What do they want to know more about? What benefits are customers genuinely seeing? What other feedback is being given? Look for ways to use, share and answer these questions.
If something has really hit a nerve with one customer, then it may well do the same with another. Make the most of everything you hear across all departments – including anything negative. If there’s a problem, fix it. If there’s a success story, shout about it. If there’s a question, answer it.
Increase your sales with online lead generation and optimization
Once you’ve put it all together, you’ll have created a powerful lead generation machine that’s optimized around your company and its structure.
Constantly be building on your processes. Evaluate, adjust and retest, so you’re always improving.
And don’t forget these top tips for cutting your cost per lead:
- Define what a good lead is – get your sales and marketing teams together to agree on this
- Align marketing and sales to improve your conversion pathway
- Focus on increasing your overall sales velocity
- Take a good look at content marketing and spot opportunities for improvement and/or increase the investment you make in this type of inbound tactic
- Ensure you have the right tools in place that will support your efforts and consider upgrading your technology
- Use lead scoring to more effectively segment and qualify leads
- Re-evaluate and update your buyer personas
- Consider investing in tools like Lead Forensics software that can help streamline every stage of the buyer journey, helping you generate more leads and close more deals
With Lead Forensics you can turbo charge your lead generation, marketing and sales success. Talk to us for more details and to book your free demo.