A beginner’s guide to tracking business leads
Lead generation is the process of capturing interest in your product or service, converting somebody from prospective buyer to customer, and in doing so, developing a sales pipeline.
Lead generation can play an important role for any business. It offers advantages over word-of-mouth marketing and allows for very specific, tailored targeting.
With a detailed understanding of your target market and a comprehensive strategy, you can identify potential customers who are likely to add value to your business’ bottom line.
Stage one: Lead generation
The first step is capturing information, including contact details, so that you can establish how “warm” a lead is. This can be done via an online lead generation form, which asks for contact details.
When you capture contact information via one of these forms, you can assume that leads are interested in your business in some way. Other indicators include liking or following your social media pages, visiting a website page that asks for more information, signing up for gated content on your website, engaging with your content, or subscribing to a mailing list.
Once leads are generated, they are scored: warm leads – those most likely to lead to a purchase – are progressed to the sales team, while less promising cool leads are “nurtured”. The idea behind nurturing is to improve the likelihood of a sale and not let the lead go completely cold.
Stage two: Lead scoring
Assessing the strength of potential leads is an important part of this process, as it gives you an idea of which ones are the most valuable to your business: the ones most likely to convert to sales.
A starting point is in really knowing your target market. Having a strong profile of the people you want to target, and a robust scoring system, will help to identify the best leads.
You can score leads either based on their demographic or their behaviour, but a combination of the two will give you a strong system.
Demographic scoring can look at factors such as job role, address, contact details, and so on. In behavioural scoring, scores are allocated based on the way your prospects engage with you online. For example, opening a marketing email could be +3, and a click-through on an email could be +5; downloading an e-book could be worth +10.
The aim is to create a point-scoring system which allows you to clearly see who, from your target audience, is most engaged with or interested in your business. These are the people who are most likely to be interested in buying from you.
Set a points threshold that you think reflects a suitable level of interest – at this stage and above they become qualified leads, and can be contacted by salespeople.
Whichever way you allocate points, ensure that your scoring system is robust and built around several indicators, all of which are weighted appropriately to reduce bias in the system.
Stage three: Lead nurturing
Lead nurture is a continuous process, which will be ongoing before and after sales, but it fits neatly as an activity carried out at this stage, too. It is effectively relationship building.
Lead nurture is important. Not all your leads will be easily convinced or sold to, and will require some extra persuasion; these are unqualified leads.
Contacting your leads to keep them interested is paramount, but knowing when to contact them, how frequently, and with what sort of content is a bit more difficult.
Depending on the interactions your leads have had with you online, you should have some contact information such as an email address. Emails are a common way of contacting leads, and useful metrics such as the open rate and click-through rate (CTR) can be used to measure how effective your email marketing is.
How quickly you contact a lead is important, too. An article in the Harvard Business Review references several studies which found that it’s a case of the sooner the better. Leads are almost seven times as likely to have meaningful conversation with a business decision-maker.
Timely engagement – knowing when the prime time is to contact a lead, and knowing which behaviours are most likely to lead to a sale – is at the heart of successful lead generation practice.
Stage four: Lead conversion
Congratulations! Your hard work – marketing and sales, take a bow – has converted a lead into a customer. Or, more specifically, a new customer. The aim now is to turn them into a repeat customer, and then a loyal customer.
In theory, the hard work is done; provided the customer is happy with the product and the service they’ve received throughout, they may return. Incentivising customers to return, though, can help to build brand loyalty.
What is a ‘customer life cycle’?
It helps to understand the customer life-cycle, which looks like this:
Prospects > Leads > New Customers > Retained/Repeat Customers > Former Customers
A business lead is at the start of the cycle; someone who has shown interest in your business. Business leads are drawn from your target market – as a collective, they are called prospects and individually they are known as leads.
The process of chasing leads is all about progressing potential customers through the life-cycle. Broadly, these are the four stages we followed above.
What are ‘channels’?
Channels are the avenues through which you communicate with leads, whether these are platforms or activities. Depending on your business and your customers, the channels you use will vary.
Direct mail, email, social media advertising – these are ways that you can put your business in front of your leads.
Each of these channels come with their own benefits and drawbacks. For example, social and search advertising (like pay-per-click) is cost-effective with access to in-depth analytics to allow for better tracking. The same is true of email. Direct mail doesn’t have that advantage, but it is more likely to stand out. Direct sales calls (when a lead has indicated interested) can also be successful.
You can expect different conversion rates from different channels, and different channels to attract different audiences, possibly in different stages of the customer life-cycle.
What can you afford?
Lead generation can become an expensive task, but provided you are tracking it and can see a return on investment, you can manage the costs appropriately. For many small businesses, social and search advertising are good options because they are economical, and a small budget can go a long way.
The important thing is to make sure you are optimising your advertising efforts to get the best results. Social platforms are intuitive, but if you’re new to marketing it can still be a bit of a minefield.
Outsourcing to a digital marketing agency, or taking a course to learn the skills yourself, may be expensive but could help to bring you up to speed.
How do you cope with customer attrition?
The customer life cycle isn’t a perfect phrase; customers are not simply stuck in a cycle with one business. They can and will move to other businesses as it suits them, or in accordance with the efforts of other brands or customer trends of the time.
Customer attrition (also called churn, or customer turnover) is when customers move from one business to another.
It is an accepted principle that it is cheaper to retain an existing customer than it is to acquire a new one – some studies have shown that costs can be anywhere between five and 25 times higher.
As such, it’s important to analyse attrition rates to gain valuable insights. Depending on your industry and product, you can assess attrition monthly, quarterly or annually.
With enough data, you may be able to identify certain trends, such as the time of year when you lose most customers. Segmenting the data will give you even clearer insights.
The Harvard Business Review argues that high churn rates are often associated with bad customer acquisition. If your new customer and churn rates are high, it may be worth analysing your overall strategy when it comes to attracting new custom.
All the hard work around lead generation and nurture is wasted if not carried out in close partnership with your sales team. Having an established set of goals, indicators and quotas will make it easier to track the success – or necessity – of the system.
The necessity bit is important – not all businesses will benefit from lead generation. It can be an overwrought system for some businesses. In the early stages, it may seem an unwieldy and unnecessary system.
However, given a business of a certain size aiming for a certain number of sales, it can be a great way of driving business forward.
For more information and resources around lead generation and general marking practices, see the following sites: