By generating better leads, you’ll convert at a much higher rate while actually spending less on marketing and advertising.
It’s one thing to understand that higher quality leads are more cost effective, though, and it’s another thing to make the shift.
There’s a common misconception that highly qualified leads are expensive. The truth is that the best leads are, by far, the most cost effective. It’s good leads that are expensive.
Good Enough Costs You Thousands
Not everyone is your customer, and not every lead converts.
The quality of your leads is a major determining factor for your conversion rates. Assuming that your marketing is competent, those highly targeted, highly qualified leads convert at a much higher rate than industry averages.
Consider Your Resources
Time is your most limited resource – you can’t make more of it, and you can’t recover it once lost. That’s why intentionally saying no is one of the most important skills you’ll ever develop.
Intentionally saying no is critical, because whenever you say “yes” to something, you’re also saying “no” to something else.
Saying yes uses your time and resources, so those same resources can’t be used elsewhere. In other words, saying yes to a new employee is saying no to all the others who you could have chosen, and saying yes to a lunch meeting is saying no to everything else you might have done during your lunch hour.
That also means that saying yes to a lead generation strategy is saying no to the alternatives, and that’s one of the things that makes good leads so expensive. They cost you the profit you could be making.
When you intentionally decline to focus on mediocre prospects, you free up your resources to go after the best.
Calculate The Money You’re Losing
Would you rather have 300 leads or 500 leads?
If you’re smart, you hesitated before you answered. The savvy businessman will ask: how good are the leads?
Imagine you have a marketing budget of $1,000 and you’re offered the chance to market to either 500 pretty good leads, or spend that same $1,000 targeting only 300 highly qualified leads. If you make $200 per completed sale, your options might look something like this:
Focusing on your cost per lead generated instead of your cost per conversion is an expensive mistake. In the example above, if you had focused on the 500 good leads instead of the 300 great ones, it would cost your business $5,000.
A good lead source might make you a moderate profit. However, by focusing your time, effort, attention, and money on generating and nurturing good leads, you’re giving up the much greater profits you could be making.
Great Leads Don’t Take Extra Effort
If you’re generating your own leads, your time, effort, attention, and monetary investments to attract great prospects is almost exactly the same as it is to collect those good enough leads.
How can that be?
Think of it this way:
Imagine two friends dining together at a restaurant. Both of them want to improve their health, and both are in about the same physical shape right now.
When the waiter arrives to take their orders, one gentleman requests the specialty of the house: a huge bacon cheeseburger with crispy fries.
The other orders a light grilled fish meal with steamed vegetables.
If this behavior continues, which of the men is going to reach his health goals first?
Obviously, the person making the healthier decisions is going to make more progress. Now, here’s the real question:
Which man put forth more actual effort?
It’s a trick question. The effort they expended is exactly the same.
Both men arrived at the restaurant, sat at a table, read a menu, ordered a meal, and then consumed it.
The difference between exceptional results and average results isn’t determined by the amount of effort you put in. The determining factor is where that effort is placed.
Make sure your prospecting efforts are in the right place, and you’ll begin generating better leads.
Research and Metrics are Key for Generating Better Leads
To determine where to focus to generate those great leads, it’s all about your research and metrics.
Your own specific metrics give you the most reliable data to determine where you should be spending your time and energy. Even if you haven’t been tracking your numbers, though, it’s simple to supplement your data with research so you can make informed decisions.
Competent market research can be a decisive factor in your company’s success.
Don’t Just Look For Interest
While you’re completing that research, be careful:
Interested leads aren’t necessarily high quality leads.
Great leads have 3 essential components – they want products or services like yours, they’re aware you exist, and they’re capable of making a purchase.
As you research, remember that you’re not just looking for people who want your product.
You’re looking for motivated buyers who are ready to make a purchase, and that’s a whole different category than “interested.”
Market Research Priorities
The trickiest thing about marketing isn’t the technique – it’s people. No matter how much research you complete, and no matter how much insight you draw from it, your audience is going to be unique.
However, just because your research isn’t going to give you a 100% clear view of the future, that doesn’t mean you shouldn’t do it.
Good research gets you started in the right direction and making more money quickly. From there, you’ll have better metrics to track, and you can make course adjustments as needed.
Your research should be focused on determining:
- Who is your audience?
- Where do your most qualified leads hang out, both online and in person?
- When do they make purchases?
- Why do they make purchases?
Understanding your audience’s habits and motivations makes it possible to tailor your marketing correctly and get it in front of people at the right time.
Track Key Metrics for Lead Performance
Research determines your direction, but your individual metrics guide your steering.
Tracking your overall returns and cost per conversion isn’t enough. Instead, you should be tracking key metrics for each lead source so that you can accurately determine where you’re generating better leads.
When you evaluate the quality of each lead source, remember to consider both your cost to acquire that lead and your cost to turn that lead into a sale.
As much as possible, take referral traffic into account, too.
It’s more difficult to determine where your referral traffic is coming from, but by making one change at a time and watching the results carefully, you can estimate some of the indirect effects of your marketing.
A specific audience may be more prone to post about you on social media, and that influence is difficult to track directly. While your direct marketing efforts may be less cost effective, if you decrease your ad spend for that source and your revenue drops disproportionately, it may be caused by indirect benefits like social sharing. For that reason, it’s important to make changes gradually and watch your numbers.
Don’t Be Afraid To Make Changes
Just because a lead source is generating a profit, that doesn’t mean you should keep it.
Imagine you have an overall marketing budget of $4,000 per month, and you have 4 lead generation sources that are creating profits. Does it make more sense to spend $1,000 on each, or to divide your investment less equally?
The answer is, of course: it depends.
If you haven’t been tracking effectively, the first step is to implement a tracking system so you can tell which leads are actually performing, and exactly how well they’re doing.
Once you’ve determined where your marketing money produces the greatest returns, it’s easy to decide where you should be focusing.
Then, you just need the courage to make the change.
Many businesses keep their mediocre marketing because they’d rather keep their okay results than gain great results. The risk seems greater because it feels as though you’re giving up something valuable for something uncertain.
In reality, your current mediocre results aren’t that valuable, and the profit you’ll make from those better leads isn’t any more uncertain than the profit you’re making now from your average ones.
Do more of what’s working, and keep tracking closely.
The Point of Diminishing Returns
With every marketing strategy, there comes a point when investing more money doesn’t produce the same ROI. That’s why you should have multiple lead sources.
Keep watching your numbers and tracking your returns. Your goal should be to find the optimal amount of money to invest in marketing to your best lead sources so that you’re getting the highest ROI.
Redirecting your marketing efforts and budget to the highest quality leads produces almost miraculous results.
But it’s not a miracle. It’s just marketing.
Originally posted 2017-05-31 11:43:05.