What is Lead Generation?
Lead generation is the process of attracting and converting strangers and prospects into someone who has indicated interest in your company’s product or service. Some examples of lead generators are job applications, coupons, and online content.
Lead generation is the process of attracting and converting strangers and prospects into those leads we just talked about.
Whenever someone outside the marketing world asks me what I do, I can’t simply say, “I create content for lead generation.” It’d be totally lost on them, and I’d get some really confused looks.
So instead, I say, “I work on finding unique ways to attract people to my business. I want to provide them with enough goodies to get them naturally interested in my company so they eventually warm up to the brand enough to want to hear from us!”
That usually resonates better, and that’s exactly what lead generation is: It’s a way of warming up potential customers to your business and getting them on the path to eventually buying.
Why Do You Need Lead Generation?
By showing an organic interest in your business, it’s those strangers and prospects that are initiating the relationship with you — versus you, the business, initiating the relationship with them. This makes it easier and more natural for them to want to buy from you somewhere down the line.
Within the larger inbound marketing methodology, lead generation falls in the second stage. It occurs after you’ve attracted an audience and are ready to actually convert those visitors into leads for your sales team. As you can see in the diagram below, generating leads is a fundamental point in an individual’s journey to becoming a delighted customer of your business.
How to Qualify a Lead
As you now know, a lead is a person who has indicated interest in your company’s product or service. Now, let’s talk about the ways in which someone can actually show that interest.
Essentially, a sale lead is generated through information collection. That information collection could come as the result of a job seeker showing interest in a position by completing an application for the job, a shopper sharing contact information in exchange for a coupon, or a person filling out a form to download an educational piece of content, like an ebook, kit, podcast, tool, trial, or something else.
Below are just a few of the many ways in which you could qualify someone as a lead. Each of these examples also highlights the fact that the amount of information you can collect to qualify someone as a lead, as well as the that person’s level of interest in your company, can vary. Let’s assess each scenario:
- Job Application: Any individual filling out an application form is willing to share a lot of personal information because he/she wants to be considered for the position. Filling out that application shows their true interest in the job, therefore qualifying the person as a leader for the company’s recruiting team.
- Coupon: Unlike the job application, you probably know very little about someone who has stumbled upon one of your online coupons. But if they find the coupon valuable enough, they may be willing to provide their name and email address in exchange for it. Although it’s not a lot of information, it’s enough for a business to know that someone has interest in their company.
- Content: While the download of a coupon shows an individual has a direct interest in your product or service, content (like an educational ebook or webinar) does not. Therefore, in order to truly understand the nature of the person’s interest in your business, you’ll probably need to collect more information — you’ll need enough information for a sales rep to actually understand whether the person is interested in your product or service and whether they’re a good fit.
Online Lead Generation
Online lead generation is an Internet marketing term that refers to the generation of prospective consumer interest or inquiry into a business’ products or services through the Internet. Leads, also known as contacts, can be generated for a variety of purposes: list building, e-newsletter list acquisition, building out reward programs, loyalty programs or for other member acquisition programs.
With the growth of social networking websites, social media is used by organizations and individuals to generate leads or gain business opportunities. Many companies actively participate in social networks including LinkedIn, Twitter and Facebook to find talent pools or market their new products and services.
There are three main pricing models in the online advertising market that marketers can use to buy advertising and generate leads:
- Cost per thousand (e.g. CPM Group, Advertising.com), also known as cost per mille (CPM), uses pricing models that charge advertisers for impressions — i.e. the number of times people view an advertisement. Display advertising is commonly sold on a CPM pricing model. The problem with CPM advertising is that advertisers are charged even if the target audience does not click on (or even view) the advertisement.
- Cost per click advertising (e.g. AdWords, Yahoo! Search Marketing) overcomes this problem by charging advertisers only when the consumer clicks on the advertisement. However, due to increased competition, search keywords have become very expensive. A 2007 Doubleclick Performics Search trends report shows that there were nearly six times as many keywords with a cost per click (CPC) of more than $1 in January 2007 than the prior year. The cost per keyword increased by 33% and the cost per click rose by as much as 55%.
- Cost per acquisition advertising (e.g. TalkLocal, Thumbtack) addresses the risk of CPM and CPC advertising by charging only by the lead. Like CPC, the price per lead can be bid up by demand. Also, like CPC, there are ways in which providers can commit fraud by manufacturing leads or blending one source of the lead with another (example: search-driven leads with co-registration leads) to generate higher profits. For such marketers looking to pay only for specific actions/acquisition, there are two options: CPL advertising (or online lead generation) and CPA advertising (also referred to as affiliate marketing). In CPL campaigns, advertisers pay for an interested lead — i.e. the contact information of a person interested in the advertiser’s product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints — by building a newsletter list, community site, reward program or member acquisition program. In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction.