Getting more leads at a lower cost is always at the top of marketing and lead generation objectives, especially for startups and small businesses. In fact, our own research on marketing strategy found that 65% of B2B marketers claim that generating traffic and leads is their top priority.
While generating a high volume of leads is a good thing, it doesn’t necessarily translate into sales and revenue. You may be getting a lot of traffic to your site, but only a small percentage may opt-in to receive your gated content, and an even smaller percentage of your leads convert into paying customers.
Much of the focus these days is on lead quality as marketers take cost-per-acquisition into consideration.
Another one of our studies revealed that 61% of B2B marketers find it extremely difficult to generate high-quality leads. Most companies aim to reduce their cost per lead (CPL), thinking that the cheaper the lead is, the lower the cost per acquisition (CPA), and the bigger the profit margin. But in reality, quality sales leads don’t come cheap.
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What is a Quality Lead?
A quality lead is someone who has the budget, authority and need to buy your product within a relatively short period of time. I have used the common acronym BANT to describe this lead quality criteria:
- Budget: do they have the money to spend on your product or service?
- Authority: do they have the ability to make the decision to buy it?
- Need: do they have the problem your product or service solves?
- Timing: are they planning to make the decision within the next 3-6 months?
When I was at SAP, we added an “S” the acronym to have our lead qualification criteria include a defined next Step. So, BANTS.
What is Lead Scoring?
Lead scoring is the approach of giving leads are specific score to determine if they are worthy of sales follow-up or further marketing nurture.
At SAP, we also weighted the scoring of each lead depending on how explicitly they answered each question:
So no budget would get 0 points, have budget would get the most points, and each answer in between would get somewhere in between.
Leads that scored a certain amount determined to be high quality would be sent to sales as a Marketing Qualified Lead (MQL). Those with a score below that would get marketing nurture emails and offers with the hope of moving them along the buyer journey.
But, Why are Quality Leads So Expensive?
1. It can be hard to find accurate data and valid contact information
Accurate data is one of the most important aspects of quality lead generation. In fact, a lead should never even be considered a lead unless you know something verifiable about the contact. Email address is a bare minimum but ideally company name as well so you can validate where they work, size of the company and whether they are a fit for your business.
2. Many leads do not fit your buyer persona and target market
If you only sell to large businesses but most of your leads are small businesses, then you cannot really call them quality leads. Same is true for industry, title, location and in many ways all of the BANT criteria mentioned above.
3. Some leads might not have the right budget for your services
While one of the criterial in BANT, it may be the most important, after Need. Because if the prospect is never going to get the budget for your product, what is the point of even talking to them. In my own contact form, I ask prospects if they can afford my starter or basic levels of service.
4. Decision-makers and company influencers can be hard to reach
This covers the “Authority” question in BANT. However, there is really no bad answer here. Because one of the best follow-ups is: can you point me to the right person in your company who handles [whoever the right person is for your product]. This is one of the many goals of Account Based Marketing: to get to the right people and all the people who influence the buying decision.
5. Most of your leads will not be sales-ready
This is mainly all about the Time factor in BANT. But it may be the least important. You can always try and convince them of the need to move sooner. Discounts, offers, really good sales people can all help to escalate the decision to buy your product.
6. It can be hard to create content that attracts the right leads
Now this should never be a problem. Because you can just reach out to us right here and we’ll help you attract the right people through relevant weekly content. We can also help you create e-books and other offers to generate the leads, convert them to qualified prospects and turn them into customers. Having the right content marketing strategy should not be a problem.
When leads aren’t qualified, you can expect to spend significantly more (in terms of effort and resources) on converting them into customers. That’s why there’s a high premium on quality leads.
In general, the free and inexpensive lead generation strategies cost you more time and effort, while more expensive tactics will produce faster results. However, it’s not just speed you should be focusing on. You want quality leads that can be converted into actual revenue – leads with a higher propensity to purchase.
There’s a good reason you’ve created a buyer persona for your target market. This buyer persona not only fits your brand but is also the ideal client that you want to be working with. Use it to qualify your leads and focus your efforts on the low-hanging fruit (leads that are easiest to convert).
You don’t want to waste your sales team’s time trying to sell to someone who doesn’t need your product. Time wasted is money lost.
Quality leads are priceless commodities. You can have a funnel overflowing with leads, but that doesn’t necessarily translate into lots of customers. It’s the quality leads that bring home the bacon.
The Cost of Quality Leads
Quality sales leads don’t come cheap. If you think you’re in the clear because you’ve successfully lowered your CPL and amassed a high volume of leads, then think again. Leads are leads, yes. But are they the quality leads that you can eventually convert into paying customers?
Investing in a lead generation strategy that brings in revenue will help your business grow. You’ll not only save yourself the trouble of spending precious resources on ineffective tactics, but you’ll also save your sales team the effort of following up on leads that may never convert.
When it comes to spending your lead generation budget effectively, the old saying holds true: “You get what you pay for.”
We Can Help You Get Quality Leads
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