It is not so much a question of where to get leads as much as a question of how. That is really what people are asking when they ask about finding quality leads. In a previous post we outlined the difference between the process of acquiring leads versus the actual source of leads versus what one does with those leads. As a result, this will help us better focus the discussion on only those activities that will get leads into your lead gen process.
There are several factors to consider when pursuing any lead acquisition program. First and foremost, however, is the marketing objective. What is the audience you are seeking? How many leads do you need to capture? Are you testing a market or mining an existing market? Basically this is the “who,” “how many” and “why” behind your lead gen program. Once you have that in place, you can evaluate options based on cost, yield, effort, timing and reach.
Cost – What does it cost in aggregate as a program and also per lead acquired. That second cost measure usually gets forgotten, but you need that in order to get a sense of whether a program falls into your CAC (customer acquisition cost) range. Cost is obviously a huge factor in any decision, but even in pre-funded startups, do not let “free” blind you. There are many creative and useful ways to leverage paid acquisition, especially when testing tactics and when only focused on small numbers.
Yield – How many leads would a particular tactic generate? You want enough leads so that you can achieve a decent conversion rate (thus getting an accurate reading on program effectiveness), but not so many as to flood your process and have leads drop out. Note, however, that it is not always about volume of leads that are generated that is important, but the quality of the leads that are generated.
Effort – Startups operate pretty lean, even when funded, so it important to deploy limited resources into programs that will be worth the “human capital cost” committed. There are options, however, to mitigate this cost by using more inexpensive labor pools such as interns, freelancers, outsourcing providers or mechanical turk, particularly with time intensive tasks such as research, event staffing or creation of promotional materials.
Timing – This is when you get leads. Sometimes it is an upfront acquisition like events and purchased lists, and other times it is a slow drip such as advertising and referrals. Depending on your objective and process, you may want all leads at the start or instead balance out the acquisition over time. The best, however, is a mix that keeps acquisition and lead conversions steady but can be accelerated at certain times to accentuate campaigns and broader business objectives.
Reach – How far and wide does the acquisition tactic reach, and does it tap into the right audiences? The importance of reach also impacts the cost factor, because you want to measure the effectiveness of the tactic—in other words the percentage of total reached versus actual leads generated. A program may yield a large number of leads, but only because the spread was so wide. You want to focus on the impact of a particular acquisition tactic.
No one factor should sway any decision, but rather use all 5 in concert to come to an informed decision on a particular lead acquisition tactic. This begs the question, though, what are some of those tactics? I posted a rather generic slide in the previous post of this series, but below is a more thorough breakdown of various tactics one could employ, organized by category. I personally find it more useful to think at the category level to determine the value of a particular tactic before diving into specifics.
Paid Names – This is paying for names and contact information. This is the most direct method and can often be the most cost-effective and time-efficient solution. All you need to do is plug the list into your lead gen system and press go. The downside, however, is that most lists are utter crap, so you are at best paying for 50 percent of the names you believe you are buying. The more industry-specific, though, the better the results, as the data is refreshed much more often. The other problem with paid names is that there is the tendency to spam the list as opposed to using a more personal and targeted approach.
Paid Eyeballs – Most people would call this advertising, but I like the visualization of eyeballs. The reality of all advertising is that there is no direct engagement with people. What you are effectively buying are eyeballs (or ears), and these eyeballs are an amorphous audience loosely defined by a few demographic parameters. This is the least direct method while conversely being the most costly, whether you are talking about offline or online ads. That does not mean it is ineffective, it is simply that, in a cost analysis basis, you are not usually going to get much bang for your buck. Therefore, for most early stage startups, this is a poor choice for acquisition until you get to a point where you are ready to scale out the business.
Event Marketing – This is also in many ways a paid eyeballs game. The benefit, however, is that you can at least directly engage with interested prospects and capture their contact information. Whereas advertising is expensive in the aggregate (you are buying placements over time), events are usually a big one-time, upfront cost that also sucks up people resources to prepare, travel to and staff the event. All of these considerations need to go into the cost equation when budgeting for events.
Promotional Marketing – In between events and outright advertising are promotional tactics. Everything from sponsorships to t-shirts—anything that displays logo/branding is promotional marketing. It is often integrated into events while seeming to be an advertising play. The difference is that you are not paying for a targeted audience or distribution with the same goals in mind as other paid marketing. For example, sponsoring charitable events does have an “audience,” but the goal is more reputational than acquisition focused. Still, the net of these tactics is to expand the breadth of the brand/name to a much broader network that can eventually turn into leads.
Targeted Research – On the opposite side of the spectrum to paid acquisition, there is research. This is generally free or at least low-cost but takes quite a bit of time to gather all the names. The benefit, of course, is that the quality of the information gathered can often be of better quality than a paid list. The most effective way to use this method is to come up with a targeted account list, which essentially is a list of companies that you are most interested in reaching, based on various criteria such as industry, revenues, number of employees, products owned, geography, brand equity, etc. Note, that to get to actual contact information, you often need to pay for access to databases or tools that provide this data, which could be things like Data.com or LinkedIn or SalesLoft.
Direct Referrals – The best quality leads across all possible methods are referrals. When someone or some organization can pass you onto a decision maker, then that instantly establishes credibility and removes the issues of gatekeepers that arise in many cold outreach methods. This includes direct contact to an executive, a partner referring to their contacts in a company, or some other relationship that yields a relevant contact into an organization. While it may seem like this would go into the deal/opportunity bucket, it is still important to think of this as a lead for measurement purposes, and because it is still officially a lead until someone in sales qualifies it as having near-term potential.
Networked Acquisition – Under the umbrella of social networks, network effects businesses, and various online discussion venues would be networked acquisition. The benefit is that these are free acquisition methods; however, the counter is that they take a significant amount of time to foster in order to bear fruit. This is one reason that business models with built in network effects are so interesting, because the value of the network increases as more users join the network. The network creates a bandwagon effect where everyone joins while conversely creating lock-in as other options become significantly less viable. Another important aspect of networks is the ability to do research, like above, and create various follow strategies to gain the attention of certain target audiences. It should be noted, however, that from a pure volume perspective, this would be about the lowest yielding of the tactics.
Organic Discovery – When people come to you, whether by word of mouth or through a Web search, that is the most effective marketing of all. What is great about it is that it is absolutely free, at least transaction-wise, but it is always the result of a lot of work in the beginning to build a great product and being persistent in promotion. Though discovery does not happen by accident (the proverbial “build it and they will come strategy”), especially when there is an ocean of options available for customers. By leveraging the other acquisition methods, over time, serendipitous discovery and casual referrals can become a regular source for leads.
There is a lot here to consider as you create your own lead generation program. The point is to at least think strategically about lead generation. It is often tempting to grasp at any promising method that comes your way, and I have seen this happen all too often with startup founders. However, the only way you develop a healthy program and thus a healthy pipeline and predictable revenues is to have a sound approach to lead acquisition. When your lead acquisition is humming, you often find that many of the other issues in the sales pipeline smooth themselves out.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.
Image credit: CC by Keng Po Leung