Mistakes to Avoid with Lead Generation

Your sales team has their hands out asking for the best quality leads so they can make money and grow the business at the same time. You’re under the gun to bring in the leads quickly or risk a mutiny from your sales staff. Does this sound like a familiar scenario?

I always find myself straddling the line between what our sales team wants in regards to leads, and what makes sense for our business. It’s a constant back and forth between marketing and sales that will likely continue until the end of time. So how can you serve both masters and succeed?

Generating leads is easy. Generating good quality leads that convert at a rate that gives you the ROI you need is another story. When you’re under pressure to bring in a certain volume of leads, it’s especially easy to fall into a handful of lead generating pitfalls. During my marketing career, I’ve fallen into many lead generating pitfalls. By simply avoiding these four traps, you’ll be well on your way to lead generating success.

When running a lead generation campaign, the ultimate goal is to generate the right quantity of leads that convert into sales at a very high rate, thus generating the ROI that you need to qualify the campaign as a success. With this in mind, it’s very tempting to focus on very cheap lead generating campaigns. The thought process is that if you generate the raw material (leads) cheaply enough, there will be a bigger margin on each sale. Makes sense, right? Wrong!

This is a shortsighted approach that doesn’t take into account the full sales process. At the end of the day, the big question you’ll be responsible for answering is, “How much revenue was generated compared to the amount you paid for the leads?”

While the cost-per-lead is an important factor, you’ll need to look beyond that and take a hard look at the quality of the lead. This includes both the conversion rate and the average revenue per sale. For example, I know that my leads generated from paid search turn into paid business at a substantially higher rate than many of my other campaigns. With this in mind, I pay more for these leads than any other lead, but I make the highest margin.

To illustrate this, take the following example where campaign “A” generates 100 leads at a cost of $15 per lead and has a 20 percent conversion rate with an average sale of $150. Then take 100 leads from campaign “B,” which has a conversion of 35 percent and average sale of $215, but costs $25 per lead.

Campaign “A” cost = $1,500. Revenue = $3,000. The ROI ratio is 2:1Campaign “B” cost = $2,500. Revenue = $7,525. The ROI ratio is 3:1

Which campaign do you want to run?

As a marketer, it’s easy to take the approach of, “The lead is generated, so now my job is done.” As I stated at the beginning, generating the lead is the easy part. Taking the mindset of “my job is done, now it’s 100 percent up to sales” is a great way to fuel a tenacious relationship between your sales and marketing teams. As a marketer, generating all the leads in the world doesn’t matter unless the leads turn into sales. This is where analytics plays a key role.

As a “numbers guy,” this step in the process is one of my favorites. When describing to our sales team what my team measures, I tell them that we measure every single step in the process, from the time someone sees our ad until after someone buys a product from us, and every little detail in between. Looking at the end outcome down to the campaign level, as well as all of the steps in between, will quickly tell you which campaigns are working and which are failing. In addition, if you break each campaign down by each individual salesperson, you’re likely to find wide ranges of performance.

So what’s the next step once you’ve done the measurement? Take a hard look at your worst performing campaigns and figure out if there is any way to improve them. If you’re able to improve the campaign through marketing efforts like creative optimization, landing page optimization or marketing communications, then do so. This is what you can control. If you find that nothing you do from an optimization standpoint makes the campaign successful, then kill the campaign.

On the other hand, when you find campaigns that are working well, focus your efforts on those campaigns. This is where you’ll be best served funneling the lion’s share of your advertising budget. Also, just like you would do with failing campaigns, continue to optimize the campaigns where you’re already showing success. You’ll be surprised by how much you can squeeze out of the good campaigns with a little more marketing optimization.

How many bad leads can there really be? You’ll be surprised if you’re not careful. Early on, I trusted everyone and was burned on more than one occasion. At the contract stage, a CYA approach is necessary. Everyone who has ever done business with me knows that I’m extremely risk-averse when entering into any advertising relationship, especially when running campaigns through the affiliate channel where fraud can happen. With this in mind, a few simple additions to your contract, as well as careful monitoring, will guarantee that you’ll only pay for actual leads.

In the contract, make the following specifications:
You will only pay for valid leads that meet your predefined qualifications. For example, we qualify our leads by stating that they must be U.S. residents, have valid contact information, be non-incentivized and non-duplicate. Specify that you will not pay for any leads that are clearly bogus or that are generated through fraud.

Give yourself a short-out clause (24-72 hours) if the campaign isn’t working.
So what should you monitor on the front end? It’s important that you monitor the IP address of each lead. By monitoring for duplicate IP addresses, we’re able to identify clear fraud on the front end on a daily basis. When we see this, we quickly report it to our advertising partner in order to avoid squabbles and conflict later on.

In addition, you’ll need to track the final disposition of each lead. While it isn’t up to your advertising partners to do the selling for you, it is a publisher’s problem if a large percentage of your leads are bogus or have invalid contact information. We consider it normal for 10-15 percent of our leads to have invalid contact information. We chargeback these invalid leads in conjunction with our contract terms. If your invalid/bogus lead rate is higher than 15 percent, then your eyebrows should be raised. It could either be an early sign of the general lead quality or it could mean that you have a fraud issue on your hands.

While your job isn’t done the minute a lead is generated, you cannot have success running a lead generation campaign unless the sales department meets their end of the bargain. Before running a lead generation campaign, make sure you have clearly defined sales expectations for the leads that are generated. These expectations include:

  • The number of times you expect sales to attempt a contact by phone as well as by email.
  • The close rate that is expected.
  • The type and amount of feedback you want to help improve the lead quality.

If a given campaign is falling short, examine not only the leads themselves, but also examine how they were worked by each salesperson. We always look at the campaign details first to see if there is a quality issue affecting the performance. If we can’t find anything glaring, then we dive into the performance by salesperson. It doesn’t take more than a handful of salespeople to completely tank to skew the performance of a campaign. This is important to keep in mind because you don’t want to end up killing a campaign prematurely because of a couple salespeople not performing up to expectations.

Work hand-in-hand with the head of your sales department to optimize every aspect of the marketing and sales process so that you’re giving every campaign its best chance to succeed. In the end, the success of a lead generation campaign depends on the performance of marketing and sales. Keeping close tabs on the metrics from both sides will help you avoid pitfalls and generate bigger and bigger ROI.

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