Lead Generation and Sales Conversion Statistics

Lead generation, as part of the marketing and sales process, boils down to connecting buyers with sellers. The overall process can be very short, such as when a consumer lands on a web page and determines that they will make a purchase right then and there. (For example, buying a book or a DVD).

However, for businesses that have more expensive and/or complex products, as well as businesses that provide service offerings requiring person-to-person conversations, there is an inherently longer sales process.  Of course the more expensive or more complex the offering, the longer the sales process.

Lead generation is a vital component of establishing the initial flow of potential customers or clients (beginning with an “inquiry”), who would then move through a sales process, ultimately resulting in money being exchanged. Of course, not every inquiry will turn into a sales-ready lead, and only a percentage of the those leads will become qualified prospects, and in turn, only a percentage of those will become customers or a clients.

Lead Generation Statistics

So, what would be some benchmarks for a lead generation and sales process?

The following chart from Sherpa sheds some light on to that question. This chart and statistics represent “Average Conversion Rates in the Marketing-to-Sales Process.”

“We wanted to know what percentages of leads in each stage of the pipeline are likely to advance to the next stage. As this chart shows, on average, nearly four in 10 leads move from initial inquiry to being sales-ready, and approximately the same ratio advance from sales-ready to qualified prospect. As might be expected, the trend deteriorates moving to the next stage where only three in 10 qualified prospects convert to a sale.”

It cannot be overemphasized that these numbers represent “averages.”  The specific percentages along  the various stages of the sales conversion process will be more or less effective depending upon the quantity of education required before buying decisions are made, as well as the quality of the  information provided, and the effectiveness of sales personnel closing the entire process.

Regardless, the chart serves as a practical reference for marketers launching sales campaigns for which they have not yet established any metrics for comparison.

SEO B2B Marketing Leads: Quantity vs. Quality

Like all lead-generation strategies, determining quantity vs. quality is an ongoing balancing act and one that is related to Marketing Speed vs. Marketing Investment.

MarketingSherpa recently released the chart above that highlights the subject of quantity vs. quality in terms of leads, and search engine optimization surfaced as the channel generating the most promising results.

According to MarketingSherpa, “Marketers were asked to rate the quantity and quality of leads generated for each of the search tactics listed at the bottom of each column using the scale shown to the right of the chart. The total percentage of each column reflects those who are using that tactic. For example, 71% of respondents use ‘Search engine optimization’. The remaining 29% do not use this tactic.”

Cranking out a higher quantity of leads can be established by increasing PPC advertising expenditures and increasing search engine optimization efforts, especially link-building. But tuning the quality of leads can be a little trickier while pushing quantity, since some practical ways to increase quality include conveying more restrictions in your advertising and/or on your web pages – which reduces quantity.

So, in essence, quantity and quality can seem like opposite ends of the same seesaw with one end going up and down opposite the other end.

Regardless of whether you are after more quantity, better quality, or some combination of the two, SEO should be part of your marketing efforts to accomplish your online lead generation goals.

OutSource Online Lead Generation

There are a number of online lead generation models, and they all center around the concept of providing relevant, targeted, current (even real time) sales leads.

In addition to continuing your own lead generation strategies – online or otherwise – an additional option is to outsource this activity. In exchange for payments on a per-lead basis (around $5 to $25 per lead for many categories), you can follow up with fresh leads as they come in.

Internet Lead Generation Agencies

There are outsourced agencies that provide online leads that can be used for a variety of purposes such as list building for e-newsletters or direct sales. The idea would be to call the leads immediately (for a telephone sales organization), or to plug the leads into an appropriate sales funnel.

Internet lead generation agencies develop their own websites to capture leads and/or partner with other lead generation websites.

Various models of online lead generation exist, but typically, a consumer who encounters lead generational websites enters their contact details in exchange for a free offer or for free information.

♦ In some cases, the info seeker would enter his/her information directly within a banner advertisement and the lead could be sent directly to the advertiser.

♦ A full-page lead generation advertisement may promote some free offer to encourage visitors to enter as much personal information as required to process the lead and for the individual to receive their free item. This type of online lead generation can result in lots of leads, some of which can be low-quality, including leads with purposefully inaccurate information, since the information was entered for the purpose of receiving something free and not as a result of a sincere desire to be contacted.

♦ Another common Internet lead generation model is through co-registration advertising (Co-Reg). Through this process, an individual is offered the opportunity to receive additional free information while registering for some other service. For example, while subscribing to a magazine or ordering printing services, a consumer might request additional information that is being offered. In other words, the demographic info provided by the consumer, as well as the service they were signing up for would indicate the category of lead. Following the same examples, someone who was signing up for a health magazine subscription and also requested info for a nutritional product, might be categorized as a “Health and Fitness” lead or “Weight Loss” lead, depending upon the specifics of the nutritional product. A consumer who is purchasing online business cards from a printing service, and who also registers for information about working at home, could be categorized as a “Business Opportunity” lead.

These are not the only ways lead-generation agencies generate their inventory, but they are some of the ways that lead agencies can provide current, targeted leads to your email inbox.

Like everything else in the marketing world, you would be wise to start small and test the effectiveness of a given online lead generation service (or several such services) and scale up your efforts for a lead source that shows promise.

Of course what is understood is that you have a lead processing activity already in place, to effectively utilize these paid leads, whether that might be calling the leads immediately, or including the purchased emails into your existing sales funnel.

Ten Lead Generation Models

Generating an ongoing flow of sales leads is the most fundamental component of marketing for every business that requires new sales to sustain itself and/or for established businesses that want to expand.

Lead generation includes any, or a combination of, the following:

♦ Broadcast Advertising: Infomercials are a prime example here. Not only is an obvious product being sold, but that sale results in a valuable lead for additional and similar products. Such products may be sold by the same company and/or the lead may be sold to other companies that sell similar products. (Radio advertising would be another aspect of broadcast media).

♦ Online Lead Generation: This is a very rapidly growing and evolving arena as new methods for online lead generation are tested and other ones are refined to produce greater results. Online lead generation includes pay-per-click models; search engine optimization activities; video marketing; downloading free (or paid) information in exchange for lead info; responding to surveys; registering for online services; in short, any way that you can observe or imagine how to inspire an individual to enter their name and email (or more info) online could be a component of lead generation.  (You can also Outsource Online Lead Generation.)

♦ Direct Mail: Lead generation through direct mail still works today, as evidenced by the amount of junk mail you and I continue to receive each week, in spite of the rising mailing production costs. Becoming effective at direct mail lead generation can make or break a lead-generating marketer, since the costs demand critical attention to testing, comparison and refinement. In my opinion, this is a fantastic proving ground for the development of any marketer worth his/her mettle.

♦ Event or Trade Show Marketing: This is a traditional form of formal and informal lead generation. The formal aspect of this is represented by all the ways that exhibitors desire to engage attendees at these expos. The informal aspect of trade shows is represented by the nature of many professionals who attend such conferences for the purpose of establishing new business leads through personal networking.

♦ Seminar or Training: You name it, and there are entities who provide seminars and training sessions for popular subjects, such as health, finance, insurance, software, marketing, etc. The seminars may be low cost or free or may be an important revenue stream in and of themselves.  But for many such activities they primarily exist to generate leads. In recent years this has been growing at a rapid rate, especially as an important aspect of online lead generation.  However, in this paragraph, I’m primarily referring to its more established offline activity.

♦ Publicity and Public Relations: Getting people to call your business through mentions in the press is a very effective way to not only generate new leads, but it’s also a way to bolster each and every other method, too, since independent media lends greater credibility to your business.  For some businesses, online press release services have become a primary driver of new leads.

♦ Whitepapers or Product Literature: Requesting free information from a company is a classic lead generation strategy that has been prominent forever and is one of the earliest methods on this list that was translated over to the online world. Because it is so commonly utilized, it is most effective with significantly unique and valuable research and/or some very creatively presented information to make it stand out in your industry.

♦ Email Marketing: Lead generation through email lists is still used, and is still effective, even though in the hyper-paced world of the Internet, this seems like an ancient activity. Although spam is universally vilified, you and I still receive a lot of it every day (in spite of anti-spam regulations in the USA in 2003). Unfortunately, that perception diminishes the effectiveness of generating leads via email marketing but does not make it obsolete. More targeted types of email lead generation are effected by offering something for free that is delivered via email, such as a mini-course, in exchange for their email address.  Also, speaking of email newsletters, for more info check out Should You Offer a Paid Online Newsletter?

♦ Telemarketing: In the United States, telemarketing was restricted in 2003 with the opening of the National Do Not Call Registry, which gives consumers the opportunity to limit the telemarketing calls they receive. Regardless, the list only applies to residential phone lines and not business lines, as well, telemarketing can be conducted to residential lines for political organizations, charities, surveys, and for existing business relationships.

♦ Social Media: Lead generation through social media channels is noted separately here, even though it is an online activity. Social media merits a special mention not only because it such a dynamic and growing area, but also because social media channels, such as YouTube, Facebook, LinkedIn, blogs, Flickr, Digg, etc., command such a large amount of Internet traffic that they have become a force independent of search engines and paid search models. For more info on “strategic” use of social media, be sure to read Social Media Chocolate Strategy.

Conclusion

Whether you are generating leads online or offline, the necessity for testing, monitoring, comparing and refining are the factors that will determine the best results from any lead-generation campaign or model.