What is lead generation?
Lead generation is a process of attracting users who are ready to perform at least one of the targeted actions on the website: place an order, subscribe to a newsletter, leave their contacts, write a review, etc.
Unlike other promotion techniques offered by every marketing agency, the lead generation service results in an intensive increase in conversion (by improving the quality of traffic), rather than an extensive one (by increasing its number).
What is a lead?
A lead is a potential buyer who has shown interest in your product and has taken one of the targeted actions: visited the website, viewed contacts, filled out a feedback form, left an application, placed an order, etc.
Based on the probability of becoming a client, leads are ranked as cold, warm, and hot. The hotter the lead, the more valuable it is, and, therefore, the more effective the channel that brought it.
How to calculate the cost of a lead
In lead generation, marketing cost is calculated using two methods:
- Actual: we divide the funds spent on lead generation by the number of leads. For example: 100 USD spent, 50 leads received, lead price = 100/50 = 2 (USD).
- Predictive: we decide what share of the average order margin we’re willing to pay the webmaster as a payment for a lead. This will be the cost of the lead.
Not all leads end in a sale. Therefore, the order price is a more informative indicator. Let’s take the cost per lead and multiply it by your conversion rate. If out of 100 leads, about 30 become buyers, then the conversion rate is 30/100 = 0.3.
For example: from an average purchase we get $200 of margin, of which we’re ready to spend $40 to pay for a lead. With a conversion of 30%, for 1 order we pay 40 * 0.3 = $12.
Lead generation payment models
There are three basic payment models:
- Cost per Action (CPA);
- Cost per Click (CPC);
- Cost per Lead (CPL).
Cost Per Action
CPA is a model of mutual settlements between an advertiser and an affiliate, in which the advertiser (the one who buys leads) pays the affiliate (the one who generates them) only for the targeted action performed (a completed order, for instance). In this case, orders that weren’t completed aren’t paid. Leads that completed the registration or filled out the application form but didn’t bring commercial benefit are also not considered payable.
CPA is the most transparent and productive model in lead generation outsourcing: you’ll hardly find a more cost-effective way to attract visitors to your website.
An example of CPA-based cooperation: an online store that places its products on so-called CPA affiliate networks. The store pays the CPA network only for completed orders.
Cost per Lead
Cost per Lead is payment for users who came to the website and left their contacts (for example, after completing the registration procedure or subscribing to the newsletter). If your website doesn’t sell anything, but you’re interested in collecting contacts, then there’s no difference between CPA and CPL for you. In your case, the action is a subscription or registration.
Separating (or combining) CPL and CPA makes sense if the task is to collect a base for mailings apart from lead generation. Cost per Lead is a common model among training agencies and, in some way, intermediate between CPA and CPC.
Cost per Click
CPC is payment for clicks, that is, for traffic. This means that the risk of attracting traffic from leads that may end up cold is quite high. This model may be inferior to CPA in terms of efficiency, but in general, this drawback isn’t a necessary attribute. The fundamental difference between the two models is in the methodology: while CPA raises conversions, CPC boosts the number of views and makes your website more popular – which ultimately also leads to increased sales. Plus, CPC is cheaper than CPA.
An example of companies that benefit from working on the CPC model: news and other information resources that don’t offer goods or services.
The advantages of lead generation
- Absolute assessment indicators. The results come not in relative terms but in specific numbers: the number of leads received, the number of sales, profit, the number of views, etc.
- Pay for the result. Expenses are strictly proportional to income. You pay only for real growth, not for increasing its likelihood.
- Easy budget planning. Determine how many leads you want to get, calculate the cost per lead, and multiply the resulting values. The campaign budget is ready.
- Brand awareness boost. By increasing the variety of traffic channels, you improve your search presence and gain more popularity.
- Sales growth without risk. Any lead generation marketing company is interested in growing your sales because it works for the % of the profit.
Lead generation tools
- Website (Landing Page)
The landing page that your leads, well, land on consists of a layout with multimedia elements and sales copy. The text provides information about your product, explains the uniqueness of the offer and benefits from a purchase made here and now, lists guarantees, includes reviews from satisfied customers as well as contact information and a button for placing an application/order. We do all the work on creating a landing page ourselves.
- Content marketing
To ensure that the landing page (or your website) is user-friendly, doesn’t raise doubts, and encourages performing the targeted action, we create unique SEO-optimized content for it. Thanks to optimization, it’s easy to find, collects traffic, and drives more people to your proposition. Sales copy grabs the visitor’s attention and nudges them into action.
- Lead generation through social media
Maintaining your company’s accounts on social media means drawing up a content plan, creating a group, selecting a recognizable, human-readable URL for it, creating a logo, posting content regularly, as well as writing copies and media content for posts according to the plan. The goal is to attract attention, be remembered, generate the maximum number of shares, and, ultimately, get leads into the sales funnel.
- Mailing lists and messengers
Emails and notifications in instant messengers are a way to warm up cold leads. The letter will remind them of how unique your product is and the benefits the lead will lose if they don’t take the targeted action as soon as possible. Another type of mailing is unobtrusive newsletters with valuable content. Having received a portion of interesting info, a person is less likely to mark your next letter as spam, becoming more engaged.
Lead generation for the B2B segment
Through lead generation, our marketing agency will effectively improve your B2B KPIs. We’ll select and sort the audience according to the degree of interest in your product, create a unique selling proposition for each segment, and demonstrate it to the decision-maker at the right time in the right place. This approach guarantees an influx of leads at a minimal cost.
In B2B, working with cold leads brings no profit, so you need to build a customer base from warm ones. And that means from decision-makers, not those who are just interested. It’s tricky to obtain the contacts of the management, but it’s possible. There are public and private resources for this: the Unified State Register of Legal Entities, databases like Cronos, etc.