Course 5.  Lead Generation

Lead Generation is a formal process of converting leads to prospects.  A company uses methods like direct mail or telemarketing and approaches a target market with something of interest.  Sales cycles are created. 

In this course you'll learn about:

1. Lead Generation Methods

a. Awareness Marketing  

b. Target Marketing  

c. Direct Marketing  

d. Networking  

e. Prospecting  

f. Referral Marketing

2. New Revenue's Primary Constraint

3. The 10 Do or Die Factors of Lead Generation  

Lead Generation Methods

Lead Generation uses a variety of marketing communication tools to send a message to your market.  Your goal is to get the market to respond back to you.

1.  Awareness Marketing

A common definition of advertising is any paid form of non-personal communication of ideas or products in the prime media, i.e. television, the press, posters, cinema and radio, and the Internet.   The foremost purpose of advertising is to create awareness.  Awareness is the primary requirement for advertising to be effective in any way.  Awareness marketing can be used in a variety of markets and usually represents one item such as one product or one company.

Toshiba has an advertisement with the headline "Affordable Color Copiers."  A paragraph goes on to create awareness of the Toshiba FC22 color copier.  For more information, the audience is invited to go to copiers.toshiba.com.  

Kmart has an advertisement for Martha Stewart products.  A nice photograph of Martha seated in her Victoria Dining Collection furniture has a headline saying "Garden Furniture for Every Day."  The tagline is "You're sure to find a comfortable seat in one of our eleven furniture collections."  

The advertising world is filled with Awareness Marketing.  How do we know an ad is using awareness as a primary function?  The ad makes a statement without a request for action.  Advertisements can do a lot of things besides create action.  Brand awareness and positioning are primary uses of advertising.    

Marketing tools used in awareness marketing are generally advertising mediums such as newspaper, radio, television and the mail.  Signage and location certainly fit in the category as well.

2.  Target Marketing

Using Target Marketing, a firm identifies market segments and develops products and marketing mixes tailored to the segment.  A marketing campaign is targeted at one segment with a product designed to meet the needs of that segment.  

Low cost producers as well as companies with a differentiated marketing strategy that allows a premium price because of the uniqueness of the product or service use target marketing.

Target marketing can use a variety of marketing tools.  The same tools used in awareness marketing can apply to target marketing.  For example, if a product is targeted towards senior citizens, many publications cater to the senior citizen market.    

VeriSign, Inc. is the world's largest provider of Internet trust services, supporting businesses and consumers from the moment they first establish an Internet presence through the entire lifecycle of e-commerce activities.  The company recently sent a targeted marketing piece to Web sites promoting the attendance of a seminar titled, "Secure E-Payment Processing - How to Quickly Add E-Commerce Profits and Convenience to Your Site."

Targeted at investors, Special Situations Report is a monthly report on stock opportunities.  A marketing piece makes the statement "Special Situations Report has racked up an impressive record since its inception in 1989: SSR's stock recommendations have achieved a compound annual return of 26.7%, easily beating the S&P 500 at 12.7% and the Dow Jones Industrial average at 13%."  The annual return of 26.7% is a targeted message to potential investors.

Target marketing crafts messages aimed at a particular audience.  It's not "one size fits all" like awareness marketing.

3.  Direct Marketing

Direct marketing is the practice of marketing directly to a market without the use of third party tool such as a newspaper, radio station, television station or channel partners.  Direct marketing is sent directly to the market.  Telemarketing, direct mail and direct email are popular forms of direct marketing.  The middleman is eliminated.

The goal of direct marketing is to find the emotional and rational needs of a market and then create products and promotions that address those needs.  Knowledge is continually collected, assimilated and used to continue to create opportunities.

Direct marketing is very effective and affordable to small business.  One of the hallmarks of direct marketing is the use of product offers.  Most often direct marketing doesn't market a product.  It markets a product offer.  The key is to drive activity within a market.

4.  Networking

Networking is the marketing practice of building associations with groups of people to generate new business.  It is a strategy that pays off over time as relationships are built within a community.  

For example, business people will join the local chamber of commerce and get involved in activities to meet other people.  Over time the relationships develop and prospecting and referral marketing become possible.  

Affiliate marketing on the Internet is a good example of networking.  There are many affiliate programs on the Internet a business can join.  Programs such as Commission Junction, Mailbits, and FastClick are just a few.  Affiliate marketing is automated networking.  Third party commissions are generated in one of four ways.  They are pay-per-click, pay-per-impression, pay-per-lead, and pay-per-sale.

5.  Prospecting

Prospecting is the practice of cultivating potential new business by aggressively approaching new people or groups and soliciting participation.  Prospecting is an aggressive activity that requires a lot of stamina.  It is practiced by personal sales representatives to build their list of prequalified prospects.  

Prospecting takes many forms and is usually practiced consciously.  Canvassing, for example, is a good example of prospecting.  In canvassing, a sales person will choose a geographic location and make a point of visiting every business within that geographic location.  It may be a city block.  The person is seeking opportunities to prequalify a business and creates the opportunity by walking in the front door.  

Prospecting can be done on the phone, in person, by mail or email.  

6.  Referral Marketing

Referral marketing is a specific marketing practice utilizing the principle of reciprocity - "I'll scratch your back if you scratch mine."  In referral marketing relationships are formed for the purpose of generating referrals.  A referral is a recommendation by a third party that a prospect and a seller meet or do business. 

One person acts as the referral agent.  The referral agent has a relationship with a potential customer and a seller.  The referral agent prequalifies the potential customer to determine interest in the seller's product.  If the potential customer has interest, the referral agent refers the potential customer to the seller either directly or indirectly. 

Referral marketing generates the highest closing percentage on activity in the entire field of marketing.  It is also the most difficult to manage because of the nature of relationships.

New Revenue's Primary Constraint

Lead generation is the primary constraint in revenue generation for small businesses.  If a small business is struggling with sales, nine times out of ten the problem is lead generation.  The struggling company is surviving but sales revenue is either a feast or a famine.  When income statements are reviewed, the struggling small business will have peaks and valleys in sales.

What causes the peaks and valley's and why is lead generation such a problem?  The struggling company doesn't develop a direct, reliable and affordable method of lead generation to add enough new cycles to grow the company.

Most small businesses hire one sales person to start.  Now there are two people selling because the owner or operator of the business started out as the chief cook and bottle washer.  Over time, as sales grow, more sales people are added.  The business will grow, however, only if it is able to add enough new sales cycles. 

In the startup days of a business, the sales people rely on referrals and light prospecting.  Referrals, while they're terrific if you get them, are uncontrollable in both quality and quantity.  Sales people wait forever for the next referral to come.  Prospecting activities also tend to be hit or miss.  Mainly sales people attend meetings, functions, gatherings and tradeshows trying to meet the right people at the right time.  Like referrals, it's a needle in a haystack.

Eventually the struggling company discovers direct marketing.  It's usually in the form of cold calling.  Why don't more companies use cold calling?  It's a very difficult thing to do for most people.  Most sales people are sales people, not marketing people. 

Successful business-to-business cold callers are a unique breed of marketer.  They possess a nature, temperament and intelligence that allow them to dial the phone to talk to a total stranger, interrupt someone’s day and create awareness and interest in a product or service according to a plan.

Cold callers like to take action and create results.  They are autonomous people who like to work and act independently.  They don’t mind sitting in an office with just the computer, phone and desk.  They have high energy levels and are easily motivated and enthusiastic.  They have a desire for relationships and are good relationship builders while, at the same time, they are direct, assertive and don’t mind conflict.  They can say "no" when necessary. They are charismatic and conversational but know how to get to the point and achieve a goal.  They like creating opportunities from a call and getting immediate results.  Even if the response is "not interested" at least the cold callers knows more now than a few minutes earlier.  Cold callers are courageous people who don’t take the rejection personally.  They have a sense of urgency that compels them to dial again.  They need feedback about their work and like to have people praise them for a job well done.  Each day is a challenge and while they’d really rather be doing something else they like being good at their job.

Dealing with rejection is a way of life for cold callers.  About 98% of contacts made from cold calls are either "not interested" or "don't call me again."  Cold leads are the primary result of cold calling.  Small businesses don't have the patience to cultivate cold leads.  They need business now.  Cold calling can produce immediate results but its best used for building a long-term funnel.

Capital is also a factor.  Passive advertising like newspaper, television and radio are beyond the means of most companies.  Direct mail can be affordable but it’s difficult to master.  Most businesses are undercapitalized and have to rely on personal sales people to generate sales.  If the personal sales person isn't a lead generator and relies on referrals, revenue is going to be hit or miss.

Struggling companies need to hire good sales people who can perform lead generation duties to keep the sales funnel growing. 

The 10 Do or Die Factors of Lead Generation

1.  The size of your market

The size of your market can be, and usually is, very misleading.  Very few business owners ever segment their true market.  If you follow the guidelines for list cleaning and prequalifying after your market selection you will see the true size of your market.  Most business owners are mislead by statistics, charts, graphs, tables, lead list companies and other business people.  Just because you have a product that can be sold to 50,000 companies doesn’t mean your market is 50,000 companies.  There are many variables that affect the true size of your market. 

For example, if you have a sales force of four people you will find, upon very close inspection that a different trend will develop with the four different individuals.  Their own core value, bias, prejudice, judgments, attitudes, beliefs, intentions and actions will guide them towards a unique market.  They will segment their own markets without your knowledge.  You will find the actual available market based on these criteria is very small compared to your expectations.

It is very difficult to segment a true market.  It is costly, time consuming, complex and emotionally draining.  So what?  Declining sales and the pressures of cash flow are a far greater concern than looking at a true market.  Determining the true size of your market is a skill that is learned over time.  The clues are always in front of you if you choose to see them.  In working with most business owners, I will ask, "What is the size of your target market?"  Whatever the answer is I will divide it by four and start with this number. 

2.  The demand for your product in your market

The demand for your product is very elusive.  Unless you can afford very expensive research you are going to go with a gut feel.  I believe in this method.  I think the strong business owner can determine whether there is market demand. Certainly some basic research will tell you if your product is in demand.  The only true test is sales.  If you are selling, all things considered, and revenues are growing then there is demand.  The one thing that kills most lead generation programs in terms of demand is price.  Price is an elusive beast.  Pricing yourself out of a market or giving away too much margin in a market is a real concern.

3.   The competition in your market

Competition is always of the utmost concern.  Competition can always be beat if you segment markets based on the actions of your competitor.  There are only a few strategies for competition.  Be first.  Be the best.  Be the only one.  Go where they aren’t.

4.   Your differentiation in the market

Are you unique?  Can you prove your uniqueness?  Do prospects contact you to get your product?  Do you have a high degree of positive value return?  Differentiation is a never-ending battle in a competitive market.  We often fool ourselves about our value.  There’s no need to go through this.  If you have a differentiated product that is valuable in the market you will get positive value return.  Look for it and if it is occurring, don’t take it for granted.  Realize its benefit and run with it.

5.   Your product offer in the market

Direct response marketing is mandatory in business today.  The market place is too crowded.  I think every business owner should have a degree of expertise in direct response marketing.  It’s how we polarize our markets and get people to take action.  Learn the techniques or have people on staff that knows the techniques.  Your offer is going to be constantly changing as your market changes. 

6.   Your ability to penetrate the market

There is a vertical or a horizontal market strategy that allows you to penetrate the market.  Relationships are critical.  Who you build relationships with and the benefit you derive from them are critical to your success.  Find the opportunities in your horizontal market to continue spreading your markets.  Find the vertical opportunities that present themselves and seize them for all they’re worth.  Your ability to get in and stay in is a strong factor in growth.

7.   Your ability to capture leads

Lead capture is an often-overlooked component of lead generation.  How many newspapers consult with businesses about capturing the leads from their advertising?  Almost none.  Work on your lead capture and make it reliable and measurable.

8.   Your ability to prequalify leads

Prequalifying is an art form.  It’s a combination of logic and influence combined with charisma and sleuthing.  It is a strong indicator of your growth potential.  There is a definite relationship between the quantity of prospects and the quality of prospects.  How many you have and of what type are things you have to know.  You don’t have a choice.  Learn them.  Growth them.  Don’t ignore prequalifying.

9.   Your level of maturity in understanding market cultivation

Companies are trained to pay attention almost exclusively to the action stage of the first time buyer.  If a deal isn’t going to close now you may not care about it.  This is wrong.  Market cultivation is the ability to project out one, two or three years in advance and develop a relationship through the identities and roles of the sales progression.  People move through stages of change.  The contemplator today is your customer tomorrow if you have framed the opportunity.  It requires maturity.  Here’s a rule of thumb.  The more competitive your market the more you have to cultivate the market to grow.  It doesn’t have to cost a lot of money.

10. Your ability to automate the lead generation in balance with growing relationships

Banner advertising is a very cold, calculating process based on automation.  If combined with real world marketing and relationship building it can be effective.  Automation is critical in every business but in lead generation it should be combined with relationship building.  Email has grown in popularity for this reason.  It has the highest degree of automation yet still provides the ability for personal issues.  

Summary

First we discussed six common Lead Generation Methods.

1.  Awareness Marketing

The foremost purpose of advertising is to create awareness.  Awareness is the primary requirement for advertising to be effective in any way.  Awareness marketing can be used in a variety of markets and usually represents one item such as one product or one company.

2.  Target Marketing

Using Target Marketing, a firm identifies market segments and develops products and marketing mixes tailored to the segment.  A marketing campaign is targeted at one segment with a product designed to meet the needs of that segment.  

3.  Direct Marketing

Direct marketing is the practice of marketing directly to a market without the use of third party tool such as a newspaper, radio station, television station or channel partners.  Direct marketing is sent directly to the market. 

4.  Networking

Networking is the marketing practice of building associations with groups of people to generate new business.  It is a strategy that pays off over time as relationships are built within a community.  

5.  Prospecting

Prospecting is the practice of cultivating potential new business by aggressively approaching new people or groups and soliciting participation.  Prospecting is an aggressive activity that requires a lot of stamina.  It is practiced by personal sales representatives to build their list of prequalified prospects.  

6.  Referral Marketing

Referral marketing is a specific marketing practice utilizing the principle of reciprocity - "I'll scratch your back if you scratch mine."  In referral marketing relationships are formed for the purposes of generating referral.  A referral is a recommendation by at third party that a prospect and a seller meet or do business. 

Next we discussed new revenue's primary constraint - lead generation.  Lead generation is the primary constraint in revenue generation for small businesses.  If a small business is struggling with sales, nine times out of ten the problem is lead generation.  The struggling company is surviving but sales revenue is either a feast or a famine.  The struggling company doesn't develop a direct, reliable and affordable method of lead generation to add enough new cycles to grow the company.

Lastly, we discussed the 10 Do or Die Factors of Lead Generation:

1. The size of your market

2. The demand for your product in your market

3. The competition in your market

4. Your differentiation in the market

5. Your product offer in the market

6. Your ability to penetrate the market

7. Your ability to capture leads

8. Your ability to prequalify leads

9. Your level of maturity in understanding market cultivation

10. Your ability to automate the lead generation in balance with growing relationships