Oftentimes, when I speak to business owners and sales executives about their lead generation efforts, they tend to view the subject as an “investment” in their business. You need to “spend money to make money,” right?
All too often business owners put all their eggs in one basket when it comes to lead generation. They either spend too much on ads or shell out lots of money for a new website, or bet everything on one marketing channel — or even just a few channels — in the hopes that one or all of these tactics will make the biggest difference.
But investing in lead generation is just like investing in stock; you don’t want to over-invest in one tactic. For example, would you put all of your retirement savings into a single company’s stock? You probably wouldn’t. So why are you investing all of your lead generation efforts — the source of your company’s future income and growth — into only one or a few lead generation channels?
The rules of investing also apply to growing your business, which usually starts with lead generation. After all, you need good leads to close deals and drive revenue growth. Here are a few tips for how you can diversify your investment in lead generation:
Most investment advisors would say it’s not a good idea to put your whole 401(k) into a single stock; instead, they would say you should invest in mutual funds or other investment products with a diverse range of risks and returns. Similarly, you shouldn’t only have a single source for leads.
At my company, we get a lot of phone calls from prospective clients looking for help with lead generation every time Google updates its algorithm. Why? Because companies will spend thousands of dollars getting their website into top placement in the search results ranking. Then, when they wake up one day to see their search ranking has dropped because Google tweaked the algorithm and changed the rules, and they suddenly realize that they had all their eggs in one basket. A good “lead gen portfolio” should include a mix of different lead generation activities, including both inbound (i.e. SEO, paid ads) and outbound (i.e cold calling, email outreach) tactics. This is what I mean by portfolio diversification. Even if one of your lead generation tactics struggles or the rules of the game change, your leads will continue to come in.
One of the most important aspects of investing — whether it’s stocks, bonds, index funds, retirement savings, or any other investment — is aligning your investment strategy with your investment horizon. How long do you intend to hold this investment? How soon do you need to be able to get the money? The timeframe for your investments is one of the most critical questions to ask because it helps determine which types of investments you should buy as well as what kind of risks you can tolerate.
In the same way, you need to align your lead generation portfolio with the short-term and long-term investment horizon for new business. We all want deals to close right away, but most of the time, especially in complex B2B sales, that’s just not realistic. You often need to have a big picture perspective, keeping in mind that a lot of your new leads are not going to close right away. Some will require long-term lead nurturing, which will require you to keep talking, building trust, and answering questions from prospects for many months. You should be focused on developing both short-term and long-term opportunities. This helps keep your pipeline full at all stages. Much of the sales process is about building relationships and trust. This usually doesn’t happen overnight. Just because a company isn’t going to buy your solution today doesn’t mean they shouldn’t be nurtured for tomorrow.
Just as a good investor examines returns and makes adjustments to a portfolio over time, you should be doing the same with your lead generation efforts because a certain tactic or marketing channel that got good results a few years ago may not work today. Remember, leads are the fuel to grow your business. You need to stay vigilant and constantly re-evaluate your lead generation channels and tactics. Keep trying new things and don’t be afraid to reapportion resources away from lead generation tactics that aren’t working and into new channels that have more potential for growth.
Investing is all about managing risk. Having 30 years until retirement is a much different situation than someone five years away from retiring. Your investment strategy should reflect that.
Too many lead generation “investors” have a tendency to underestimate the risks of certain types of lead generation activities. There are always new platforms to try, but that doesn’t mean it’s worth moving a sizable portion of your budget there all at once. Stay away from “game-changing” solutions that require large buy-ins or long-term commitments. Your lead generation portfolio needs to stay agile and flexible. Don’t bet the farm on any one lead generation channel or tactic.
When investing for your retirement, the toughest decision to make is knowing how much to put away, as well as estimating how much you should have already saved for retirement based on your age and income.
With lead generation, you also need to perform a few simple calculations to know how much of an investment you need to make to generate each new lead. Start by considering your average deal size, then calculate backward (based on your own conversion rates) how many leads you need to generate in order to hit your sales goals. Knowing the true value of a lead will steer you towards the lead generation tactic(s) best for your business. For example, you would n’t want to spend $500 to acquire a lead that will only generate $400 in revenue over time. A big mistake that many entrepreneurs and marketers make is not understanding the true ROI of their lead generation. Every single sales lead has a value. You need to know how much it’s costing you to get those leads and whether they’re actually worth the cost.
Diversifying your lead generation strategy doesn’t have to be complicated; it just requires a change in mindset. You need to put your energy, time, and marketing dollars into different channels to be successful. Just like having a diversified portfolio of investments and not putting all of your eggs into one basket when investing for retirement, your lead generation strategy needs to be diversified across several different tactics and channels. By diversifying your leads, you will build a stronger foundation to boost your conversion rates, close more sales, and drive more revenue.