First Step to Generate Leads: Key Perspectives You Can’t Miss


The Demand Generation Context

Lead generation is a process, a set of activities required to fill the top of a marketing funnel. It is the process through which a ‘suspect’ is converted into a ‘prospect’. By definition, a suspect is a person or an entity who is outside the sales funnel but who essentially emits some signals (such as visiting your website, downloading content, sharing email and phone number, etc.) that (s)he might conform to our target audience. However, we have to validate our assumption and qualify a suspect into a ‘prospect’. Before we get to the challenges to generate leads there are three more questions, we need to clarify in order to establish the market segment your product can be categorised. Those are:

  • What is your average revenue per account per annum (ARPA)?
  • How many accounts do you need to create $100Mn in ARR?
  • Who is your target customer? Is it a retail user, an SMB or an Enterprise?
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Lead generation is a process, a set of activities required to fill the top of a marketing funnel. It is the process through which a ‘suspect’ is converted into a ‘prospect’.

Christoph Janz of Point Nine Capital described 8 following types of products:

    1. A microbe: charging $1 a year per account to 100 Mn users e.g., WhatsApp

       

    2. A fly: charging $10 a year per account to 10 Mn users, e.g., Yelp, Brainly

       

    3. A mouse: charging $100 a year per account to 1 Mn users, e.g., Evernote, Mailchimp

       

    4. A rabbit: charging $1K a year per account to 100K users, e.g., Shopify, Kajabi

       

    5. A deer: charging $10K a year per account to 10K users, e.g.,Hubspot, Atlassian

       

    6. An elephant: charging $100K a year per account, e.g., Salesforce, Demandware

       

    7. A brontosaurus: charging $1M a year per account, e.g., Veeva, Workday, and

       

    8. A whale: charging $100M a year per account, e.g., Palantir

Most SaaS companies selling to SMBs start as a rabbit and try to become a deer over time. A rabbit requires an automated no-touch sales process whereas a deer would need an inside sales organisation. For those who do not know the difference, an inside sales organisation has Sales Reps (SDRs) who sell to inbound leads remotely over call and a demo over the internet. A low-touch or no-touch sales process avoids using a human to close sales. The reason is that the LTV coming from the low-ticket size does not permit the availing cost of a sales team. The elephants, brontosaurus and the whale fall under the domain of hardcore enterprise sales with a longer sales cycle and requirement of face-to-face dedicated sales executives (ABS, Account-Based Sales).

Which Segment Does Your Product Appeal To?

From the above discussion three different market segments emerge:

    1. B2C: Individual users, low ticket, high volume: microbe, fly, mouse
    2. SMB: Small & medium business owners, moderate ticket size, medium volume: rabbit and deer
    3. Enterprise: Large enterprises, high ticket size, low volume: elephant, brontosaurus and whales

With this context, let us attempt to understand the challenges to generate leads as these three different segments of users carry different procurement mindsets since they follow different decision-making processes.

Usually, all these companies would use a combination of the following channels to generate leads. Let’s delve deeper into these channels for lead generation before discussing common challenges faced in respective channels

Common Channels To Generate Leads

Content Marketing

People connect with stories. And where do we look for stories? The answer is obvious, the internet, especially social media. People on an average check their smartphone about 150 times a day. These are opportunities to grab attention. And nothing works more than a well-crafted story i.e., content in the form of a video, gif, meme, blog, vlog etc. Content marketing is one of the key pillars of marketing today.

Influencer Marketing (paid)

You have a group of followers (tiny or big) in the real world. However, you can’t broadcast a message to these people instantly if you so desire. But the social networks on the internet have made it possible for anybody to communicate to his or her captive audience on the network instantly. Power to people, you might think. Therefore, every person in a network is a micro-influencer. The celebrities such as a film star, a singer, or a sports star might have influence over millions whereas a local influencer might have influence over a few thousands. The difference is in degree not in quality.

This phenomenon of networking clubbed with our innate human bias for a recommendation from a known, likable face have created a new form of marketing, influencer marketing. Today you can pay selected (micro-)influencers to endorse your product on his or her social network and generate (micro-)visibility which in turn generate leads for your product.

Search Engine Optimisation (organic)

When you publish your website, search engines such as Google sends a crawler program to your website. The crawler picks up keywords from your webpages and indexes those in the google search algorithm. Based on several qualifying criteria that google changes from time to time a rank is generated for your website for certain keywords. This entire ranking process is unpaid or organic because google doesn’t take money from you to do this work. It takes some time before you can expect good results from such SEO efforts. However, a higher organic ranking on certain keywords that are relevant for you increases visibility organically and helps your brand establish its authority. SEO should be there in the long-term marketing strategy of your product and brand.

Search Engine Marketing (Paid)

This is the bidding marketplace where you bid an amount for certain keywords in google search. You get instant results in higher ranks within the paid-search listing hence get a share of attention from your target audience. Search engines are a two-sided network where on one side the ‘free’ users share their ‘intent’ with google in terms of the search keywords and google indexes those search terms and sells those to the willing bidders on the other side of the network and make money in the process.

Email Marketing

Email marketing, if done well can be called one of the forever green pastures for your brand. In this you build a well curated list of emails collected from the internet traffic you get (either organically or through paid marketing) on your landing page in exchange of offering some value to them (e.g., an eBook, information, access to your basic product etc). These are usually people who self-select to opt-in your list of email followers therefore can be a very relevant, effective and sticky audience. Once your list grows to a significant number you may plan sending them occasional updates of your activities along with product promotions.

Social Media Marketing

Social media marketing helps you to build a funnel in the selected social networks such as Facebook, Instagram, twitter etc. It has both organic and paid options just as in search engine platforms. These efforts are a must for building a recall of your brand and continuously engaging with your target audience. It can also help you build your own community of earnest followers through groups and pages. You may also use a technique called retargeting to follow along a prospect who showed some interest in your content across the social media.

Affiliate Marketing

This is a performance driven reward system that rewards the source (read affiliate marketer) for bridging a lead into seller’s funnel. It can also be linked to final sales rather than just providing a lead. There are affiliate networks that consist of influencers, bloggers, large media sites that help capture a lead and redirect them to the seller’s website.

Structures Of The Sales Organizations

There can be another lens to view these channels and the lead these channels generate.

Based on the effort to generate the leads, say we create a 2×2 matrix. The x-axis is divided into inbound and outbound. Inbound means the prospects discover the product online and call/reach the company sales executive, whereas outbound means the company sales executives call the prospects/leads generated through other marketing campaigns. On the Y-axis we plot the type of leads: organic, if the leads come through non-paid sources such as word-of-mouth, organic search (SEO) etc. and paid, if the leads come through paid marketing sources such as google paid search (SEM), influencer marketing (paid) etc.

No-touch: B2C

In this segment, the LTV is too low to allow for a large spend on customer acquisition. We can’t even afford a human closing a sale. Therefore, automation is the only way. Moreover, the expectation is to generate leads which are organic rather than paid over a period of time making the low lifetime value justified in the business model. 

For example, nobody from Facebook came and sold you an account, you got sold yourself. Though you might feel you are not ‘paying’ any money to them. But the fact is you are paying in another currency, your ‘attention’. That’s what Facebook sells on the other side of the network, to the advertisers who want to catch your attention. 

Google follows a similar business model. When you sign up for Gmail you don’t pay in the basic plan but when you use google search you share your ‘intent’ with google and google sells your ‘intent’ (read search terms, keywords) to millions of willing bidders on the other side of the ‘screen’. That’s how they make money. 

It’s the continued ‘presence’ of users like yourself on the network that makes these two-sided platforms ‘valuable’. Therefore, they will go to any extent to get your ‘attention’ and keep you ‘hooked’ to their screen, if possible, forever.

Inside-sales: Medium ticket B2C & SMB

In some sectors, the sales ticket size is usually moderate, not too small nor too large. In such a case we can afford to spend some budget on what we call an Inside Sales organisation. In such a case online marketing is considered to generate leads, however, there will be a group of sales executives who would call these leads to close the sales over the phone or the internet. 

Imagine an insurance agent selling your car insurance. She is going to call you before your renewal date and try to sell you an insurance product. You will never meet her in person. This kind of a sales effort is a low-touch sale more formally called an Inside Sales. It is called ‘Inside’ because the sale executives would never go outside the office to sell the product. The entire sale happens remotely.

The cost of customer acquisition here is higher than that of no-touch sales but this higher cost is justified by the higher ticket size and higher margin of the product, say, the insurance premium.

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In this article we have set the context of digital marketing with respect to the nature of the business, and pricing of products.

Enterprise Sales: Enterprise

Finally, we come to the large ticket contracts which are sold to large enterprises. These are large annual contracts for build-operate models. Often the deal size goes into tens of millions of dollars. Of Course, the time to close such deals are longer, there are many people involved in such a purchase, therefore, such sales require a lot of human contacts, face-to-face meetings, requirement gathering, proposals, counter proposals etc. 

Think of companies such as TCS, Wipro’s of the world in the software domain, GE, Bosch’s of the world in the manufacturing domain.

The customer acquisition cost in such a sales structure is very high and the high-ticket sales justify those. Leads are generated mainly through outbound activities, be it paid or organic using a strategy called Account Based Marketing (ABM).

In this article we have set the context of digital marketing with respect to the nature of the business, and pricing of products. We have logically deduced three different segments (B2C, SMB & Enterprise) in the market for such products. We have also explored their uniqueness and deliberated on the kind of sales strategy appropriate for each segment. This article sets the context well for the next topic we want to cover next. We will discuss the top 9 lead generation challenges and possible solutions in the upcoming article, so stay tuned.

Avijit Dutta
Avijit Dutta
Avijit is a seasoned industry expert and a sharp strategist. Alumnus of Jadavpur University and IIM Bangalore he writes on innovation and entrepreneurship.

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