Where do your customers come from?
Most people would probably choose advertising as an answer. Or referrals. Or direct mail campaigns. This may seem true, but it’s not really accurate.
Your customers come from leads that have been turned into sales. Each customer goes through a two-step process before they arrive with their wallets open. They have been converted from a member of a target market, to a lead, then to a customer.
So, would it not stand to reason then, that when you advertise or send any marketing material out to your target market, that you’re not really trying to generate customers? That instead, you’re trying to generate leads.
When you look at your marketing campaign from this perspective, the idea of generating leads as compared to customers seems a lot less daunting. The pressure of closing sales is no longer placed on advertisements or brochures.
From this perspective, the general purpose of your advertising and marketing efforts is then to generate leads from qualified customers. Seems easy enough, doesn’t it?
Where Are Your Leads Coming From?
If I asked you to tell me the top three ways you generate new sales leads, what would you say?
- Word of mouth?
- …don’t know?
The first step toward increasing your leads is in understanding how many leads you currently get on a regular basis, as well as where they come from. Otherwise, how will you know when you’re getting more phone calls or walk-in customers?
If you don’t know where your leads come from, start today. Start asking every customer that comes through your door, “how did you hear about us?” or “what brought you in today?” Ask every customer that calls where they found your telephone number, or email address. Then, record the information for at least an entire week.
When you’re finished, take a look at your spreadsheet and write your top three lead generators here:
From Lead to Customer: Conversion Rates
Leads mean nothing to your business unless you convert them into customers. You could get hundreds of leads from a single advertisement, but unless those leads result in purchases, it’s been a largely unsuccessful (and costly) campaign.
ratio of leads (potential customers) to transactions (actual customers) is
called your conversion rate. Simply divide the number of customers who actually
purchased something by the number of customers who inquired about your product
or service, and multiply by 100.
# transactions / # leads x 100 = % conversion rate
If, in a given week, I have 879 customers come into my store, and 143 of them purchase something, the formula would look like this:
[143 (customers) / 879 (leads)] x 100 = 16.25% conversion rate
What’s Your Conversion Rate?
Based on the formula above, you can see that the higher your conversion rate, the more profitable the business.
Your next step is to determine you own current conversion rate. Add up the number of leads you sourced in the last section, and divide that number into the total transactions that took place in the same week.
Write your conversion rate here: ________________________.
Quality (or Qualified) Leads
Based on our review of conversion rates, we can see that the number of leads you generate means nothing unless those leads are being converted into customers.
So what affects your ability (and the ability of your team) to turn leads into customers? Do you need to improve your scripts? Your product or service? Find a more competitive edge in the marketplace?
Maybe. But the first step toward increasing conversion rates is to evaluate the leads you are currently generating, and make sure those leads are the right ones.
What are Quality Leads?
Potential customers are potential customers, right? Anyone who walks into your store or picks up the phone to call your business could be convinced to purchase from you, right? Not necessarily, but this is a common assumption most business owners make.
Quality leads are the people who are the most likely to buy your product or service. They are the qualified buyers who comprise your target market. Anyone might walk in off the street to browse a furniture store – regardless of whether or not they are in the market for a new couch or bed frame. This lead is solely interested in browsing, and is not likely to be converted to a customer.
A quality lead would be someone looking for a new kitchen table, and who specifically drove to that same furniture store because a friend had raved about the service they received that month. These are the kinds of leads you need to focus on generating.
How Do You Get Quality Leads?
• Know your target market. Get a handle on who your customers are – the people who are most likely to buy your product or service. Know their age, sex, income, and purchase motivations. From that information you can determine how best to reach your specific audience.
• Focus on the 80/20 rule. A common statistic in business is that 80% of your revenue comes from 20% of your customers. These are your star clients, or your ideal clients. These are the clients you should focus your efforts on recruiting. This is the easiest way to grow your business and your income.
• Get specific. Focus not only on who you want to attract, but how you’re going to attract them. If you’re trying to generate leads from a specific market segment, craft a unique offer to get their attention.
• Be proactive. Once you’ve generated a slew of leads, make sure you have the resources to follow up on them. Be diligent and aggressive and follow up in a timely manner. You’ve done to work to get them, now reel them in.
Get More Leads from Your Existing Strategies
Increasing your lead generation doesn’t necessarily mean diving in and implementing an expensive array of new marketing strategies. Marketing and customer outreach for the purpose of lead generation can be inexpensive and bring a high return on investment.
You are likely already implementing many of these strategies. With a little tweaking or refinement, you can easily double your leads, and ensure they are more qualified.
Here are some popular ways to generate quality leads:
Direct Mail to Your Ideal Customers
Direct mail is one of the fastest and most effective ways to generate leads that will build your business. It’s a simple strategy – in fact, you’re probably already reaching out to potential clients through direct mail letters with enticing offers.
The secret to doubling your results is to craft your direct mail campaigns specifically for a highly targeted audience of your ideal customers.
Your ideal customers are the people who will buy the most of your products or services. They are the customers who will buy from you over and over again, and refer your business to their friends. They are the group of 20% of your clients who make up 80% of your revenue.
Identify your ideal customers
Who are your ideal customers? What is their age, sex, income, location and purchase motivation? Where do they live? How do they spend their money? Be as specific as possible.
Once you have identified who your ideal customers are, you can begin to determine how you can go about reaching them. Will you mail to households or apartment buildings? Families or retirees? Direct mail lists are available for purchase from a wide range of companies, and can be segregated into a variety of demographic and sociographic categories.
Craft a special offer
Create an offer that’s too good to refuse – not for your entire target market, but for your ideal customer. How can you cater to their unique needs and wants? What will be irresistible for them?
For example, if you operate a furniture store, your target market is a broad range of people. However, if you are targeting young families, your offer will be much different than one you may craft for empty-nesters.
Court them for their business
Don’t stop at a single mail-out. Sometimes people will throw your letter away two or three times before they are motivated to act. Treat your direct mail campaign like a courtship, and understand that it will happen over time.
First send a letter introducing yourself, and your irresistible offer. Then follow up on a monthly basis with additional letters, newsletters, offers, or flyers. Repetition and reinforcement of your presence is how your customer will go from saying, “who is this company” to “I buy from this company.”
Advertise for lead generation
Statistics show that nearly 50% of all purchase decisions are motivated by advertising. It can also be a relatively cost effective way of generating leads.
We’ve already discussed the importance of ensuring your advertisements are purpose-focused. The general purpose of most advertisements is to increase sales – which starts with leads. However ads that are created solely for lead generation – that is, to get the customers to pick up the phone or walk in the store – are a category of their own.
Lead generation ads are simply designed and create a sense of curiosity or mystery. Often, they feature an almost unbelievable offer. Their purpose is not to convince the customer to buy, but to contact the business for more information.
As always, when you are targeting your ideal audience, you’ll need to ensure that your ads are placed prominently in publications that audience reads. This doesn’t mean you have to fork over the cash for expensive display ads. Inexpensive advertising in e-mail newsletters, classifieds, and the yellow pages are very effective for lead generation.
Here are some tips for lead generation advertising:
Leverage low-cost advertising
Place ads in the yellow pages, classifieds section, e-mail newsletters, and online. If your target audience is technology savvy, consider online forms of advertising like Facebook, LinkedIn, YouTube, and others.
Don’t give them all the information they need to make a decision. Ask them to contact you for the full story, or the complete details of the seemingly outrageous offer.
Grab them with a killer headline
Like all advertising, a compelling headline is essential. Focus on the greatest benefits to the customer, or feature an unbelievable offer.
Referrals and host beneficiary relationships
A referral system is one of the most profitable systems you can create in your business. The beauty is once it’s set up, it often runs itself.
Customers that come to you through referrals are often your “ideal customers.” They are already trusting and willing to buy. This is one of the most cost-effective methods of generating new business, and is often the most profitable. These referral clients will buy more, faster, and refer further business to your company.
Referrals naturally happen without much effort for reputable businesses, but with a proactive referral strategy you’ll certainly double or triple your referrals. Sometimes, you just need to ask!
Here are some easy strategies you can begin to implement today:
Give your customers a reason to refer business to you. Reward them with discounts, gifts, or free service in exchange for a successful referral.
Offer new customers a free product or service to get them in the door. Then, at the end of the transaction, give them three more ‘coupons’ for the same free product or service that they can give to their friends. Do the same with their friends. This ongoing program will bring you more business than you can imagine.
Forge alliances with non-competitive companies who target your ideal customers. Create cross-promotion and cross-referral direct mail campaigns that benefit both businesses.
Lead Management Systems
Once your lead generation strategies are in place, you’ll also need a system to manage incoming inquiries. You’ll need to ensure you receive enough information from each lead to follow up on at a later date. You’ll also need to create a system to organize that information, and track the lead as it is converted into a sale.
Gathering Information from Your Leads
Here is a list of information you should gather from your leads. This list can be customized to the needs of your business, and the type of information you can realistically ask for from your potential customers.
- Company Name
- Name of Contact
- Alternate Contact Person
- Mailing Address
- Phone Number
- Fax Number
- Cell Phone
- Email Address
- Website Address
- Product of Interest
- Other Competitors
Lead List Management Methods:
Once you have gathered information from your lead, you’ll need a system to organize their information and keep a detailed contact history.
The simplest way to do this is with a database program, but you can also use a variety of hard copy methods.
Electronic Database Programs
- High level of organization available
- Unlimited space for notes and record-keeping
- Data-entry required
- Examples include: MS Outlook, MS Excel, Maximizer
- Customer Relationship Management Software
- Variety of sizes: 3×5, 4X6 or 5X8
- Basic contact information on one side
- Notes on the other side
- Easy to organize and sort
- Maintain more contacts than index card system
- Easily organized and compact
- Basic contact information on one side
- Notes on the other side
- Can keep phone conversation and purchase details Notebook
- Best if leads are managed by a single person
- Lots of room for notes
- Difficult to re-organize
- Best for smaller lists
Business Card Organizer
- Best for small lists – under 100
- Limited space for notes
- No data entry required
- Rolodex-style, or clear binder pages