Building a Lead Generation Program Is Easy (NOT).
So… I’m asked all the time how to build sales for a business. Should I do Social Media, SEO, Advertising, Direct sales, all of that.
I think the first point to start with any “sales” program is the understanding of one very important principle. So to get to that lets start with this question which is this: Sales starts with and goes no where without what?
There are many good answers to this, you might say..
- A great product, – A sales person, – An offer, – Marketing dollars, and on and on.
But the pragmatic answer is this: Sales go nowhere without “leads”. A lead is a business or person who has been qualified as a prospect AND expressed interest in what ever it is you sale.
Lead Generation is hard
Now here is the second principle you must understand….Lead Generation is hard, expensive, and can be very painful. That’s why “inbound Marketing” has become such a big tactic. Inbound marketing whispers the promise of easy leads being sent to your inbox, ready for your sales rep to close.
The mistake in this concept is that Inbound Marketing is HARD, expensive and can be painful. like any other form of lead generation, it just has a prettier face.
So if you want to build sales, you have to understand, it’s going to either cost money, or it’s going to take all your time (if you’re a small company).
How much money depends on your service or product, and market. To get the picture on how you should budget (or spend) on sales (and 30% to 50% of that should be in lead generation) you need to understand there are different type sales strategies and customers. Depending on your growth strategy, and your tactics have a everything to do with the cost.
If you’re in a sustain mode, relying on referrals and luck, then your budget is tiny because it costs very little to acquire referred customers.
If you want new “open market” customers, that’s a completely new game. And these new customers are your growth group. You have to sell to them in a completely different way. They don’t know you, so you have to establish trust in the relationship. That takes time and money.
So here is a simple formula you might consider. A new market customer will cost you at least 15% of your Gross revenue. So if you sell $2500. Web sites, a new market customer will cost $325. Also understand that that’s 15% of a new sale, not 15% of your gross revenue. If your revenue is evenly split between referred customers and open market customers (a nice healthy mix), your budget is 7.5% of all revenue. That’s why the first few years of a business is so tough! Your cost of sale is twice to three times what your established competitions is.
The thing that really stops most companies from investing that 15% is the fact that it’s money up front, and it takes time to get the return. If you want 10 new customers in a quarter (or a day, its all just math) you are going to have to invest $3250.00 , it may take 6 months to see the total first stage results (First stage is the original prospect buys, second stage is when they refer others).
So if you have an ongoing program, you’re into the budget $3250 time 6 months before the first months return is final. Ouch! That’s why most start up sales programs don’t have a positive return until the 9th month.
if you do it wrong (which is easy to do) it’s throwing your money away. So you can start to see the pain… it’s hard, and it’s temporarily expensive. Not only that, but if you do it wrong (which is easy to do) it’s throwing your money away. And the first way to do it wrong is by NOT focusing on lead generation first.
For small companies without a sales department or person, you are going to have to outsource your lead generation. Sorry, no choice if you want to grow. You’re also going to need to put some dollars into it. So if you don’t have 15% of the expected new revenue ready to spend, your not ready. If you want to add $1,000,000.00 in sales in the next 3 to 12 months, you need $150,000.00 in funds. Sorry, that’s the truth. And of that 30% to 50% should be in lead generation.
The bottom line in a successful lead generation campaign is this: If you don’t have the money, it’s not going to work 95% of the time.
So if you do have the money or time where should you spend it for the best return on Investment? Well, that’s a whole new subject, which I will write about soon. But, here’s a big hint, you should start with Lead Generation.
You can generate leads with:
Social media campaigns managed by a professional firm with a great track record.
• Search Engine Optimization
• Email campaigns that drive qualified prospects to euth your site, or your online presentations
• Advertising on any media
• Trade shows
• Direct sales
• Co-op marketing
• Referral programs
And a bunch of other tactics. All of which, falls under business development, because any of those tactics have to be implemented well, and will need to be integrated with other parts of your business to be successful.
That’s what I do with companies. What I call business development. And that starts with assessing budgets, strategies and tactics to be uses, and finding decent measurement metrics and tools.
It’s hard, it’s expensive, and it’s painful at times. It’s also the way 95% of businesses grow, and owners become wealthy.
Your choice is to recognize the challenges, and do nothing, or boldly go where few small businesses go, which is find the money and courage to grow.