No matter how you slice it, lead generation is, simply, buying customers — and it’s a key piece of any business. Here's a simple strategy to determine how much to spend for your marketing.
Lead generation is a term that is often used in sales and essentially this means that you’re reaching out to people that are in your target demographic and then slowly introducing them to your brand.
These people are your cold leads – the people who have shown no interest in your brand and who never asked you to contact them but who nonetheless fit into your target demographic.
When someone has shown an interest in your brand and is now potentially ready to be marketed to, become a warm lead. Perhaps they subscribed to your mailing list, or maybe they liked you on Facebook.
You’re not trying to force your product down their throats right away but instead, you are collecting their details so that you can build a relationship and then sell to them. When someone has shown an interest in buying from you – perhaps by requesting a quote or clicking to get more information about a product, you have your ‘qualified lead’. In terms of your sales funnel, the qualified lead is the person who is now ready to cross the ‘free line’ and become a paying customer.
You should include some degree of lead management and scoring in your sales funnel. You will do this first by collecting email addresses from subscribers and the easiest way to do this is with an autoresponder.
From there, you’re then going to organize those leads so that you know who is at each point in your funnel.
The best autoresponders have another great feature too, which is the ability to ‘score’ your leads: here's how you know who is the most engaged at any time automatically, with no need for you to calculate that yourself.
An great autoresponder will do this by calculating the amount of emails they open, which pages of your site they look at etc. You’ll then be able to identify who is ready to buy from you and who just needs that extra nudge from a sales-oriented email.
As you start to build your list, you need to segment your growing audience. Specifically, segmentation means dividing your list into groups based on a common characteristic or characteristics.
That could be anything—some examples:
Most recent purchase (i.e. 30 days, 90 days, etc)
The purpose of segmentation is that it enables you to connect with different customer groups in a more relevant way. This easy tactic can help you increase revenue by 10%, 20% or even more.
Here are two easy segmentations you can start with:
Segment your list based on geography — any email autoresponder software can easily divide your list based on geolocations, whether or not the person provided their address.
Segment based on behavior—perhaps it’s people who registered for a webinar or maybe it’s people who actually attended the webinar on one list and people who registered but didn’t show up on another.
Calculating your Customer LifeTime Value.
Every business has to contend with something called “customer lifetime value” (LTV).
The Customer LifeTime Value is the average amount one of your customers will spend with your brand, from the very first to the very last purchase.
If you go to Starbucks every single day and spend $5, then your LTV for Starbucks is $5 multiplied by the total number of visits you make over your lifetime. Average your LTV with every other Starbucks customer, and you’ll get Starbucks average LTV.
Customer LTV is important because it dictates how much your brand should spend acquiring one customer.
If your average LTV is $500, then spending $50 to acquire a new client is great. If your average LTV is $15, then spending $50 per acquisition is way too much.
In other words, when you know your business’ average LTV you can easily determine your marketing budgets. Until then, you’re marketing blindly.