Lead generation is the process of identifying a B2B company that is interested in the product or service a company offers and engaging with them.

In digital marketing, lead generation engages with prospective customers via digital channels (i.e., your website, blog post, email, online ads, social media, etc.) Digital lead generation focuses on providing content to prospective customers of high enough value that they declare interest in your product or service by providing you some or all their contact information. It is important to note, however, that even after this type of engagement most of these contacts won’t be qualified at this time. These leads, commonly referred to as Marketing Qualified Leads (MQLs), will require further engagement to become actionable leads.

It is unusual to convert a new prospect into a customer during your first interaction. Prospects need time to learn and become aware of your company and offerings. At its core, lead nurturing is the process of cultivating prospects that are not quite ready to buy.

Successful lead nurturing anticipates the journey your buyer will take to learn about your offering in relation to their needs. The best lead nurturing programs are industry and persona specific, and they tailor their messaging, resources, and selling tools according to their specific buyer’s needs and their step in the buying journey.

Nurturing keeps prospects engaged by providing relevant content (such as blog post, whitepapers, eBooks, and webinars) designed for their situation and stage. If done well, lead nurturing can build strong brand loyalty long before a prospect is ready to buy. By cultivating prospects early in the buyer’s journey, companies can increase the conversion of unqualified prospects to qualified opportunities and drive more revenue. Nurturing also helps accelerate active opportunities by giving prospective buyers the information they need to make purchasing decisions. Lead nurturing is about helping buyers along in their buyer’s journey which is why it’s most effective when triggered by prospect activity or behaviors.

Most B2B companies today offer products and services that can serve a vast array of potential clients. Trying to target every company in every industry vertical and geography with the same messaging, approaches, and materials is likely to be less than successful. Organizations are too varied, with diverse pain points and buying processes, and different segments will respond to your sales and marketing efforts differently.

So how do you ensure your sales and marketing efforts are focused on the most productive targets? The answer is market segmentation and data analysis.

Market segmentation is the process of dividing your sales and marketing results across a diverse and varied market data set into more homogeneous segments. This can include company size, vertical, or geography. Results are divided further into sub-groups based on criteria such as persona, needs, behaviors, and attitudes. Performance data is then analyzed at the segment and sub-segment level to identify the most productive segments. Market segmentation is critical to optimizing any sales and marketing effort to maximize results.

To answer this question, we need to start with the definition of a lead. Some would suggest that any interaction with any potential customer, even a visitor to your website, counts as a lead. Others would only count those companies who have directly expressed interest and had a conversation with sales as actual “qualified leads.” Let’s narrow this down by defining two types of leads:

First, Marketing Qualified Leads (MQLs) are companies that have been attached to your business through some form of marketing activity. This could include web content including blogs and whitepapers, events like trade shows or webinars, or paid forms of advertising such as Pay Per Click, radio, or TV ads.
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MQLs are generally easier to create, given they are typically generated through automated means (web traffic, PPC, email, etc.), but they also are much less qualified. A person that clicks on an ad or downloads a whitepaper may be a company too small to buy your product, a student doing a research paper, or even a competitor. You should expect that less than 20% of all MQLs you generate will move forward as qualified opportunities.

Next, Sales Qualified Leads (SQLs) are companies that have engaged with a representative of your business who has confirmed the prospect is qualified and has an addressable need. SQLs require real interaction, and if properly qualified, will move forward towards next steps in your pipeline at a much higher rate. You should easily expect SQLs to move to next steps more than 50% of the time.

Determining the cost of lead generation first requires a determination of what kind of leads are to be generated. Marketing Qualified Leads can be generated with content automation and digital tools, and they are typically lower in cost. They can cost anywhere from $10 to $500 per lead or more. MQLs need to be engaged by a salesperson to be qualified and evaluated to move forward to become an SQL. This process takes time and resources, and as a result, costs significantly more. High-quality, Sales Qualified Leads can cost anywhere from $500 on up to thousands of dollars per lead.

In many businesses, a seasoned sales professional who is newly hired into an outside sales role can work months to identify, qualify, and engage with a new prospect. In this case, the cost of an individual lead would be the fully burdened cost of that sales rep for the duration of the time they took to develop the lead. That could be $10,000 per lead or more.

Ultimately, the goal of any lead generation program is to generate the qualified leads you need to support your growth plans at the lowest possible cost. Generating qualified leads at scale involves a lot of variables. The cost and ROI of an effective lead generation program is ultimately a function of your unique business. The greater the value of a new customer the likely higher the cost to generate quality leads.