Same Old Song and Dance

Revenue leaders in early-stage B2B companies have limited budgets.  One of the hardest choices they make is where to invest when it comes to generating leads.  It isn’t black and white: there are a seemingly endless number of sources: SEO, social media, form fills (website and social), conferences, webinars, white paper downloads, etc.  Leaders really, really ought to know how to make the right decision.

Aside from the most obvious reason (attracting new clients), leaders must answer the question when seeking funding.  Often the first thing investors ask when talking to you is “Where will you source your leads?” or “What are your best lead sources now?”  Leaders need to have a good, fact-based answer.  This can be the difference between building confidence in your company’s growth potential or having would-be backers break your heart because they don’t believe that you have a plan to generate reliable (and convertible) customer interest.

Even before courting VCs, revenue leaders need to know how to let it all out to increase growth.  It’s a matter of survival for early-stage B2B companies: once the first small set of channel partners or early adopters signs up, how does the next, larger wave find out about your company?  Companies won’t live to tell the tale if they waste valuable months of discovery. Those seed dollars and early customer payments burn awfully fast.

A Change Would Do You Good

Not knowing where to source leads is a thing you can do without.  Try this instead:

• Tracking: Start measuring a couple of key things: conversion rates and cost per lead.  This means you need to track each step in your lead funnel and attribute costs correctly. The easiest way is in your CRM because it provides a reliable way to capture the info each time.  Marketing (demand gen leader) or a trained BDR are usually the most consistent with entering the information relative to other options like sales reps.  Automate as much as you can.  If using your CRM isn’t an option, a spreadsheet is better than nothing.
• Metrics: As mentioned, the most important metrics to track are conversion rates (total and stage) and cost per lead.  The math is simple for each: total conversion rates (how many leads made it to that stage divided by the total number of leads, stage conversion rates (how many leads made it to the stage divided by leads that made it to the prior stage), and cost per lead (dollar spent on the lead generation campaign divided by the number of leads that made it to a certain stage, like Closed Won). 
• Definitions: When tracking conversion rates by source, clearly define each step so you know what went into the top of your funnel and what converted to each step (Lead, MQL, SQL, etc.).  It’s important to do this all the way to Closed Won.  That way, everyone is on the same page and has a common understanding when you talk about “cost per” metrics.
• Tip: Find the balance between conversion rates and cost per lead. Typically, lead conversion is a single-digit number, meaning the degree of difference between sources is often one or two percentage points.  This is where cost per lead comes in.  Having the highest conversion rate out of all the sources is meaningless if the cost per lead is several times that of other sources.  You’ll need to find a better lead source or get the cost down.