What is Lead Generation? A Guide for Business

What is Lead Generation? A Guide for Business
Find out what is lead generation and its benefits of it. Learn how it works along with strategies, the 3 main types of qualified leads and more. Visit Square.
by Square Mar 17, 2022 — 6 min read
What is Lead Generation? A Guide for Business

Today we’ll be taking a deep dive into lead generation: what it is, why your business needs it and the strategies that can help you implement it, no matter your business size.

What is lead generation?

Before we define a lead generation, let’s first define a ‘lead’.

A lead is simply a potential customer – an individual or organisation who might be interested in a product/service that you offer. Leads fall into two main categories:

Cold leads: Potential customers who aren’t aware of your brand and who haven’t shown interest in your products/services. Cold leads are often bought from third parties or from public databases.

Warm leads: Potential customers who are aware of your brand and/or have shown some form of interest in your products/services. These leads aren’t bought from external providers – they’re generated in-house through email newsletters, social media audiences etc.

Lead generation – AKA lead-gen – is a strategy to create and capitalise on these warm leads. It aims to capture the interest (and information) of potential customers, subsequently fuelling future sales. Modern lead generation is built on a foundation of technology – digital channels make it far easier to tailor marketing and communication to an individual’s needs, which is key in turning a prospect into a warm lead.

7 benefits of lead generation

What makes lead generation such a powerful strategy? It helps you to:

Expand your customer pool: What opportunities might you currently be missing out on? Lead generation can reveal customer segments that you may not know even exist.

Grow your following: Content forms a key pillar of most lead gen strategies, and by crafting and posting quality content you can organically expand your online reach. More social media followers, more email subscribers, more website visitors, and ultimately more customers.

Increase your social proof: People trust people – this simple truth is what makes reviews, ratings and other forms of social proof so valuable. By bringing in more leads and encouraging engagement, lead gen activities can create a growing mountain of social proof.

Improve the quality of leads: Lead generation represents a highly targeted approach to attracting customers. This results in higher quality leads that are more likely to become customers.

Automate lead management: Modern technology not only automates large parts of the lead generation process but also increases your efficiency and effectiveness in managing those leads.

Cut out cold calling: When done right, lead generation removes the need for your salespeople to engage in cold calling activities, and will instead provide a steady stream of warm, qualified leads.

Increase your bottom line: The most compelling benefit of lead generation? You earn more money. Freed from endless cold calls, your team can instead focus on higher-value tasks, like converting already warm leads.

How do you determine a qualified lead?

There was a time when leads were about quantity, but in modern lead gen it’s all about quality. By feeding the right data through the right technology, your leads can be monitored, analysed and ranked. You can determine the most qualified leads by tracking and analysing the following metrics:

What is lead scoring?

Attempting to track and analyse the above metrics and more can get messy and confusing – which is why many organisations have turned to a ‘lead score’: a single number that combines all relevant lead metrics, quantifies exactly how likely each lead is to become a customer, and how soon that might be.

The higher the prospect’s lead score, the closer they are to becoming a customer. This allows you to easily segment your leads and customise your approach to each group – communications with high scoring leads can centre around purchases, while communications with low scoring leads can focus more on brand awareness and building trust.

The criteria you use is completely up to you – although there are many ‘standard’ lead scoring models that you can use if you’re unsure where to start.

The 3 main types of qualified leads

The highest-scoring leads in your lead gen database can be described as ‘qualified’ leads. These leads have been created by your marketing department, vetted by your sales team, and represent the most viable of all your prospects. They are familiar with and have shown interest in your brand, product or service, and they may only need a light nudge to become a customer.

Qualified leads come in three main forms:

Information-qualified lead: An information-qualified lead is someone who has traded their contact details for useful information that your brand has offered, such as a newsletter subscription or a piece of downloadable content.

Marketing-qualified lead: A marketing-qualified lead is someone who has shown interest in your brand via your marketing efforts – following or engaging on social media, clicking on ads, visiting your website, or downloading materials (there can be some crossover between information- and marketing-qualified leads.)

Sales-qualified lead: A sales-qualified lead is someone who has shown an express interest in becoming a paying customer – think someone who has asked a question about a specific product/service or who has taken advantage of a free trial.

How does lead generation work?

Now that we’re familiar with the what and the why, let’s turn to the how. How does a modern company go about generating leads?

Lead generation is a subcategory of inbound marketing. It is undertaken after you’ve discovered/attracted an audience and ends at the point you hand qualified leads to your sales team. A very basic description of the lead generation process goes something like this:

A prospect discovers your brand, product or service on the back of your marketing efforts.

The prospect journeys through one of your marketing channels (ad, social media, email, website) to a landing page, at which point they’re offered an incentive to leave their details.

The prospect leaves their contact details, at which point they’re transformed into a lead.

The 4 components of lead generation

Further to the above, the lead generation process relies on main four components:

Lead capture: The process of collecting contact details and other important information from a lead.

Lead magnets: The incentive used to drive a prospect to become a lead (a piece of downloadable content, a discount or coupon, a free trial.)

Lead qualification: The process of understanding how likely the lead is to become a customer.

Lead segmentation: The process of grouping similar leads together in order to more effectively communicate with them.

10 lead generation strategies

It’s time for the nitty-gritty: what exactly does a lead generation strategy look like? If you’re searching for some lead gen inspiration, here’s a few ideas.

Use automated chatbots: Imagine having someone who greets your website visitors 24/7/365, and not needing to pay them a salary! Chatbots are an already incredible lead gen tool, and they’re only getting better at answering prospect’s questions and obtaining their details.

Offer awesome content: You have the necessary product and industry expertise, why not share it? Create an ebook, whitepaper or video tutorial that answers the questions people are asking, then offer it in return for a prospect’s contact details.

Create an enticing newsletter: The key to gaining newsletter subscribers is to offer them value. Keep people up to date with the happenings of your company and industry, but include things like tips, discounts and entertainment too. By using Square Marketing to distribute your newsletter, you’ll also enjoy a wealth of email analytics that will reveal areas of opportunity and improvement.

Host a live event: Offer up some wisdom at a live event. Livestream it to increase your audience andask for guests’ contact details in return.

Offer a coupon or discount: One of the most effective forms of lead magnet, a hot deal will always get a prospect excited.

Offer a free trial: If you offer a service, particularly one that is web-based, offering a free trial will not only bring leads in, it will also increase the likelihood of them turning into customers.

Promote your lead magnet on socials: Use social media to its potential by featuring your lead magnet everywhere: your Instagram bio link, your Facebook profile banner, your Bitly URLs on Twitter and in sponsored posts.

Retarget website visitors: If a prospect doesn’t convert to a lead, don’t be disheartened. Use retargeting to get your brand and offerings in front of them.

Lean on PPC ads: Pay per click ads do what they say on the packet – you only pay when a customer clicks. The ads at the top of the Google results page are the most well-known form of PPC advertising. When you offer an enticing lead magnet, Google ads can be a surprisingly effective source of leads. Be sure to include PPC ads in your broader lead gen strategy.

Reward referrals: As we mentioned earlier, people trust people more than they trust companies. This means that the best source of new leads is your current customer base. Offer discounts or coupons to customers who refer people to you.

At Square, our aim is to make growing your business as simple and fun as possible, and we offer a wealth of tools designed to do exactly that.If you’re ready to put your business up in lights and attract an ever-growing number of leads, we’re ready to help!

Square
The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.

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