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The New Rules of Lead GenerationProven Strategies to Maximize Marketing ROI
By DAVID T. SCOTT
AMACOMCopyright © 2013 David T. Scott
All right reserved.
Chapter OneWhat Is Lead-Generation Marketing?
TO BEGIN, we need to answer two basic questions: What exactly is lead-generation marketing? And what exactly is a lead?
Lead-generation marketing is getting people to "raise their hands" and say they are interested in buying, or learning more about, your product or ser vice. By "raise their hands," I mean they show interest in a very palpable way.
Leads are people who have identified themselves as candidates who can potentially be turned into sales. Depending on where they are in the buying cycle, they may be "thinking about buying" or "shopping around" or "considering alternatives" or "ready to buy." Whatever their stage, they have a genuine interest in your products or services, and are considering you as a viable option to meet their needs.
Lead-generation marketing is a way to generate what I call marketing-qualified leads (MQLs). An MQL is a lead that is legitimate, honest, and actionable. Legitimate and honest mean your prospective customers have a true intent to buy. They have the money and the authority to buy, and are serious about evaluating your product or service for possible purchase. Actionable means your sales engine can act on the lead.
A sales engine is whatever mechanism you use to engage the sale of your goods and services. It used to be that "sales engine" referred almost exclusively to a company's sales department, but a shift in practices is taking place. In the 21st century, lead-generation marketing is changing not only how companies handle marketing but, in some cases, how they handle sales as well.
A Paradigm Shift
We live in an interesting time for lead-generation marketing. It is (and always will be) a sales support function. Its traditional goal in corporate marketing is to provide warm, actionable leads to the company's sales force, enabling salespeople to close more deals and generate more revenue. A sales force used to be an essential requirement for any business, and lead-generation marketing provided support for the sales. Previously, only a few specialty companies, such as L.L. Bean, were able to get by without a sales force, relying exclusively on print catalogs to drive sales.
But the role of lead-generation marketing is evolving, as more companies adopt e-commerce and mobile technologies as sales vehicles. With the evolution of online catalog marketing and self-service sales, some e-commerce companies don't even need a sales force. They just need highly effective lead-generation marketing.
This is one of the most exciting transformations that has occurred in the world of business over the last decade. With the development of e-commerce, some organizations have been able to take the sales force entirely out of the equation. This development puts greater influence on the marketing discipline, to the point where, in some organizations, lead-generation marketing could effectively serve as both sales and marketing for the company. It's a very powerful paradigm shift.
This shift first played out in the travel industry. Companies like Expedia introduced self-service travel concepts that essentially put travel agencies out of business. You no longer have to hire a travel agent to purchase an airline ticket or to book hotel or rental car reservations. Now you can make your own reservations online.
This paradigm shift is extending to the real estate field. Companies like Redfin and Zillow now provide real estate search engines and databases that allow Web users to offer or search for homes for sale online. As a home buyer, you can check the location, property values, and other information about the house, get a home price estimate, compare mortgage options with different lenders, and ask advice from a community of real estate experts. As a home seller, you can offer your home for sale and post information about it. You may not even need a real estate agent to buy or sell a home.
The car buyer's market is also being affected by this paradigm shift. Auto industry marketers are now providing car buyers with information that was formerly provided by salespeople in the dealer's showroom. These days, 80% of the car-buying experience is done online. People research car models, read consumer reports and reviews, check out the 360°-view on the car maker's website, download a list of the car's features, and get an estimate of the price. When the buyer walks into the dealership, marketing has already done most of the work for the sales force. You may never be able to buy a car without a salesperson to sell it to you, but it's a definite power shift.
What's driving this shift in business practices that gives lead-generation marketing more influence and importance in e-commerce businesses? Consumers want more control over the buying experience. They want to do their own research on products and understand their options before making a purchase. The Internet provides a means for consumers to find product information quickly and easily and, in many cases, to make purchases more conveniently.
As companies seek to fulfill the consumer's need for more buying information and control, they are relying more on lead-generation marketing. This reflects a dramatic shift in the importance of marketing in relation to sales.
To further understand this shift, let's look at where lead-generation marketing falls in the world of marketing, and how it relates to its "brother"brand awareness marketing.
Brand Awareness vs. Lead Generation
In general, the world of marketing is dominated by two disciplines: brand awareness marketing and lead-generation marketing. These two disciplines are the "big brothers of marketing," and they have a kind of yin/yang relationship with each other. (There are other equally important forms of marketing, of course, such as product marketing. But these other forms have only a casual relationship to lead-generation marketing, so I won't focus on them in this book.)
Brand awareness marketing (commonly known as brand marketing) is all about making people aware of your product and/or your company. It's about creating an impression of what your brand stands for in people's minds, and repeating that impression until they have an explicit or implicit awareness of your brand. Coca-Cola spends billions of dollars a year for just this purpose. They plaster their brand and pictures of their soft drink across billboards, posters, print ads, TV commercials, online ads, and many other places so that, when you're thirsty and looking for something to drink, you automatically think of Coke. Or if a Coca-Cola bottle is sitting next to a Pepsi bottle, you've already formed your opinion of Coca-Cola's product in your mind, and you can make your choice.
For decades, brand awareness marketing has been considered the sexy part of marketing. The hit TV show Mad Men is built around the lives of advertisers in a top New York ad agency in the 1960s. During this time, ad marketers were perfecting the concepts of art and copywriting, and the concepts of advertising aimed at building awareness of a brand (Chevrolet Oldsmobiles, Lucky Strike cigarettes, etc.) in the public mind, and then invoking an implicit desire to buy the product.
Lead-generation marketing has long been considered the underbelly of marketing. Lead-generation marketers ask this question: Once you have established an awareness of your brand and/or product in the marketplace, how do you get the customer to move from considering your product to actually buying it? It's one thing to make your customers aware that you offer the newest, most innovative smartphone; it's another thing to convince them to spend $479.99 to buy it. That is the art of lead-generation marketing.
Who Uses Lead-Generation Marketing?
It's difficult to measure the exact percentage of companies that use lead-generation marketing. But here's an interesting statistic: A McKinsey Global Survey found that 83% of companies worldwide use some kind of online lead-generation tactic (e-mail marketing, search engine ads, etc.). If we include the few companies that use only traditional lead-generation tactics (trade shows, direct mail, and cold calling) without using online tactics, we might estimate that roughly 85 to 90% of all companies worldwide use some form of lead-generation marketing.
The companies that have the most use for lead-generation marketing are those that acquire sales through a website or sales staff. Any company that has a direct sales process and/or a direct sales forceeither an internal sales force or a field sales forcewill receive significant benefits from using lead-generation marketing tactics.
The ways that companies employ the two major marketing disciplinesbrand awareness and lead generationfall across a range of three categories. Figure 1.1 shows the breakdown of how companies fall into each category.
Lead generationdependent companies rely exclusively, or almost exclusively, on lead-generation marketing. Usually, these companies are manufacturers or service providers (e.g., Intel or Caterpillar) who may sell directly to a targeted set of customers who have a specific need for their products or services. (For example, Caterpillar usually sells its equipment products and vehicles to construction companies, mining companies, warehouse companies, or whoever has a specific need for it.)
Or these companies may be original equipment manufacturers (OEMs) that sell directly to client companies, who then install the OEM's components in their own products and sell them under their own brand name. (For example, Intel manufactures microprocessor chips and sells them to manufacturers of computers, mobile devices, entertainment systems, etc.)
For these companies, brand doesn't matter nearly as much as lead generation because the company relies more on the sales team, the catalog, or the website to push their wares. Yes, their brand helps in terms of recognition. (Among businesses that use their products, Intel and Caterpillar are very recognizable brand names.) But the company's direct efforts in marketing and sales really drive the business. Their audience is so targeted that branding to a larger audience would be a waste of money. The challenge for these companies is to make contact with the customers who have a need for their products and to build a personal or business relationship with them.
An excellent example of this type of company is the Fluke Corporation, headquartered in Everett, Washington. Owned by the Dahaner Corporation, Fluke is a billion-dollar company that manufactures electronic testing devices such as calibrators and waveform generators. Fluke uses lead-generation marketing to market their products exclusively to electricians and companies that have a need for them. Because their target market is so specific, they don't need to spend much money on brand advertising. Among electricians, Fluke enjoys 95% name recognition, but very few people outside their customer base have ever heard of the company.
Brand awarenessdependent companies rely exclusively, or almost exclusively, on brand awareness marketing. Companies like Coca-Cola and Delta Airlines need brand marketing because their target audience includes "everyone." So these companies pay millions of dollars for advertising to make sure their brand is top-of-mind for anyone with a reason to buy their types of products or services.
In many cases, these companies don't need to rely on lead-generation marketing because they have channels (e.g., supermarkets or retail stores) to do their selling for them. For example, a consumer electronics manufacturing company like Panasonic might sell its flat-screen TVs, DVD players, and other products through retail stores like Target, Walmart, and Best Buy, as well as online through Amazon.com.
Many consumer electronics companies don't focus on direct sales of their products. They care only about whether their brand has enough value and awareness to command the high premiums that the company demands, and whether the stores will carry the brand. A consumer electronics company has no reason to generate leads for their products because retail stores that offer or specialize in consumer electronics do it for them, through their own brand awareness marketing.
Brand awareness/lead generationdependent companies use a combination of brand awareness and lead-generation marketing. Usually, these companies have numerous competitors, along with numerous potential customers in their target markets. In these situations, their target audience must take some kind of action. Whether that action is simply to become aware of the product, to show interest, or to actually purchase the product depends on where the potential customers are in the buying cycle. (I'll talk more about this in Chapter 2.)
An example of a company that uses a balance of brand awareness and lead-generation marketing is Progressive Insurance or any other large insurance company. Progressive Insurance has hundreds of agents throughout America, whom they must fuel with leads every month. So Progressive does a tremendous amount of lead-generation marketing through direct mail, e-mail marketing, and display ads. But Progressive also uses national TV advertising to make customers aware of their brand. They want to make sure that anyone who is thinking about buying insurance thinks about them.
As shown in Figure 1.1, the companies that use only brand awareness marketing or only lead-generation marketing are fewer in number than those that use both. Most companies fall at the center of the graph, using some combination of brand awareness and lead-generation marketing. The more successful companies are the ones that have learned not only how to use lead-generation marketing to maximum effect, but also how to coordinate lead-generation and brand awareness marketing.
When lead-generation and brand awareness marketing work in tandem, it produces a halo effect, in which the positive effect of one marketing tactic benefits other marketing tactics. For example, when people see a commercial for your company on TV, they come away with a positive impression of your product. While surfing the Web, they see a display ad for your product that reinforces the message. A few days later, they get an e-mail from you, inviting them to learn more about your product, and they click on the link to your website. They may not have clicked on the e-mail invitation without the positive impressions they received from previous ads. (I'll talk more about the halo effect in Chapter 16, when I discuss integrated marketing campaigns.)
What sets lead-generation marketing apart from brand awareness marketing is that brand marketing is more intuitive and creative, whereas lead-generation marketing is more mathematical and analytical.
Analytical vs. Emotional
Brand awareness marketing is a "bright idea," "thinking-outside-the-box" kind of discipline. Brand awareness marketers focus on creating impressions in the prospect's or customer's mind and on displaying or broadcasting those impressions in ways calculated to reach as many consumers as possible. For example, in marketing a soft drink, they work on creating ads and TV commercials to convey the impression that the soft drink is "cold," "tasty," and "thirst-quenching."
Brand awareness is a battle of creative ideas, whose goal is to connect emotionally with the customer. Once a brand awareness campaign is sent out into the world, there's no way to correct it. You can only determine the effectiveness of the ad or commercial after it is released, not before.
Lead-generation marketing focuses more on mathematics and scientific methods. You must constantly perform testing and analysis as part of your lead-generation efforts. This testing and analysis process occurs on multiple levels. On a tactical level, you need to continuously test the results of your lead-generation tactics to find out how well they provide quality leads and how cost-effective they are. On a lead-generation management level, you need to compare the results of different tactics (e.g., direct mail versus trade shows) to find out which tactics are the most efficient and cost-effective.
Excerpted from The New Rules of Lead Generation by DAVID T. SCOTT Copyright © 2013 by David T. Scott. Excerpted by permission of AMACOM. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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