How Lead Generation and Lead Nurturing Can Help You Increase Sales and Revenue

by Deepak Kanakaraju on June 6, 2014

Digital marketing primarily involves generating traffic and conversions. For a business or project to succeed online, a digital marketer has to bring in the traffic at the lowest cost per visitor and strive to achieve the maximum conversion ratio with that traffic.

Lead Nurturing

There are different types of conversions. Conversion from a visitor to a lead, a lead to a customer and from a customer to a repeat customer. Lead generation and lead nurturing is part of the conversion process and helps increase the conversion ratios.

You can read more about the conversion metrics in my article about important digital marketing metrics.

In this article I will explain about Leads, Lead generation and lead nurturing. Lead scoring is an advanced concept which I will talk about in the next article.

What is a Lead

“Lead”, means a lot of different things in a English language. From nouns to verbs, there are several contexts where this word can be used. With a little bit search on the web for definitions, the closest I could come up with for marketing context is “culminate or result in (a particular event or consequence).”

A web visitor becomes a Lead when she has shown an intention to buy our product or service. This expression of intent to buy can be done in different ways.

A visitor becomes a lead when she does one of the following:

  • Register for a free trial, product demo or a webinar
  • Fill a form with name, email ID and/or phone number giving you permission to contact them with more information
  • Call your business phone number or send and email to get more information about your offer

This data that represents a potential customer is a ‘lead’ for a marketer or sales man because this could ‘culminate or result in a conversion – a sale!’

If Leads to Sale conversion is 5%, then for every 20 leads we can expect 1 sale. This number may not be constant initially but as you get more leads, the conversions will become consistent because of the law of large numbers. This ratio differs from market to market and is directly dependent on the product-market fit and the effectiveness of branding, marketing & sales.

You can even predict how many sales you are going to make in the future with the number of leads you generate now. Predictive web analytics is an interesting topic. You can check my article about it: Predicting Future Web Events using the Law of Large Numbers.

Lead Generation and It’s Purpose

Not all businesses will need to generate leads and nurture them to convert them into customers. For example, you need not do lead generation to sell a soap, refrigerator, washing machine or a flight ticket.

Lead generation is not needed when the product is a commoditized product and the customer clearly understands the product, its features and pricing.

However a SaaS company selling an innovative product online needs to generate leads and nurture them.

The need arises when you are selling a relatively unique product to an uninformed customer. The customer does not purchase right away because she has a lot of questions, hesitation and objection in buying your product.

The job of a marketer and a sales man is to answer the questions and remove any objections that a person may have before they buy your product.

Some people may feel that “Lead generation and nurturing” is about pushing customers to buy your product that they do not need. Its not like that. The customers want to buy your product but they need more information to to make a buying decision.

Your job is to give them the information they need and help them make an informed buying decision. Lead generation and lead nurturing helps you get the right kind of customers and also push away the customers for whom your product might not be the right match.

The easiest and fastest way to generate leads online is converting web / blog visitors to subscribers of your exclusive content. You can check my other 2 articles about lead generation:

Lead Nurturing

Lead nurturing is all about converting cold leads into hot leads. A cold lead is someone who is interested in your product but not ready to purchase yet because they lack the information needed to make a buying decision. A hot lead is an informed, educated lead who is ready to buy your product. The process of educating and informing your leads through sales and/or marketing is lead nurturing.

To help you understand lead generation and nurturing in a simple, easy and fun way, let me give you this example:

Team John and Andrew have started a new company. They have invented a new kind of washing machine. This washing machine washes, dries and automatically irons the clothes within 25 seconds. This is a brand new invention and they are showcasing it in an exhibition.

People walk up to their stall and check out their new product. But they do not buy it immediately. Since this is a new kind of product  and something that they have not seen or known about before – they have a lot of questions, hesitation and objections.

  • Will it consume a lot of power?
  • Will it break down soon, do you have warranty?
  • Is it easy and simple to operate?
  • Does it come with any payment plans?
  • How can I trust this new brand or company? And so on…

So the sales man says “Please fill this form with your name, phone number and address, we will bring this machine to your home for a demo, explain all the features, answer all the questions you have until you are convinced and then you can decide if you want to buy it.” (This is the lead generation part).

When the sales man goes to their home, does a demonstrations, answers all her questions and removes all her objections, they buy the product and become a customer. (This is lead nurturing and conversion into a sale).

You see, lead generation and nurturing is not something that is limited to the internet and digital marketing world. Any uninformed customer needs to be nurtured before they are ready to buy. Lead nurturing is also termed as education marketing by some experts. They are all the same.

That being said, there are exceptions and exceptions cannot become examples that we can follow. There are companies who sell brand new inventions without lead generation and lead nurturing and they still end up making a billion dollars in sales. Those exceptions are by very big companies with very huge marketing budgets. They create enough buzz with the marketing and generate a curiosity among the masses that many people learn about this new toy by themselves and buy them.

Our scope for marketing and out reach is limited and the best way to get customers is to generate leads through digital marketing, nurture them and convert them into friendly customers.

Look forward to my future articles where I will be writing about inside sales, lead nurturing methods in digital marketing and lead scoring. Thanks for reading.

Any questions?

{ 7 comments… read them below or add one }

Pradyumna June 6, 2014 at 8:59 am

Great article Deepak.

For certain kind of industry sectors, like you mentioned, especially B2B and knowledge-based B2C products/services (BFSI sector for example), generating leads through exchange of something valuable, nurturing them to a sale and later providing them a superior post-purchase experience has become a must. While probably generating a lead was always possible, the advent of digital marketing made nurturing the lead easier, I feel.

Once again great article. Cheers!

Reply

Deepak June 6, 2014 at 9:06 am

I agree with you. There is a fine balance between marketing and sales. If the ticket price of the item is low and it is B2C, marketing plays a major role. With higher ticket items and B2B, it is less marketing and branding and more sales. And lead nurturing is important in the latter. I should write an article about marketing and sales balance!

Thanks for reading and your comment.

Reply

Vivek June 6, 2014 at 9:35 am

Very clear explanation on Lead generation & Nurturing. A must read for all B2B marketing professionals !

Reply

Deepak June 6, 2014 at 11:46 am

Thanks Vivek, glad you found it useful.

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John Cooper June 21, 2014 at 3:03 pm

Accurate and very clear basics about understanding of lead generation and its importance to a business development

Reply

Siddhartha Parija July 9, 2014 at 11:55 am

Hey Deepak..i am really very appreciate by read your blog. It is very informative and helps me a lot. I have few questions regarding lead generation. i have sent you a request on your mail id. So could you please accept that request for further conversation. Thank you so much..

Reply

Paul Marshall May 12, 2015 at 4:11 pm

A really great summation of the lead generation process. I think you’re spot on in reference to marketing a SaaS product, keeping that cost per customer acquisition rock bottom is key for decent ROI.

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