Most people think of “sales” as sales. It’s one role, what else could there be? You hire a salesperson, and they bring in new subscriptions and contracts with new business clients. In the middle, there are probably a lot of activities going on: networking, phone calls (and maybe some of those are cold), maybe you have a marketing team doing some advertising, proposals, some time “wasted” on social media, and a grab bag of other things.

You’re not really sure exactly what those activities are, the breakdown of time spent on each one, or the value of each different tactic, but you know each salesperson has a quota, and you know you can measure the amount they bring in vs how much they cost to the company.

There’s a better way to frame this. While there is absolutely an art to selling and marketing, when you’re starting out with building a B2B lead generation program, you’re better off thinking of it as a science, as an equation to be solved.

In this article, we’ll talk about what lead generation is, how it’s unique within B2B, how to think about where it fits within your sales and marketing strategy, and we’ll also give you a few ideas to start off with.

 

What Does B2B Lead Generation Really Mean?

If you’re reading this, chances are you already know what B2B is and that your company is a B2B organization. B2B stands for “business to business”, which means you don’t sell to consumers, you sell to companies. If you sell to consumers, your company is a B2C organization.

While the acronyms are simple, there are a few other things to understand that separate B2B lead generation from B2C lead generation in some fundamental ways:

People Are Still People

They don’t become emotionless robots as soon as they are working with you in their capacity as professionals. A Director of Marketing purchasing marketing automation tools also buys cars and homes, also has a sense of humor, and also has an Instagram account.

Don’t forget to remain a human when you’re selling and marketing to businesses, because a “lead” is a “person who happens to control some budget, who is interested in working with you”. Too many people lose sight of this and assume that they’re talking to a procurement checklist. What does this mean? For example: take the bullet points out of your cold emails and tell stories instead.

The Opportunity Landscape Changes Dramatically

Strategies you can’t get away with when you’re marketing to consumers in their capacity as individuals now become viable, because your value per lead in B2B is much higher than in B2C. Companies selling to enterprise are often willing to pay thousands of dollars in total costs for a meeting with a Fortune 2000 decision maker, because the expected payoff is huge.

Meanwhile, a consumer-focused company getting a lead to put their @gmail.com address on their mailing list, isn’t worth anything near that. People acting in their capacity as professionals have much different ideas about value, and about what’s expensive or affordable.

Long story short: remain human, recognize that you’re interacting with emotional beings who nevertheless are wearing their “I’m at work” hat, and recognize the enormous value of a B2B lead. When you’re reading about lead generation tactics, make sure that the first thing you understand is whether you’re getting B2C or B2B advice, because that’s the most fundamental perspective to adopt when you’re building up a lead gen program.

 

How Much is a Lead Worth to You?

Corporate leads are worth a lot more than individual leads. But how do you calculate how much each lead is worth? It’s important to know this so you can figure out how much you’re willing to spend on lead generation.

Here’s one equation you can use to calculate this:

[Lead to Opportunity Conversion Rate %] x

[Opportunity Win Rate %] x

[Average Deal Value $] = Lead Value

I’m defining an “Opportunity” as a sales opportunity within a qualified Account, that you believe has a good chance of becoming a client of yours. Your ‘win rate’ is the percentage of these opportunities that convert into paying customers.

Average Deal Value is a little trickier, because you can think of this as the annual revenue per customer, the lifetime gross profit (revenue less cost of sales) per customer, or some combination thereof. We suggest you think of your average deal value as either the first-year or lifetime gross profit you can expect from your typical customer.

If you’re a software company with a huge customer lifespan – several years, let’s say – you may end up over-spending on lead generation if you assume several years of revenue per customer. However, if you’re a B2B services company with an average contract size of $5,000, but your typical customer orders from you 3X over the course of their first year doing business with you, then you’re better off thinking of your average deal value as $15k, rather than $5k.

Let’s plug some numbers in here, to do an example:

Lead to Opportunity conversion rate = 50%

Opportunity win rate = 25%

Average deal value = $40k

Value per lead = 50% x 25% x $40k = $5k

Now, you know how much each lead is worth to you. You shouldn’t spend that whole $5k to acquire that lead, or you wouldn’t be making any money – you should spend anywhere from $600 – $1200 to acquire each lead, so that you have profit left over.

What this means is, when you’re thinking about different lead generation strategies, you should be highly suspicious of any type of tactic that seems to offer leads for $10 – $80 apiece. Something is wrong with this, or they’re using a wildly different definition of “lead” than you are. Similarly, you shouldn’t invest in programs that result in a $2000 – $3000 cost per lead, because you know your efficiency will be too low, since you’ll be spending an overly-large chunk of your profits on marketing.

 

How Do You Do B2B Lead Generation?

Everyone has a slightly different definition of a “lead”, but one easy way to think of it is: Someone who has raised their hand and indicated they’re interested in talking to you about what your company could do for them.

Because B2B leads are valuable, you’re almost always going to want to speak to them before they do business with you. The large majority of B2B organizations we work with don’t even make it possible to sign up for their product until conversations have been had, and a customized agreement has been signed. With such a high value per sale, you’re better off speaking to people.

A lot. Even before you’re 100% sure they’re “qualified” to do business with you.

That’s why a “lead” is someone who works at a company that seems to fit reasonably well with your target customer, seems to understand what it is you do, and has indicated somehow that they’d like to directly learn more from you about whether there’s a fit.

This leaves us with a world of possibilities for how your target customers can learn about what you do, and also for the various ways they can tell you they’re interested. One of the most broad classifications of lead generation you’ll come across in B2B is the choice of Inbound or Outbound.

Think of Inbound Lead Generation as “luring” lead and Outbound Lead Generation as “hunting” leads.

Examples of Inbound Lead Generation

  1. Creating content and advertising it to your target customers, with the hopes that they exchange some of their information for the content you’re offering. They may not ask to talk with you right away, but the idea is that they eventually will.
  2. Creating content that gets picked up by Google as being valuable, thus increasing your ranking for search results related to your product (“Search Engine Optimization”, or SEO), causing you to receive more web traffic
  3. Creating content and posting it on your LinkedIn profile, and seeing who engages with it, then following up with them to start a conversation with them.
  4. Sponsoring a conference, setting up a booth there, and setting out plates of warm cookies so the pleasant scent wafts over to the people walking by, at which point you can engage them in conversation in exchange for baked goods. Mmm, cookies…
  5. Taking an ad out on the side of a bus in San Francisco, in an area heavily-trafficked with high-growth companies.

Examples of Outbound Lead Generation

  1. Finding the phone numbers of target customers, cold-calling them, and setting up product demo appointments with 15% of the ones you talk to.
  2. Finding your prospect’s email address, sending them a personalized video of you walking them through how your product would specifically add value to their company, and then offering them some times to meet with you using a “book a meeting” link included in that email.
  3. Sending hand-written letters to their office, with a Starbucks gift card and your business card included, inviting them to coffee on you. Follow up with an email asking if they got your coffee, reaffirming your value proposition, and offering a time to meet to go over suggestions you have for improving their business.

 

Prioritizing Lead Gen Tactics

Your strategy for choosing which tactics to use should take into account two main things: how your buyers are best reached, and what your average deal value is.

The bigger your average deal size, the more you’ll want to lean toward the more “white glove” channels like personalized email, phone calls, direct mail, personalized gift-giving, one-to-one video creation, and content that’s been customized for one specific account (“Account-Based Marketing”, if you will). The smaller your average deal size, the more you’ll need to template your outbound communication, rely on SEO instead of creating highly-customized content, and generally lean toward higher-volume lead generation methods that require less effort per lead.

If you get this balance very wrong, you’ll end up coming across overly-generic in front of your most important accounts, or alternatively you’ll spend way too much time and money generating a pitiful amount of leads that don’t have the budget to pay you back for all of your marketing expenses.

 

Putting Lead Gen Into Action

By now, you should have a better high-level understanding of what B2B lead generation is, how it’s done, and some ideas for generating leads. We hope you now have two kinds of questions:

Known Unknowns

You know content marketing is probably a good idea, but how do you go about creating the type of content that results in leads and SEO gains? You want to try cold emailing prospects, but how do you write in a clever and compelling way, and how do you ensure your emails actually reach the inbox they’re destined for?

Unknown Unknowns

What are all of the questions you aren’t even yet thinking about, because you aren’t yet a lead generation expert? This is where we believe that expertise comes into play.

Many people are reasonably proficient in one or two lead generation tactics, which is great. By sticking to what you know well, you’ll give yourself a better chance of success. However, you may be leaving money on the table by relying too heavily on tactics that may not be appropriate for your customers – for example, if you’re an expert at cold emailing, but your customers are field managers that don’t check email often, then you may need help reaching them in another way. Enlisting competent consultants and agencies can help you overcome these natural skill gaps – or, if you’re large enough, you may want to hire specialists for specific roles and strategies.

We’re happy to answer any other questions if you have any. Email hey@revenuezen.com and let us know the challenges you’re facing with lead gen and revenue, and we’ll do our best to help.