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Focusing on Lead Generation Reduces Your Revenue

Lead generation is killing your business. Yes, you read that right. It’s true. Here’s how, and what to do about it.

Lead generation is a reactive process for finding prospective buyers, creating a relationship, and converting as many as possible to customers. It relies on knowing that someone already has a pain point that your offerings can solve. And that means the prospective customer must already know what the underlying issue is, and what potential solutions exist.

There is an entire process that happens before a decision-maker starts to look for solutions and providers. They need to know a problem exists. A company may experience symptoms well before they realize they even have an issue. Once they determine that there is one, they need to figure out the cause of it. That’s when they will start to research solutions and providers.

This is the point where the typical lead generation strategy begins. Marketing efforts start once the prospective customer has figured out what the pain point is or even after they have begun to research the available solutions. Don’t take my word for it. Think about your customer avatars and marketing campaigns. What are they focused on? I’m betting the focus is on resolving known pain points.

As a result, you are already reducing the number of prospective customers you could be talking to. In marketing, we refer to the number of all potential customers as the Total Addressable Market. But not every company in the TAM will have the issue or have it at the same time, and you’re not the only company with a possible solution. Your lead generation model will also limit the size of your actual audience. The addressable market begins to shrink as soon as a prospective customer knows they have an issue, which is where your lead generation is most likely starting.

The Serviceable Market is the part of the part of the market that is Available or Obtainable. The Serviceable Available Market (SAM) is larger than the Serviceable Obtainable Market (SOM). At the end of the day, 100% of your marketing efforts are focused on approximately 2% of the Total Addressable Market. Lead generation as a strategy is a recipe for lower conversions and revenue generation. You can increase the size of your Serviceable Market if you stop focusing on lead generation and start focusing on demand generation.

Demand generation starts before the prospect knows they have an issue you can solve. It enables you to build and nurture the relationship longer. It also makes you the “trusted advisor” you want to be. Most companies are not interested in increasing their marketing costs, which can happen with demand generation, but the upside payoff can be significant. It’s possible to minimize and contain any additional marketing costs while increasing conversions and revenue. It just takes a solid strategy.

Your lead generation strategy may be killing your pipeline. It’s filling the pipeline closer to the sale, but it may also be costing you opportunities for additional sales and revenue. Your sales reps may be working harder for each sale and their close rate may not be so great as a result. Displacing other competitors that are under consideration is more difficult than converting sales because you were there as a trusted advisor when the issue was discovered.

Want to know more about how Demand Generation works? Set up a complimentary conversation with us today!