Of all the inquiries I get from business leaders who have questions about their marketing, the most frequent is about how to generate more leads. Of course everyone wants to grow their income, and most people still believe that increasing the number of customers is the best way to grow their business.
If you are looking for more customers, it’s natural to think that generating more leads is the solution for slow business growth. But that’s not true for more than 70% of the business owners I speak with. For many companies a low number of leads is a symptom of an issue, not the issue itself. It is a distraction from other ways your company can grow. and it is distracting enough that 100% of the business leaders I ask about how they intend to grow their business tell me they plan to generate more leads. There are other ways to grow your business, and they may provide better results.
Sometimes bringing in more leads hurts more than it helps. For one thing, increasing the number of leads typically means increasing your marketing budget. This increased budget may be used to increase the success of the tactics you are currently using or to implement more (and different) tactics. In either case, your profit will take a dip due to the increased expenses. And the expenses may not be limited to your marketing efforts.
You may need to hire more people to follow up on the leads. And there is no guarantee that the new leads you get will be right for your business, so there may be an additional time component to the cost. You may need more sales or sales-support team members to qualify the opportunity and prospect. New employees require training and ramp-up time, which is another hidden cost for increasing the leads you generate. And there can be many other hidden costs.
Lead generation is great if you need to grow your customer base, but sometimes the issue is your Average Annual Revenue Per Customer, the Lifetime Value of the Customer, or even your Customer Churn Rate. These are three numbers that are worth looking at before you start pursuing new leads and adding new customers.
You may find that you have to update your Ideal Customer Profile (ICP), or increase the value of your offerings relative to the prices you have set. And don’t overlook the impact of Customer Service on that churn rate. Of course there may be a combination of things holding your business growth down. As you can see, generating more leads is not always the answer.
It’s time to stop buying into the hype of agencies that suggest growing your business requires more leads. They don’t have any other answers to offer, but you have other options. Want to know more about other ways to grow your business? Let’s chat!
Meet with me for 15 minutes, and I will be happy to tell you if more leads will help you achieve your goal. You may be in the 30% of companies for which it will work, but there is a 70% chance you’re not.
