An important first step in creating a lead gen strategy is deciding whether to focus on lead quality or quantity. Every lead generation strategy will produce leads in some quantity, but when it comes to leads quality vs. leads quantity, you have a choice to make.
Which is the right lead gen focus for your company? To examine what’s best for your business, let’s first define what is lead quality and what is lead quantity.
What is Lead Quality?
Lead quality is a measure of the value of the leads you are generating. High-quality leads have a higher propensity to convert into paying customers, so the higher quality of your leads, the more likely you are to generate revenue.
A quality lead needs what you’re selling and has the budget and authority to buy it.
What is Lead Quantity?
Lead quantity is the number of leads you generate from your marketing efforts. The more leads you create, the more opportunities you have to market your products and services.
However, low-quality leads often waste time and money. Finding a balance between quantity and quality is essential for high-converting companies.
Lead Quality vs. Lead Quantity: How They Affect ROI
Whether you are focusing on lead quality or lead quantity, your lead gen focus will impact your ROI and it’s essential to measure it. In a recent survey, 44% of marketers say better ROI measurement of their lead and demand generation activity is their top priority for 2021.
You want to generate the best possible leads with a high conversion rate at the lowest customer acquisition cost. That’s the formula for profitability. But it’s easier said than done. Let’s look at this example.
Let’s say you have two sources for lead generation and you’re allocating $10,000 for each source.
- In the first source, you generate 1,000 leads to give you a $10 cost per lead.
- The second source nets 2,500 leads which equals a $4 cost per lead.
If you’re more concerned about lead quantity, the second source appears to be a better deal. However, evaluating the ROI takes more than just putting a price tag on the lead. You also need to evaluate the conversion rate.
- If the first source has a 30% conversion rate, you will convert 300 leads.
- If the second source has a 10% conversion rate, you convert 250 leads.
You spent the same amount of money in each scenario, yet netted fewer total conversions from your second source. Despite the lower cost of leads, you also had to process an additional 1,500 leads. Over time, this inefficiency multiples quickly. Businesses often make the mistake of going with the lower cost per lead solution and can make the lead gen process less efficient.
In our example, if you took the $10,000 from the first source and instead put all $20,000 into the second source, you’d generate 5,000 leads at your $4 cost per lead. With a 10% conversion rate, that means 500 conversions. But if you put the $20,000 into the first source instead, you’d generate fewer leads — 2,000 — but with a higher conversion rate of 30%. You would net 600 conversions and handle 3,000 fewer leads. In this case, the higher cost per lead returned better results in a significantly more efficient manner for the same net investment.
While it may be easy to spot the ROI difference of lead quality vs. lead quantity in this example, it’s not always so obvious. There are also other factors at play. For example, if you have a robust lead scoring process to separate high-quality leads from low-quality leads, you may be able to remove inefficiency in the system. If sales teams have more time to work on high-quality leads, their closing rates may improve which could make leads with a lower cost per lead a better investment.
Lead scoring automatically assigns values to your leads based on criteria you’ve set, such as source, product fit, persona match, and behavior. Lead scoring automation evaluates the action taken by your leads to identify the high-quality leads that are more likely to convert. This allows you to pass along the best quality leads to your sales team and lower your overall acquisition costs.
Look to the Data
Figuring out the right balance for your business takes the careful evaluation of the data along with the right marketing automation system. Using insights from your CRM and marketing tools, you can refine your marketing and lead gen focus.
For example, an analysis of your CRM and lead funnel can help you determine which marketing efforts most strongly correlate with purchases. Analyzing your customer base can help you uncover the commonalities among your customers so you can better target and refine your efforts.
Determining which actions prospects took that led to conversions — or failed to lead to conversions — can help you more easily recognize the buying signals that indicate a higher quality lead. This can help you sort through leads to deliver high-value leads to your sales team more quickly.
Lead Quality vs. Lead Quantity: You Need Both
There will always be tradeoffs between focusing on quality and focusing on quantity, but it’s important to achieve the proper balance to keep your sales pipeline full with qualified prospects.
It is possible to improve both lead quality and lead quantity and find the right balance. You just need the right systems, processes, and automation to capture, engage, and nurture leads.
Tips for Finding the Right Balance
Finding that balance means an efficient system for generating, analyzing, and automating as much of the lead gen focus as possible.
- Capturing and evaluating leads: You need an efficient and automated way to capture and evaluate leads as they enter your system. Depending on the analysis and the insights you’ve gained from your CRM and marketing automation, leads can be assigned a score to determine the next step.
- Fast-tracking high-value leads: High-value leads that enter the sales pipeline and demonstrate the right buying signals should be routed immediately to sales teams for follow-up. For example, someone asking for a quote or requesting a demo requires immediate attention.
- Managing other leads: Other leads are scored and put into the pipeline at the levels appropriate for their value.
- Nurturing leads: Automation customizes a lead-nurturing pathway depending on the prospect’s profile and behavior. Content marketing, email marketing, and other inbound marketing leads continue to be delivered to the prospect until they take the next step on the buyer’s journey or take actions that indicate they are more likely to convert.
- Customizing efforts: The more you can customize your responses, offers, and lead nurturing tactics, the more likely you are to improve your conversation rates. Advancements in AI, natural language processing, and machine learning have made customization at scale possible in ways that were impossible just a few short years ago.
Using these tactics allows you to generate leads at volume and fast-track those most likely to convert. At the same time, you can continue to nurture other leads to drive them through the buyer’s journey until they are ready for your sales team to take over.
While companies understand the value of nurturing leads, one overlooked strategy is to target stalled or “dead” leads. While it may be inefficient to have your sales team follow up on these stalled leads, marketing automation can work in the background and continue to reach out to find potential prospects and get them back into your sales flow.
As many as 68% of businesses are now using marketing automation. If you’re not one of them, you may be at risk of falling behind your competitors.
Transforming Your Sales Process
To compete effectively, you need to transform your traditional sales process to manage both the quantity and quality of leads required to drive sustainable growth for your business.
Customer acquisition costs, or CACs, continue to rise. Over the past five years, CACs have risen by more than 60% on average. Creating a more efficient way to manage your leads can help mitigate these rising costs.
Aktify provides businesses with a way to virtually clone their sales team without adding additional sales reps. Virtual AI-enhanced agents can manage and engage with leads at various stages of the buyer’s journey and provide them personalized attention to drive them forward.
The AI assistant understands context, colloquial styles, and interprets intent. Prospects won’t know they aren’t dealing with a real person when they get personalized real-time responses to inquiries. Leads are captured and nurtured. Based on data analysis, the AI takes the appropriate next step, including automatically scheduling appointments, demos, and follow-ups.
The Aktify solution is scalable to manage any lead volume. Virtual agents can handle thousands of conversations simultaneously, so you can generate and manage a significant number of leads and nurture them until it’s time for the sales team to close the deal.
Implementing conversational AI into your sales process can help you find the perfect balance between lead quantity and lead quality. Contact Aktify today for a demo.