When lead generation turns into lead DE-generation

One of the tasks of a business is to fill its sales funnel with leads. The more leads (and the more targeted those leads are) the better. But not all of those leads will buy from you.

Although most businesses will have some leads fall out of their sales funnel, it pays to spend some time investigating the causes of lead degeneration.

To find out how much a lead is worth to your business, determine is what the average spend on each sale, then determine your prospect-to-customer (conversion) rate, then determine your lead-to-prospect (qualification) rate. So, if your average customer spends $100.00 per sale, and if you convert 1 customer out of every 10 prospects, and if you convert 1 prospect out of every 10 leads, then each lead is worth $1.00. ($100/10 prospects = $10; then $10/10 leads = $1).

In the scenario above, if you can plug the holes in the lead stage of your sales funnel and save even one lead, you’ve saved $1.00.

So how do you plug the holes in your lead stage? First, you need to identify why leads leave.
Although each business’ leads will have their own unique reasons for leaving, here are some general observations:

  • The lead discovers that your product or service doesn’t solve their problem in the way they initially thought it might when they were in the audience stage.
  • You don’t qualify the lead at the right time (either too fast or too slow).

Although there might be other reasons, many of the reasons I’ve encountered are subsets of these reasons for lead fall-out. Here are a few practical scenarios of how leads fall out of the lead stage:

  • The prospective buyer realizes they have a problem and they start to investigate the solution. They sign up for your email newsletter to get more information but as the information starts to come in, they realize that they don’t have the problem they once thought they did.
  • The prospective buyer is price shopping and although your product or service seems equivalent or provides even better value than a competitor’s product, the lead discovers the price and heads away from your business to the cheaper price.
  • The prospective buyer asks to find out more about your product or service and although they want information to make an informed decision, they instead get a sales pitch that tries to push them to a sale faster than they are ready.
  • As the prospective buyer moves through lead the stage, they start to uncover objections about your product or service. However, your sales process doesn’t address objections until the prospect stage.
  • The prospective buyer learns more about your product or service, and seems very interested, but they discover other solutions (including alternates and replacements that they had not considered previously), which seem superior at the time.

The lead stage can be quite tenuous – you don’t want to come across as too pushy but you also need to take charge and help the prospective buyer understand what you have to offer and what value it provides.

You can keep leads from falling out of the lead stage by doing some of the following:

  • Take a poll of your leads and of your prospects and compare the two. Are there responses present among your leads that simply do not appear among your prospects? Chances are, something in your sales funnel is driving those specific leads away (or outside of your sales funnel is attracting those specific leads away).
  • If you have captured some contact information from your leads, follow-up when it becomes apparent that they are no longer responsive leads. Ask them what they chose instead, and why.
  • Examine the marketing you do at the lead stage. Test new methods or new ways of communicating.
  • Time your leads through the lead stage. Test a slightly faster and slightly slower rate and see what happens.
  • Look at where you handle objections in your sales funnel and try spreading them out a little so that some objections are handled earlier in the funnel.
  • If your qualification (lead-to-prospect) rate suddenly drops off, scour the news to pinpoint a possible cause. Did a news story related to your industry suddenly sour your leads?

Lead generation is vital to ensuring that your business sells its products or services and generates cash flow. But if you don’t pay attention, lead generation can easily turn to lead degeneration.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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