How Much Does Lead Generation Cost?
All outbound lead generation can be grouped into one of three categories. In this video we’ll look at the pros and cons of each approach.
We’ll explore average conversion rates you can expect from each method. And the cost of generating leads for each.
Let’s get started!
Managing Director, Sales Higher
I get a lot of questions about lead generation.
But hands down, the most 2 frequently asked questions are:
“How Many Leads Will I Get?”
“How Much Does Lead Generation Cost?”
Now the exact numbers for YOUR industry & YOUR circumstances will vary
But I’ve been doing B2B lead generation for 11 years now.
I’ve run hundreds of campaigns across dozens of industries.
And I’ve worked with one person companies all the way up to listed companies.
So I’ll give you some general numbers you can use as a benchmark to answer to both of these questions
There are a million ways to generate leads.
But I like think of them as all falling into one of THREE categories
I call these categories: High Friction Leads, Medium Friction Leads, and Low Friction Leads.
To illustrate what I mean by friction, imagine you’re walking down the street and a complete stranger comes up and asks for $100.
What do you do?
Well you are probably going to disengage as fast as possible!
So this is a high friction approach. If it’s successful they get $100.
But most people aren’t going to give them the time of day, much less $100.
I should point out this is very similar to what we’re doing when we contact people we’ve never met and ask them for 30 minutes of their valuable time.
Something to think about…
Now imagine you’re walking down the same street and the same stranger approaches.
But this time they explain they just opened a new pizza parlour and they’d love to get your feedback on their pizza.
Do you have a few minutes for a free slice and a free drink?
I’ll bet you might have time for that!
This is a very low friction approach to starting a relationship.
In an email, a high friction approach would be, “Hey, book a 30 minute meeting on my calendar”.
A low friction approach might be, “Hey I made a video that will show you 3 ways to reduce your taxes to zero this year. Can I send it over?”
In this incredibly professional chart we can see the effect of friction on lead volume.
So you might be thinking that adopting a low friction approach is the obvious way forward.
Why doesn’t everyone just do that?
Unfortunately it’s not quite that simple.
Because we also need to consider the IMPACT leads have on our business.
Someone who wants to meet for an hour is a LOT more valuable to your business than someone who downloads your free eBook.
High friction leads are harder to acquire, But they have more impact on your bottom line.
The question is then is it better to have a lot of low value leads?
Or is it better to get a small number of high value leads?
There’s no easy answer to that question.
Personally, I like to think of lead generation as a relationship building process. And I want to create as many relationships as possible.
So I tend to favour low and medium friction approaches.
Let’s take a closer look at each type of lead so you can decide for yourself what’s the best approach for your business.
Starting with High Friction Leads
This approach is almost always your value proposition followed by a request to discuss.
It works AMAZING when your offering is high outcome, low risk.
For example, during Covid one of our clients was selling remote onboarding solutions. EVERYONE wanted to talk to her.
The nice thing about high friction leads is they convert pretty well. Your prospect is giving up their valuable time which means they’re serious.
Another nice thing is they’ve already agreed to meet so you don’t need a lot of marketing materials to nurture them to the point where they book a meeting.
High friction lead costs can vary. We’ve generated qualified meetings for less than $30.
But for companies that don’t have an insanely compelling offer then this approach typically costs about $175 per qualified meeting.
The important thing to understand is that for most companies, adopting a high friction approach is a very inefficient use of your valuable data.
Let’s say 1 person out of every 100 books a meeting. Great!
But what about the other 99?
A LOT of them are going to be curious about your services
And they want to know more about what you do.
They’re not ready to hop on a call yet. But they are open to more information.
So if your call to action is, “let’s jump on a call” then you’re never going to hear from them again.
And in some instances the opportunity will be lost forever.
Develop Low Friction Leads
These are just collateral driven leads.
For example, offer a template, a case study, a video or some other valuable resource that offers immediate value to your ideal client.
I really like this approach because:
I like contacting people and offering them something rather than asking for something. It just feels good.
If the resource is actually valuable then you’re gonna get tons of replies. Some campaigns can get up to 10% positive responses.
But the thing I like most about this approach is the people who have an immediate interest in your solutions tend to self identify.
In other words, they don’t respond with ‘sure send me the video’. Instead they ask questions about terms of service. Or just ask for a meeting.
In a typical Low Friction campaign up to 1% of prospects will ask for service related information.
And an additional 2% – 3% will request the resource.
So very often you get the same number of qualified leads, without asking anyone for anything.
And you also got another group of opportunities you can nurture long term.
To give you an idea:
Your cost per lead is usually only around $70
There are some challenges with this approach:
The big one is the people who accept your resource, just want the resource. They haven’t shared any interest in your solutions, yet.
That means, ideally, they should be nurtured in an email list or by connecting on LinkedIn.
Use A Medium Friction Approach
This is where we combine the elements of a meeting with valuable resources that prove your topical expertise.
The most common example of this is a webinar.
Webinars are great! You KNOW the prospect has some skin in the game. After all, they’re giving up their valuable time to spend it with YOU.
And the focus of the meeting is on delivering lots of value, and proving your topical expertise.
Not on selling them something.
Webinars are fairly low friction because people expect they’re going to be semi-anonymous.
And it’s a lot easier to agree to a webinar than a 1-1 meeting.
Also, they’re easy to implement. You don’t need lots of marketing materials. You just need ONE really good seminar.
Also, keep in mind your webinar doesn’t have to be a large group of people. You can just have like 3 people on a Zoom call.
Webinar leads typically cost about $100 to generate.
And the only big challenge with them is getting people to actually show up after they’ve signed up.
So this has been a very brief overview of the 3 ways to generate leads.
And I hope I’ve given you some ideas to answer, “how much does lead generation cost?” And the right method of lead gen for your situation.
If you’d like to discuss how to get leads for your business, just let me know.