Despite all our efforts as marketers to bring in as many leads as possible, research from Next Leap Strategy shows that nearly 80% of leads will never convert to a sale.
As if that wasn’t enough of a reality shock, a survey conducted by Marketing Donut indicated that more than 60% of leads curious about your products and services won’t convert for a minimum of three months.
At first glance, this feels like a numbers game. You know the odds are against you, so you may think that boosting your lead-generation efforts will solve your problem. But is focusing solely on continuously generating new leads the best course of action?
While having a high-functioning lead generation strategy is essential to any business, especially in B2B, it’s not the only strategy you have for increasing conversion rates and sales revenue. Lead nurturing pairs well with lead generation and can offer significant benefits that will save your marketing team time and money.
To amplify your lead generation strategy for 2023, you need to implement lead nurturing processes.
What’s the Difference between Lead Generation and Lead Nurturing?
Although lead generation and lead nurturing work well together, they are two very different actions.
Lead generation takes place when potential buyers first hear about your brand, products, or services. First contact with a potential buyer and your brand can occur in any number of ways, including:
- Online advertisements
- Targeted emails
- Social media ads
- Blogs & articles
- Traditional marketing methods
- Webinars & videos
- Search engine advertising
- Press releases
- Events & trade shows
After a lead is generated, you have to do something with that lead to convert them into a buyer, which is when lead nurturing comes into play.
Lead nurturing occurs to further educate potential buyers about your products or services. Depending on your industry, lead nurturing may include a salesperson calling a potential buyer regularly and chatting with them about business needs. It can also include a salesperson sending emails with valuable content specifically chosen for that potential buyer.
Lead generation and lead nurturing each have different goals.
Lead generation is a numbers game. It’s not about if the leads convert. It’s more about whether you can gather leads to meet a quota consistently month after month.
For lead nurturing, your goal is not to meet a quota. Your goal is to make a connection by showing that you care about improving your prospect's business. Your company's products and services can deliver significant value to your prospect, and you want to use lead nurturing to share that value and gain their trust.
Benefit #1: Save Money and Cash-in on Current Leads with Lead Nurturing
Research gathered from HubSpot, the Integrated Marketing Association, Marketing Charts, and others highlighted that the average cost per lead varies based on industry as well as lead generation channel. Recent data from these sources showed that the average cost per lead for B2B ranged between $31 and $811.
Remember from the earlier statistic that around 80% of these leads will never convert.
If you gather 100 leads at the mid-range cost, ($421 per lead), then you just spent $33,680 on leads who will never make a purchase. Regardless, 20% of those leads may convert, and after paying $8,420 to get those leads, in this example, it’s cheaper to keep them interested through nurturing than to acquire (and lose) new leads.
Marketo, a marketing automation software vendor, researched the benefits of lead nurturing versus continually gathering new leads. Data from their research showed that 50% more sales were generated from their nurtured leads as compared to unnurtured leads. Additionally, sales acquired from nurtured leads on average cost 33% less.
Benefit #2: Shorten the Sales Cycle by Staying Top of Mind with Lead Nurturing
Many of the leads that marketers get are not sales-ready. Research from Marketing Sherpa indicated that more than 70% of your leads won’t have a reason to use your services when you make first contact.
And that’s okay because the goal is not to make a sale on that first touchpoint. The goal is to stay top of mind so that when they are sales-ready, your company is the first one they think about.
Lead nurturing helps you stay top of mind.
As sales team members regularly contact the lead with valuable information on the phone or via email, they start to develop a relationship with the lead that’s focused on what problems the lead’s company is facing and what would be needed to solve those problems.
Staying top of mind is even more crucial if you have a long sales cycle.
As discussed earlier, 60% of your leads can take as long as three months before they make a purchase. Across the entire B2B service industry, the average sales cycle falls between 1-6 months.
There are 3 main factors that explain why B2B service industry sales take longer:
- Multiple stakeholders making decisions
- Larger financial investment
- Higher chance of risk
Luckily, lead nurturing can counter these three factors and potentially shorten the sales cycle.
When a savvy salesperson knows that they have multiple stakeholders, each with different priorities, they can tailor their nurturing tactics to provide specific types of articles and case studies that relate to each stakeholder’s priorities.
Educating the stakeholders with different types of proof showcases your company’s industry knowledge and ability to deliver solutions successfully. It can also lower the risk ratio for each stakeholder and justify the financial investment.
Benefit #3: Increase Personalization for the Buyer's Journey with Lead Nurturing
For anyone in marketing and sales, personalization has been a major ongoing trend for several years. Customers want special treatment, and they expect others to understand their business needs.
But when you’re playing a numbers game to get more leads, how do you get more leads and still keep everything personal?
If personalization is your goal, first make sure to optimize your lead generation processes.
Keeping your data clean for better lead segmentation via industry, persona, job title, or however you want to segment is vital to personalize your messaging. Yes, you’re still sending one message to a segmented group of people, but that group of people often share the same problems, making the message personalized while still hitting a larger number of potential leads.
Research from SmarterHQ shows that more than 70% of potential customers only respond to personalized messaging. Therefore, after you acquire these leads and move them into a lead nurturing cycle, you’ll need that clean data to help you provide the most personalized experience you can offer.
Personalization also helps with reducing acquisition and marketing costs.
Records from ADWEEK indicated that customer acquisition costs go down by as much as 50% for leads who receive personalized messaging throughout the sales cycle. McKinsey & Company’s research showed that personalization offers more specific product recommendations and marketing communications, which makes the marketing spend efficiency rate grow by as much as 30%.
Must-Have Technology for Lead Generation & Lead Nurturing
For successful lead generation and lead nurturing programs, there are certain technologies available that can both streamline and optimize your processes. While the following is not an exhaustive list, it does highlight some of the foundational tools you will need.
Email Marketing Tools:
With automated email marketing, you can set up workflows that are triggered by events, such as a form fill or certain behaviors. Automations can get you in contact with potential leads sooner, (Ziff Davis’ research showed leads contacted within five minutes are 9X more likely to convert). Additionally, based on each lead's journey and habits, you can segment them into specific workflows for more personalization during the nurturing process.
By the way, email marketing tools that allow you to automate processes are worth their weight in gold! According to data gathered from Campaign Monitor, email marketing offers the highest ROI amongst all lead generation tools, with every dollar spent earning $42 in return (4,400% ROI).
Be proactive and use outbound tools to find potential leads, including their contact information and social media account info. For marketers who love prospecting, outbound tools are the way to go. Also, data gathered from outbound tools can inform salespeople about how best to nurture leads based on their digital footprints.
You don’t have the time or capacity to go after every potential buyer out there, but leveraging inbound tools lets you attract people interested in your products or services. Most inbound tools utilize keyword-rich content marketing and lead magnets to attract the ideal customer persona. The same content marketing you’re producing to attract leads works wonders for nurturing them.
Marketing Management Tools:
Of all the concepts listed, this may be the biggest umbrella term. Marketing management tools encompass any software or service that organizes your marketing efforts, which can include customer relationship management (CRM) platforms, social media aggregators, content management systems, advertising platforms, and so forth.
Before you get overwhelmed, remember the goals of lead generation and lead nurturing. For your foundation, you need something that captures lead information (a CRM would be a good place to start), and you need a way to nurture and educate those leads (think email marketing and something to manage your content).
While on-page tools sound technical, all it means is a way to capture information from a lead. In other words, a digital form. Where that information goes within your system depends on your setup and integrations with other tools. The more automated you can make it the better. Remember that any manual entry slows down your processes and risks human error.
Proof of Concept: How Lead Nurturing Landed 28% of AltSource’s Deals in 2022
As a custom software development company in Portland, it’s not uncommon for our salespeople to call potential leads and hear responses like the following:
- “Your services sound interesting, but we just don’t have any projects right now.”
- “We do need help with mobile app development, but we won’t have funding until later this year.”
- “Our legacy systems are on their last legs, but we just don’t have the budget right now.”
Where some people might hear these responses as “Thanks but no thanks” situations, our sales team sees these as prospects to nurture.
“No is just another opportunity for a future yes,” AltSource Account Executive Calen Wetherell said. “While it might not be the right time right now, you never know what the future will bring.”
Wetherell’s comments highlight one of the main goals of lead nurturing, which is to stay top of mind. He and the other sales team members here at AltSource know that polite persistence is key, which includes making regular follow-up calls to check in and sending emails with valuable information, such as case studies or thought leadership articles.
While it is easier to invest in these warm leads through nurturing versus starting from scratch with attracting new leads all the time, at AltSource we have another purpose for focusing on nurturing.
We are picky with the clients we take on because we want to develop long-term partnerships. You can’t have strong partnerships unless you know more information about your customer, and that starts with these conversations.
This year, 28% of our leads converted after previously telling us “Thanks but no thanks.” One of the reasons they came back to choose us as their technology partner is because we kept in touch and had human conversations about business problems and technology solutions. We invested our time in the potential of developing strong partnerships, and now we are happy to be supporting these newly acquired clients that we’ve gotten to know so well through our nurturing practices.
To see more of our client partnership success stories, review our case studies here. You can also email questions and start a conversation with our team: firstname.lastname@example.org