Acceleral

If ever there was a cosy world where advertising drove the bulk of your B2B leads, it's definitely not the case today. Decision makers take information from wider sources, our attention span flits from place to place and DIY online content (and PVRs) mean that we can just skip the ads anyway.  So what makes a good B2B lead generation campaign these days and how can you sort one from the other to maximise your marketing budget?  Fortunately, it's all in the numbers and the even better news is that the numbers are not all that hard to calculate.

There is no doubt that for some businesses, the ROI of lead generation is pretty easy to determine. Frank Walker, voice of radio ads for his National Tiles business, once told me that he knows if a radio ad campaign is working by the next day. And Tom Phillips, CEO of furniture outlet, Weekends Only, told me a similar thing in relation to his TV ads.

But if your business is more B2B than B2C, and your sales cycle is measured in months, not hours, then tying your lead generation spend to specific revenue can be much more elusive.

Still, the question of where to spend your money has to be answered so let’s look at some of the more common strategies you can deploy and the lead costs that allow you to choose between them.

Google AdWords

The most common question I am asked about Google AdWords is “Do they work?”

To answer that, let’s look at Google’s revenue in comparison to some more traditional advertising channels, the television industry.

According to Channel Seven’s 2009 Annual Report, total revenues, dividends, net interest income and share of associates’ profits, excluding impairment and deferred gains were $242.2 million.

Channel Ten’s consolidated entity’s revenue for the year ended 31 August 2009 was a considerably larger $903.0 million (and if I’m reading their financial statements correctly, television-specific revenue was the bulk of their business at $745M).

And Google Australia?

It’s not official, but 12 months ago SmartCompany estimated that Google’s Australian subsidiary was “rumoured to be close to hitting the $1 billion revenue figure in Australia soon.” There is likely to be some hype in that number, and a more recent estimate suggests revenues between $538M and $650M, but either way, this is an incredible result for a business that wasn’t even in the market ten years ago.

(For the record, the actual revenue figure filed by Google is a more meagre $110M, but according to theage.com.au, because its customers actually buy directly from Google Ireland, Google Australia’s stated revenue considerably understates its presence in the Australian market.)

This highlights the MASSIVE shift in advertising access to the online model. But perhaps more subtly, it also underpins that advertising linked to search activity works. Because really, if it didn’t, Google wouldn’t be the powerhouse it has become.

Given that Google AdWords work, the next most common question I am asked is “How much should I spend”. My (somewhat) trite answer is “As much as you can!”

Seriously, the killer aspect of AdWords is that you determine the combination of search words that will trigger your bid for search page primacy. So you can tweak and twist your pitch to quickly iterate what works best for what you can spend.

However, to give you an idea of spending that worked, the AdWords campaigns that I ran for a mid-sized software business cost around $10,000 per month. The return on this investment was seven leads per week, making the lead cost about $360.

Importantly, these leads were self qualified, so the likelihood of them actually buying something was higher than other lead generation techniques.

Trade Shows

I am not a real fan of trade shows, especially the smaller “industry-specific” ones, as a generator of B2B leads.

Indeed, I did some trade show analytics comparing a number of industry shows over three years and concluded that the sole determinate of leads was foot traffic. And in all cases the lead cost exceeded Google AdWords.

Still, if you can find large shows to attend there can be benefits. IT companies, for example, should consider CeBIT as the king-hit place to be with, in my experience, a lead cost of around $475.

But what about those smaller, industry specific ones, which someone in your company is convinced that you need to be seen at or your customers and prospects will somehow conclude that you’ve gone out of business?

I guess you need to pick your own battles, but if you are forced to attend, track your leads religiously so that you can calculate your lead cost ratio.

As an example, a recent industry trade show I attended cost $8,000 and we picked up 13 prospects, so the lead cost was $615.

A colleague attended an even more bespoke show that cost $5,000 and generated 4 prospects, making the lead cost a ridiculous $1,250.

Industry-specific Print Advertising

As a test of print effectiveness, for one of the Retail Expo shows in Melbourne we placed coupons for a free coffee at our booth in the various show-specific print advertising that we had purchased.

Each coupon was uniquely bar-coded to the advert, so as we redeemed the coupons the scanner told us which publication it had come from.

Unfortunately, the overwhelming response was that almost all of the coupons were clipped from the free brochure attendees picked up at the door.

Our other advertising did not even make a dent.

Now as they say, your mileage will vary, but in my experience industry-specific print advertising does not generate leads. And typically I was taking out full page ads, so we were not hiding our light under a bushel by sharing space with competitors or other content.

My bottom line was that at a typical cost of between $2,500 and $10,000 per advert, it was a lot of money to spend for a zero return.

Non-Google AdWords PPC advertising

Here’s some free advice - don’t even go there!

In my quest to generate leads I have tried the majors and many industry-specific portals that all purport to touch your demographic and generate leads. They never did.

Also, whenever I ran one of these campaigns our website analytics showed minimal referral traffic. So it was not even as though our portal advertising would spark interest and the prospect would browse to our site.

The only upside was that like Frank Walker’s radio ads, it was very easy to see whether these non-Google PPCs were working and terminate them fast if they weren’t.

So try them out if you want to, but don’t commit too much money and I’ll have my fingers crossed that you luck onto some combination that works for your business. But if it doesn't, don’t say you I didn’t warn you.

Outbound emails

Now we are starting to get into the interesting area of permissions marketing, which means that you need to brush up on anti-spam legislation.

Assuming that you have done that, there are two main ways to generate outbound emails:

1. Have your emails sent on your behalf by a trusted third party to their subscriber base;
2. Send them yourself.

In my experience, neither method is a magic bullet and given the administration costs involved in keeping lists current and correct, neither method is particularly more cost-effective than the other.

Either way, try to have a hook or gimmick in your email that grabs your reader’s attention. I’ve successfully used the “Ten Question Industry Survey” concept before, with a GPS up for grabs to those who reply.

Also, make sure that the outbound email includes an opt-out mechanism – and if you are using a third party to send your email, take responsibility as if you were sending them yourself and confirm the opt-out in writing.

Finally, I had issues with an international brand-name portal who would happily send emails, but insisted that any graphics in the email be hyperlinked back to their mail server. They had a bevy of reasons why this was desirable, but failed to recognise that most email programs automatically block such hypertext graphics, rendering the email in all its plain text ugliness.

Sadly, even screen capturing the test emails with their prominent:

“To help protect your privacy, some content in this message has been blocked. If you are sure that this message is from a trusted sender and you want to re-enable the blocked features, click here.”

message did not sway them because they just were not configured to send tens of thousands of emails each with 200K of embedded graphic images.

If you send the email directly, be aware that high volumes of what is essentially the same email may trigger a black list of your mail server. Management of black lists seems more art than science, but believe me, being on a black list is not much fun and getting off them is even less so.

Now, if that’s the mechanics of outbound emails, what is the lead cost?

A typical email campaign will trigger a response rate of less than 1% and a list runs to around $500 per thousand entries, plus $300 - $500 for setup. So the lead cost will range around $80 - $130, depending on your list costs.

OK, that's cheaper than Google AdWords you are thinking, however a good outbound email campaign should include telephone follow up because emails by themselves are pretty passive. Clearly this adds considerably to both the lead cost and the time frame of any campaign.

Telemarketing

The lead cost for telemarketing is a hard one to ballpark, whether in-house or outsourced, because it all comes down to the person making the calls.

I worked with a delightful telemarketer on $60K salary who consistently generated around 4 leads a week. With on-costs taken into account her lead cost was around $390.

I also ran a $45K outsourced campaign over 3 months that generated 8 leads a week for a lead cost of $416.

But, I’ve also run a similar costing outsourced campaign that initially generated one lead a day, but slowly slipped off that rate as staff turned over.

Consequently, my view is that if you want to integrate B2B telemarketing into your normal sales process, hire someone and park them with the sales team.

But if you want a fast-burn campaign, you should outsource because telemarketing firms can quickly apply callers in volume, and this especially works if they can work to an uncomplicated script.

So what you’ll likely end up with is a two tier approach:

• In-house to consistently generate leads as part of your normal sales function;
• Outsourced to specifically follow up campaigns, such as outbound emails or trade shows.

And if you do outsource, make sure that the telemarketers practice on you and your sales team first to bed down their patter. Otherwise they are not only going to waste the first dozen or so calls getting the nuance right, but irritate prospects into the bargain.

Conclusion

For the most part, I’ve found Google AdWords to be the most cost-effective B2B lead generation method, with a dedicated telemarketer coming a close second.

But if you take into account that Google AdWords operate 24*7 and that you get fully integrated analytics on how your campaigns are going, then AdWords are an even more potent way to spend your marketing budget.

This means that my ideal lead generation mix looks something like this:

1. Google AdWords is the bulk of your spend.
2. In-house telemarketing for consistent, outbound contact with the market.
3. Outbound emails on a per-campaign basis, coupled with outsourced telemarketing for rapid follow up.
4. High attendance trade shows, ideally coupled with outsourced telemarketing for rapid follow up of suspects.

Note that print advertising is not included in my mix, and I’ve ignored more mainstream advertising such as radio and television as I don’t consider them appropriate for most B2B lead generation campaigns.

By calculating your own lead costs, you can work through your ideal lead generation mix. And by putting numbers to the methods, you’ll even be able to impress the bean counters that the Marketing Department knows what it’s doing.

But most importantly, you will be feeding your sales team with cost-effective, quality leads and that is the best outcome of all.