MSM FULL-FUNNEL CONVERSION GLOSSARY
What is Lead Generation?
Lead generation is the process of attracting people who might buy from you and getting them to identify themselves, usually by making an enquiry, booking something or exchanging their contact details for something useful.
THE SHORT ANSWER
The Definition
Lead generation is the process of attracting people who might buy from you and getting them to identify themselves, usually by making an enquiry, booking something or exchanging their contact details for something useful.
Why It Matters Commercially
Nothing else in your funnel works without it. But lead generation is also where the most money gets wasted, because it's the easiest stage to measure badly. Volume is simple to count and tells you very little. What matters is how many of those leads your business can convert, and at what cost.
How It's Measured
Cost per lead = Total spend on a channel ÷ Leads generated. Track it alongside cost per qualified lead, because a cheap lead that never qualifies costs you more than an expensive one that does.
Who Owns It
Marketing owns generating them. Sales owns converting them. The definition of what counts as a lead worth passing over needs agreeing by both, in writing, or the two teams will keep reporting different numbers from the same pipeline.
HOW IT WORKS
Lead generation covers everything that turns a stranger into a named contact who has given you permission to get in touch. In B2B that usually happens through one of five routes:
- Search. Someone looks for a solution and finds your website.
- Paid advertising. You buy attention on search, social or display.
- Content and organic social. People find you through something you published.
- Outbound. You approach people directly by email, phone or LinkedIn.
- Referral and network. Someone recommends you.
Each produces leads at a different cost and a different quality. Referrals typically convert best and scale worst. Paid advertising scales fastest and converts least well. Most businesses over invest in one route and never measure the others properly.
Volume is the wrong target
The common failure is treating lead generation as a numbers exercise. More leads looks like progress in a report and often means more work for no more revenue, because the extra volume sits at the wrong end of the qualification scale.
The number worth managing is cost per qualified lead, not cost per lead. That single change usually redirects budget away from whichever channel produces the most enquiries and towards whichever produces the most customers.
Lead generation versus demand generation
Lead generation captures people who are already looking. Demand generation creates the awareness that makes them look in the first place.
A search advert for your service is lead generation. Someone is in the market and you are putting yourself in front of them. An article explaining a problem your buyers have before they know it has a solution is demand generation. You are creating the interest rather than harvesting it.
Businesses that only do lead generation are competing for a fixed pool of buyers already in the market, which is why costs rise as competitors bid for the same searches. Businesses that only do demand generation build awareness with nothing to capture it. You need both, and the balance depends on how established your category is.
Lead generation versus prospecting
The difference is who starts the conversation.
With inbound lead generation the buyer comes to you. They search, they read something, they see an advert, and they choose to make contact. You control the message and they control the timing.
With prospecting your sales team goes out and approaches people directly, whether or not those people were looking. You control the timing and you have seconds to earn any attention at all.
Both fill the same pipeline and both count as generating leads. What differs is the messaging, the measurement and often the people. Judging an outbound team on inbound metrics is why so many of them look like they're underperforming when they aren't.
We build lead generation systems as part of our CRM and automation work. If you want to increase leads without increasing spend, we've written about ten strategies for doing that and how to get more leads through your website.
WHAT THIS LOOKS LIKE IN PRACTICE
A consultancy spends its budget across three channels. Paid search produces 30 leads a month at a low cost per lead. Content produces 8. Referrals produce 4.
On cost per lead, paid search wins comfortably and gets more budget. When they tracked through to closed business instead, the picture reversed. Referrals converted at a far higher rate, content converted well and paid search produced volume that rarely qualified.
Nothing about the channels changed. What changed was the measurement, and with it where the money went.
IS THIS COSTING YOU REVENUE RIGHT NOW?
Work through these with whoever owns marketing:
- Do you know your cost per lead by channel, not just overall?
- Do you know your cost per qualified lead?
- Can you trace any of your last ten customers back to the activity that produced them?
- Is lead volume the main thing reported, or does quality get reported alongside it?
- Does anything happen to leads that don't convert straight away?
- Has anyone checked what percentage of leads get a response within an hour?
Two or more no answers and you're likely spending on volume that your business can't convert.
SEE WHAT YOUR COMPETITORS ARE DOING THAT YOU AREN'T
We'll analyse two of your competitors against your own site and show you where they're winning conversions you should be getting.
WHAT WE SEE IN THE FIELD
When a business tells us lead generation isn't working, the problem is rarely the top of the funnel. It's usually that leads arrive and nothing consistent happens next, so the ones who would have bought go cold while everyone concludes the leads were poor.
Before spending more on generating leads, find out what happens to the ones you already get. Response time, follow up count, and whether anyone owns the handover. That work costs nothing and changes the return on everything you spend afterwards.
Reviewed by Ian Wilson, MSM.
Frequently Asked
What is the difference between lead generation and demand generation?
Lead generation captures people who are already looking. Demand generation creates the awareness that makes them look. A search advert for your service is lead generation. An article explaining a problem before someone knows it has a solution is demand generation. Businesses that only do the first compete for a fixed pool of buyers, which is why costs rise.
How much should a lead cost?
There's no useful benchmark, because it varies enormously by channel, sector and deal size. The number worth managing is cost per qualified lead rather than cost per lead. That single change usually redirects budget away from whichever channel produces the most enquiries and towards whichever produces the most customers.
What is the best lead generation channel for B2B?
It depends on your market, but the pattern is consistent. Referrals convert best and scale worst. Paid advertising scales fastest and converts least well. Search and content sit in between and compound over time. Most businesses over invest in one and never measure the others properly.
Why are my leads not converting?
Before assuming the leads are poor, check what happens after they arrive. Response time, how many times each lead gets followed up, and whether anyone owns the handover between marketing and sales. In most businesses we audit, the leads were fine and the follow up wasn't.
What is the difference between lead generation and prospecting?
The difference is who starts the conversation. With lead generation the buyer comes to you, usually because something you published or paid for reached them at the right moment. With prospecting your sales team goes out and approaches people directly, whether or not those people were looking. Both fill the same pipeline, and they need different messaging, different measurement and often different people.
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