Lead Generation Pays Over Long Term

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Consumers are increasingly picky about marketing messages. They open fewer e-mails, watch fewer television ads, click fewer Web ads and, in general, respond to advertisers less often. What can marketers do? Get consumers to reach out to them.


The beauty of online lead generation is that it's the customer who initiates the relationship. According to the Interactive Advertising Bureau and the New Media Group of PricewaterhouseCoopers, lead generation advertising revenue hit $347 million in the first half of 2005, up 204 percent from the same period in 2004. Lead generation works best for marketers hoping to add highly qualified opt-in prospects to their databases.


Consumers express direct interest in offers from particular marketers by signing up for travel deals, newspaper and magazine subscriptions, loyalty programs or discounts on anything from jewelry to weight-loss services. Marketers link those offers from Web sites that attract audiences whose demographics, geography and other characteristics match those that marketers want to reach.


Multipurpose marketing. Once the consumer provides initial information such as name, ZIP code and e-mail address, marketers can use it in all sorts of ways. Retailers and travel marketers, for example, often use auto responders to immediately confirm consumer interest and feature offers geared to consumers' geographic location or stated preferences.


Catalogers might take advantage of information collected through lead generation over a more extended time. Based on preferences initially expressed by a consumer, or actual buying habits, catalog marketers can adjust online and offline marketing to suit that customer.


Sometimes marketers wait to send customers print catalogs only after they have made purchases. That way, catalogs can be customized based on previous orders. For instance, if a consumer ordered spring gardening products online, the cataloger may choose to send that person print catalogs featuring complementary items.


Educational institutions, from universities to vocational schools to seminar and conference operations, need to target select groups of people with specific educational goals and histories. This is where lead generation really comes in handy. According to Direct Marketing Association research, lead generation accounted for 52 percent of educational marketers' campaign objectives in 2004.


Unlike the quick follow-up cycle typical of travel or retail businesses, educational companies rely on a much slower cycle that can involve sending prospects postal mail packets and contacting them via phone or e-mail in the following weeks.


Value growth year after year. No matter the duration of the initial sales cycle, however, lead generation lets marketers continue to contact consumers for weeks, months and years to come while customizing messages and offers based on what's been learned over time. Marketers have permission to market to these consumers indefinitely, and they can tailor marketing to their preferences.


The perennial rewards of lead generation are reaped from patient tending to potential customers over time. My CEO reminisced about a call from a client who raved about the ROI boost from a lead generation campaign that he canceled almost a year earlier. Now that the client was earning three and four times the return on his original lead generation investment, he realized the error he made by canceling the campaign.


Lead generation is not just for instant gratification. Many advertisers view lead generation as only a direct response tool, but it's much more. It's a customer acquisition tool with lifetime value that provides short- and long-term results.


Quality trumps quantity. Because different types of marketers have different types of goals, the cost of each lead can vary based on the amount of information gathered from each prospect and the value of each data point. Depending on how refined the requirements are for a particular lead generation campaign, marketers might harvest anywhere from 1,000 to 15,000 leads in a month. This may seem like a small number to some marketers, but the difference is in the quality of those leads.


Sure, buying outside lists or driving high-volume site traffic through search engines can help connect marketers to a lot of prospects. But are they the right prospects? With these other strategies, there's little or no assurance. DoubleClick's Q2 2005 Email Trend Report showed that e-mail open rates have declined for five consecutive quarters, dropping from 36 percent in Q2 2004 to 27.5 percent in Q2 2005. The ad technology firm counts evolving consumer behavior, mainly "greater selectivity in opening e-mails," among the causes of these dwindling open rates.


Through lead generation, on the other hand, marketers know that consumers requested and expect to receive communications from them. Marketers can be more secure in the knowledge that they're getting qualified leads because only those people who complete online registration forms make the cut. From there, verification of contact information further ensures that marketers pay only for qualified leads.


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