You don’t need more leads (and what you need instead)
The single biggest problem every business struggles with is sales. Over the last 18 years I have worked both in my own businesses and with a multitude of startups. Without exception those businesses (including mine) all needed to get more sales to be successful, and this remains true with the businesses I work with today. And also without exception, almost everyone starts off with the idea that you need to do marketing to get more leads so you can make more sales.
But this is not the whole picture.
Too many (low-quality) leads can kill your business
We know that to get more sales, we need more leads. And to get more leads, we need to do marketing. But just getting more leads is not enough - and in the worst case too many leads can kill your business.
It's all about the quality of those leads.
When you have too many low-quality leads you can waste a lot of time trying to make a sale that will never happen. If all your leads are low-quality leads you're not only wasting time on leads that will never become clients; your actual sales will also be low. So you will have lots of leads but few sales even when you're incredibly busy trying to convert those leads into sales.
So you don't just need to get more leads. You can actually build a successful business with fewer leads - if they are high-quality leads.
So how do you get more high-quality leads?
You have to start with the end in mind.
The promise you're holding out to your clients is that of a shiny new world - a world where a particular problem has been solved and as a result their world is a better place. If you've designed your business well, that problem will be one that is expensive enough to warrant paying someone (you) to solve it, and there are enough people with the problem so you can build a viable business.
Getting clear on what problem you're solving, and how that improves your clients lives, is the first step in getting high-quality leads.
Everything you do in your marketing, nurturing your leads, qualifying them and making a sale is aimed at eventually solving that problem. If you're not clear on what that problem is - and why it is so important to your clients - you are likely to end up with lower-quality leads. When the end result is very clear - to you and to your clients - it's much easier to find people who have those problems and can pay to have them solved.
The best marketing generates enough leads who have that problem.
The purpose of marketing
In the Tornado Method we define the purpose of marketing as follows:
The purpose of marketing is to generate enough of the right kind of leads.
Marketing is about generating leads. (In the Tornado Method we keep marketing separate from lead nurturing and sales to keep things simple.) The emphasis here is on two parts: enough and right kind.
You don't need a million clients to have a viable business. In a service business this is even more true; you can only service so many clients at the same time. If you've designed your business well you will know how many clients you can service at the same time, and how many you need to have a decent income.
(Here's more information on scaling a service-based business.)
Let's say you can service up to 20 clients without losing quality, and that gives you a decent income. You now need to fill your sales funnel with enough leads to continuously keep your client list at 20 (clients come and go). Here's the kicker:
If your conversion rate from lead to client is high, you don't need a lot of leads.
If you convert on average one out of 10 leads into a client, you need to have 200 leads to build a full client roster from scratch. If you already have 10 clients (and you need 10 more) you only need 100. And the numbers improve substantially if your conversion rate is higher - which depends on the quality of the leads in your sales funnel (and how good you are at selling - that's a story for another time).
Not every client is ready to buy when you're ready to sell. You need enough leads in your sales funnel so that those who are ready to buy at any particular point in time, are enough to give you a viable business. But if the quality of the leads in your sales funnel is low - if there are a lot of tire-kickers for example - your conversion rate is going to be low.
So you need to have "enough" leads in your sales funnel, but they also need to be of the "right kind". Leads of the "right kind" turn into clients much more readily than those that are not - your conversion rate is a lot higher.
And to get the right kind of leads into your sales funnel, you have to qualify early and continuously.
The power of the simple sales funnel
Sales funnels are simple things, right? Not quite.
When I ask business owners to describe their sales funnels, I get as many different kinds of answers as people I ask. Almost everyone knows what a sales funnel is; very few have the same understanding of how a sales funnel should be designed and how it works to get people from one stage of the sales process to the next.
I have a lot of admiration for marketing and sales professionals who can construct sophisticated sales funnels with high conversion rates. But if you don't have the skills or training to do this, and your budget is limited, your sales funnel needs to be simple - and effective.
In principle, the sales funnel for a small service business needs to do the following:
- Create awareness that you exist and you can solve a problem.
- Encourage them to take the first step by downloading a lead magnet, watching a webinar or subscribing to a newsletter.
- Build trust, authority and credibility by continuously providing value.
- Qualify your leads by getting them to (for example) fill in a questionnaire or schedule a 1-on-1 session with you.
- Make the offer for the product or service that most closely meets their needs.
Your sales funnel will be more or less sophisticated depending on the cost and complexity of the product or service you're offering. For a service business this is as simple as your sales funnel can get - and it doesn't need to get more complicated.
What is not apparent from the sequence above is that you need to present your material in such a way that you turn away the people you can't help. You're always going to get leads in your sales funnel that never convert - they're just along for the ride. But you want to keep this number as small as possible; every minute you spend on a low-quality lead is time you could have spent better on a higher-quality lead.
Of course you don't know whether a lead in your funnel is low or high quality; but if you design your business (and your sales funnel) well, you will turn away the people you can't help - and those are definitely low quality leads.
You don't need more leads
What you need is enough of the right kind of leads. You will sell more, and take less time to sell, with the right kinds of leads in your sales funnel - and waste a lot less time on people who you can't help.
So let's summarise:
- You don't just need more leads - you need enough of the right kind of leads.
- To get enough leads, you first need to know how many clients you can service at the same time (that will give you a decent income). Then you need to calculate how well you convert leads into sales - which in turn will tell you how many leads you need.
- To get the right kind of leads, you need to be very clear about the problem you can solve, and for whom you can solve it.
- To reduce the number of low-quality leads, you need to a) turn away people you can't help and b) qualify your leads by getting them to take a first, second or even third step.
What you can do now
Do the following exercise:
- Calculate how many clients you need to have a viable business - one that provides you with a decent income.
- Now calculate how many leads you need to fill that client roster if you're starting from zero, and assuming your conversion rate is 1 in 10.
That gives you a pretty good idea of what your ideal sales funnel will look like if all your leads are high quality.
Your next - and bigger job - is to figure out how to get more high-quality leads in your funnel and turn away more of those leads you can't help. And that's a story for another day :)
I hope this helped you get some better insight into leads, marketing and sales funnels. You don't just need more leads, and you can build a viable business with far fewer leads than you think.
Good luck out there.