MarketingExperiments Blog: Research-driven optimization, testing, and marketing ideas

This week at the San Francisco leg of MarketingSherpa’s B2B Summit 2011, Brian Carroll, Executive Director of Applied Research, MECLABS, and Nicolette Dease, Program Manager, MECLABS Leads Group, provided tactical training on optimizing lead generation.

Part of this presentation was a case study on finding the most efficient list source based on a test that looked at several different lead sources.

The objective of the test was to determine if higher-cost/higher-quality data can drive down overall cost-per-lead, and the primary research question was, “Which campaign data source will drive the most efficient value?”

The test design looked at six list segments with 300 accounts and 80 hours of calling per segment. Let’s first look at how much each lead costs for discovery:

• Multi-source 1, validated by phone based on role – record cost $24
• Multi-source 2, validated by phone based on title – record cost $14.50
• Multi-source 3, validated by phone – record cost $6
• Multi-source 4, validated by email – record cost $3
• User-generated, validated by business cards – record cost $1
• Single-source, no validation – record cost $0.49

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Everyone wants to improve cost-per-lead, right? And so, it would be logical to assume that the cheaper the lead is to obtain, the lower the cost-per-acquisition, the greater the margin, and the bigger the bonus in your paycheck at the end of the quarter.

Well, at MarketingSherpa B2B Summit 2011 in Boston, Brian Carroll, Executive Director of Applied Research, and Nicolette Dease, Program Manager (both at MECLABS) showed, essentially, that cheap leads can be downright expensive.

I grabbed Brian at the networking event after he spoke and asked him to explain …

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If you’ve got a B2B website, you’re always looking for ways to generate more leads online. But while recent research shows 71% of B2B marketers view their site as one of the most important marketing tools, only 31% said their site is “highly effective” at generating leads.

That leaves a lot of room for testing and improving business results. However, optimizing for lead generation is not as straightforward as optimizing for conversion rate.

Conversion rate is the final metric that decides whether or not your online process/funnel is working. In contrast, lead generation only tells you a portion of the story. The leads you generate are really the start of a long process of qualification steps, both online and offline. If you don’t pay attention to each step, you will never be able to get the best out of this process.

How to use friction to your advantage

Think of the process of optimizing for lead generation as two interconnected dials. Each dial represents a step in your online process. One dial increases volume of leads by reducing friction. The second dial increases quality of the lead by increasing friction.

You can increase friction in several ways, such as adding more form fields or steps in the funnel process. Or, you can reduce it by subtracting various page elements or process steps. To adjust your lead flow, turn the dials: more friction will yield higher lead quality; less friction will increase lead volume.

Too much friction can make your visitors quit, but not enough friction will fill your pipeline with leads of a lower quality. So you need to test different approaches to determine what balance works best for your lead generation process.

Before you turn that dial …

Three keys to keep in mind when testing your lead generation process:

1. Choose the right time to add more friction. Think of your lead generation process as a personal introduction to someone. The moment you meet someone you don’t ask for a lot of personal information. If you do, you scare people away. The same concept applies here. For example, in a recent experiment, we tested moving the phone number field from the first step to the second step. Lead generation rate increased by 68% and the conversion rate remained stable.
2. Prioritize your requests properly. Think carefully about what information you ask first, second, and so on. It is important to keep a natural flow as you add and subtract friction elements. A good way to check for this with your pages and processes is to review every step and consider two questions: 1) Do we need this information? 2) Do we need it at this stage?
3. Pay close attention to your final conversion rate. We tested a three-step process against a four-step process. As expected, the three-step process had a higher lead generation rate. However, once the sales team got the leads and started following up on them, they found that leads from the four-step process were more qualified and easier to close. Bottom line: the four-step process had a lower lead generation rate, but ultimately a higher final conversion rate (sales).

To learn more about applying this concept, see our recent research brief, What’s working now in optimization or join our team at our optimization workshop at MarketingSherpa’s B2B Summit.