What are the key considerations that SMEs need to think about when it comes to lead generation? We all need new business, indeed 80% of my clients ask how to get in contact with new prospects. In a perfect world, it goes without saying that referrals and repeat business are the lifeblood for SMEs. But I suppose its fair to say that very few of us can totally relax and assume that that fresh inquiries will just come through our door and do the job. So as a consequence of that, most new businesses need to develop some kind of strategy for new business and also for developing a pipeline of new leads. In my opinion that comes to a few key factors. The first factor, in terms of developing new business, is understanding your target market. The more you can refine your target market down, the better… That might be in terms of sectors, the types of business location, size and so on; and also the job descriptions of the key decision makers that might agree to see you and buy your products or services, those are all crucial. Because if you can do that, what you can effectively do is focus your marketing and focus your lead generation and lower the cost of acquisition, the cost of finding those target prospects and then ultimately converting them.
So number one is always understanding your target market. Now once you know your target market, then next is about understanding where your prospects, your potential customers go for information, knowledge and communication, networking, forums and so on. Meaning where are the places where you can engage best with them, either on a proactive basis (targeting them via telemarketing, email marketing, advertising to them or whatever) or reaching them thru exhibitions, or even through social media where they might engage with peers and so on. The reality is there are likely to be all manner of ways to reach your target market. Ultimately, as a business owner or manager, you need to evaluate the relevance and the ease of which you can use them. Been in a specialist market helps; selling gothic clothing, brand motorcycle parts, exotic pets, fishing tackle, franchise to name a few we have worked with.
A third aspect, which I think is really important in new business, is the extent to which you can do stuff yourselves and the things you need to outsource. Now it goes without saying, as a small business, if you can do it yourself that may seem more cost-effective and that may be true. But the reality is you need to consider the balance between the opportunity cost of doing new business by spending more time on things you may be good at or you may not be, against elsewhere in the business where you definitely add value. That is often hard for small businesses as they try to juggle a lot of plates and they’re managing the business most of the time; so in essence, they have very limited time for business development activities…and that’s where they get caught. You must budget a percentage of turnover towards Lead Generation. Often start-ups under budget for this and can make building a business hard. Established businesses want to keep the profits rather than invest in Lead Generation costs. The successful companies all allocate a Lead Generation budget and usually grow it tear on year. Never ‘rest on your laurels like Kellogg’s did in the 1950’s. (Kellogg’s sales fell of the cliff when they decided to cut marketing as they were a household name.
So it is a judgment call. You need to understand what you can do yourself and what you need help with. The next question, I believe, is what resources and skills do you have at your disposal? Now it may not mean you at this point, in other words, to generate new business, what people, what systems, what processes (e.g. CRM systems, follow-up processes) have you got? And if you got them, how can you deploy them? Where are they best utilised? It makes sense to use them but again, the reality is, that it isn’t always the best solution. Because sometimes you don’t have those skills in-house. You might have the people but you/they don’t have the skills. And some forms of marketing require specific knowledge. So whether that’s knowing how to negotiate media rates for trade advertising, through making sure that social media works for you in lead generation terms and makes an impact rather than just throwing sales messages onto Twitter or Facebook, through to maybe even, in telemarketing sense, knowing how to get through a “gatekeeper” on a cold call plus how best to develop rapport with the decision maker to set that appointment. And the reality of all of these things is that not everything is feasible in-house for a small business.
Another common question for business development is “what kind of budget should I set aside?” And that’s a difficult question to answer because the reality is there is no right or wrong answer to the budget question. There was one client who said he was advised to simply spend three per cent of turnover. I said to him that may or may be correct. Because that’s all well and good if your sales are really high. But what happens if your sales are really high but your margins are really low (e.g. travel industry, automotive industry)? What that will mean in fact, is three per cent might significantly eat into your margin if you’re taking three per cent of turnover. Likewise, when your revenue is low your sales are low, three per cent of nothing is still nothing. So it absolutely depends on where you are at as a business, where your goals are, margins are and what your appetite for investment is and your understanding of your routes to market. Because of course if you know what your best routes to market are, you know where you can place your money to be most effective. And if you don’t know, maybe get some advice that can be from a local business advisor or potentially using the “growth accelerator program” by the government, where you can potentially get some funding for coaching and training or marketing. NBSL also offer a 40% grant to a marketing programme in North East England. Also realise the law of diminishing returns. If a marketing campaign produced 10 new clients, doubling the budget will produce less than 20 and more than 10. Another aspect from the budget perspective is to look from the outset what your goals are. What’s the level of growth that you’re looking for, how aggressive do you want to be? Look to work out the cost per goal. So really, your business objectives kick you off in terms of budget decisions. But since cash flow is the lifeblood of any business, it may well be that your cash flow dictates what you can spend. But on the flip side, if you get good advice from your accountant, it may be an overdraft facility or a business loan that will propel your business forward. Calculate the total cost and look at the minimum return your looking for before taking the plunge. Calculate the additional exposure too, you want sales but additional exposure will fuel your brand awareness.
Finally you need to make sure that you get the advice that you need, whether that’s from your accountant or business advisor or take some external marketing advice. Whatever it is you choose to do, make sure you get the right advice
Source: Additions by Paul Harper.
About Paul Harper
Managing Director, Paul Harper, provides sales and marketing services, Internet marketing with a focus on SME business. Business support and development with on-going mentor support. Meet Paul and talk about your business and you will see his passion and deep thought as he works with you and mentors you to achieve your business goals. Learn more here.