Who Uses Lead-Generation Marketing?
It’s difficult to measure the exact percentage of companies that use lead-generation marketing. But here’s an interesting statistic: A McKinsey Global Survey found that 83% of companies worldwide use some kind of online lead-generation tactic (e-mail marketing, search engine ads, etc.).1 If we include the few companies that use only traditional lead-generation tactics (trade shows, direct mail, and cold calling) without using online tactics, we might estimate that roughly 85 to 90% of all companies worldwide use some form of lead-generation marketing.
The companies that have the most use for lead-generation marketing are those that acquire sales through a website or sales staff. Any company that has a direct sales process and/or a direct sales force—either an internal sales force or a field sales force—will receive significant benefits from using lead-generation marketing tactics.
The ways that companies employ the two major marketing disciplines—brand awareness and lead generation—fall across a range of three categories. Figure 1.1 shows the breakdown of how companies fall into each category.
Lead generation–dependent companies rely exclusively, or almost exclusively, on lead-generation marketing. Usually, these companies are manufacturers or service providers (e.g., Intel or Caterpillar) who may sell directly to a targeted set of customers who have a specific need for their products or services. (For example, Caterpillar usually sells its equipment products and vehicles to construction companies, mining companies, warehouse companies, or whoever has a specific need for it.)
Or these companies may be original equipment manufacturers (OEMs) that sell directly to client companies, who then install the OEM’s components in their own products and sell them under their own brand name. (For example, Intel manufactures microprocessor chips and sells them to manufacturers of computers, mobile devices, entertainment systems, etc.)
For these companies, brand doesn’t matter nearly as much as lead generation because the company relies more on the sales team, the catalog, or the website to push their wares. Yes, their brand helps in terms of recognition.
(Among businesses that use their products, Intel and Caterpillar are very recognizable brand names.) But the company’s direct efforts in marketing and sales really drive the business. Their audience is so targeted that branding to a larger audience would be a waste of money. The challenge for these companies is to make contact with the customers who have a need for their products and to build a personal or business relationship with them.
An excellent example of this type of company is the Fluke Corporation, headquartered in Everett, Washington. Owned by the Dahaner Corporation, Fluke is a billion-dollar company that manufactures electronic testing devices such as calibrators and waveform generators. Fluke uses lead-generation marketing to market their products exclusively to electricians and companies that have a need for them. Because their target market is so specific, they don’t need to spend much money on brand advertising. Among electricians, Fluke enjoys 95% name recognition, but very few people outside their customer base have ever heard of the company.
Brand awareness–dependent companies rely exclusively, or almost exclusively, on brand awareness marketing. Companies like Coca-Cola and Delta Airlines need brand marketing because their target audience includes “everyone.” So these companies pay millions of dollars for advertising to make sure their brand is top-of-mind for anyone with a reason to buy their types of products or services.
In many cases, these companies don’t need to rely on lead-generation marketing because they have channels (e.g., supermarkets or retail stores) to do their selling for them. For example, a consumer electronics manufacturing company like Panasonic might sell its flat-screen TVs, DVD players, and other products through retail stores like Target, Walmart, and Best Buy, as well as online through Amazon.com.
Many consumer electronics companies don’t focus on direct sales of their products. They care only about whether their brand has enough value and awareness to command the high premiums that the company demands, and whether the stores will carry the brand. A consumer electronics company has no reason to generate leads for their products because retail stores that offer or specialize in consumer electronics do it for them, through their own brand awareness marketing.
Brand awareness/lead generation–dependent companies use a combination of brand awareness and lead-generation marketing. Usually, these companies have numerous competitors, along with numerous potential customers in their target markets. In these situations, their target audience must take some kind of action. Whether that action is simply to become aware of the product, to show interest, or to actually purchase the product depends on where the potential customers are in the buying cycle. (I’ll talk more about this in Chapter 2.)
An example of a company that uses a balance of brand awareness and lead-generation marketing is Progressive Insurance or any other large insurance company. Progressive Insurance has hundreds of agents throughout America, whom they must fuel with leads every month. So Progressive does a tremendous amount of lead-generation marketing through direct mail, e-mail marketing, and display ads. But Progressive also uses national TV advertising to make customers aware of their brand. They want to make sure that anyone who is thinking about buying insurance thinks about them.
As shown in Figure 1.1, the companies that use only brand awareness marketing or only lead-generation marketing are fewer in number than those that use both. Most companies fall at the center of the graph, using some combination of brand awareness and lead-generation marketing. The more successful companies are the ones that have learned not only how to use lead-generation marketing to maximum effect, but also how to coordinate lead-generation and brand awareness marketing.
When lead-generation and brand awareness marketing work in tandem, it produces a halo effect, in which the positive effect of one marketing tactic benefits other marketing tactics. For example, when people see a commercial for your company on TV, they come away with a positive impression of your product. While surfing the Web, they see a display ad for your product that reinforces the message. A few days later, they get an e-mail from you, inviting them to learn more about your product, and they click on the link to your website. They may not have clicked on the e-mail invitation without the positive impressions they received from previous ads. (I’ll talk more about the halo effect in Chapter 16, when I discuss integrated marketing campaigns.)
What sets lead-generation marketing apart from brand awareness marketing is that brand marketing is more intuitive and creative, whereas lead-generation marketing is more mathematical and analytical.