What is Lead Generation? A Beginner’s Guide

By Milica Milenkovic

June 19, 2023

In an era where information sources are abundant, and competition is extreme, it’s becoming complicated for companies in any field to reach, track, and engage with potential clients. Traditional email blasts used to be enough to attract customers a decade or two ago. Nowadays, however, businesses need to implement smart lead generation strategies to attract potential customers.

But what is lead generation, and how effective is it really? As a marketing technique that focuses on stimulating and capturing interest in a product or service with the aim of developing a sales pipeline, lead generation allows companies to nurture contacts until they’re ready to make a purchase. No matter if you run a B2B company or a B2C company, you’ll find lead generation beneficial. It helps increase brand awareness, build relationships, and ultimately close important business deals. 

Lead generation marketing is important for real estate, eCommerce, and many other businesses, and email marketing is still one of the most effective digital marketing channels. Gathering potential customers’ contact info allows the company to market to them later, even if they do not make a purchase immediately.

In online marketing, acquiring leads typically involves collecting a site visitor’s contact information (called a “lead”) via a web form. Before we dive deeper into explaining the benefits of implementing lead gen strategies and describing the process itself, let’s start by defining what a lead is and talking about different types of leads.

What Is a Lead?

In the context of sales and marketing, a person who indicates interest in a company’s product or service is considered a lead. From customer referrals to digital marketing efforts, there’s a wide variety of sources that leads can come from. Whether they come through offline or online lead generation channels, leads usually learn about a business or organization after opening communication by themselves instead of receiving a random cold call from someone who purchased their contact information. This is generally done by submitting personal details while looking for a quote, trial, or subscription to a product or service.

Still, given that people have different preferences and needs, not every contact is a lead. Many businesses make the mistake of marketing their products and services to a broad audience when they should instead focus on those individuals who have already shown interest in what the company has to offer. 

Finding a New Business Lead

Let’s say an individual takes an online survey to learn about accounting and bookkeeping for a small business. A few days later, they receive an email from the accounting software provider who created the survey to generate leads. The information the accounting software company gathers about the prospective customers helps it personalize that opening communication to address their specific problems and challenges – and not waste time calling individuals who aren’t interested in this type of business service. This process is a lot less intrusive than it would be if the accounting software company just got in touch with you out of the blue with no knowledge of whether you even run a business.  

Leads are part of the lifecycle that consumers follow when they move on from the visitor to the customer stage. Still, not all leads are created equal. One of the most crucial lead generation tips we can give you is to determine whether your leads are “qualified”. So, what are qualified leads, you may wonder. Also referred to as quality leads, these are contacts who have taken a step showing they are considering a purchase. While some leads may be ready to do so right away, others may be taking a little more time to research their options. 

Assuring the quality of leads you find using lead gen tools is essential. Sending the wrong message at the wrong time can waste your time and resources while ruining the relationship with a prospective customer.

Here’s an overview of several different types of qualified leads:

  • Marketing qualified leads: A marketing qualified lead, or MQL for short, is a contact who’s engaged with the efforts of a company’s marketing team but still isn’t ready for a sales call. Marketing leads are contacts who, for example, have stumbled upon your landing page and filled out a form to receive a downloadable guide. 
  • Sales qualified leads: Contacts who have taken actions that show immediate interest in becoming paying customers are referred to as sales qualified leads or SQLs. A contact that fills out a form inquiring about a product or a service is an example of a SQL. 
  • Product qualified leads: A product qualified lead (PQL) is a contact who has tested out a free or a limited version of your product. After signing up for a free trial, PQLs get in touch with your sales team to learn more about the features which are only available to paying customers.
  • Service qualified leads: Lastly, service qualified leads have an active interest in your offerings as they already use the products or services and pay for them. These types of leads are customers who get in touch with a service representative with a request to upgrade their current subscription.

Lead Generation and Inbound Marketing

So, what is inbound marketing, and how is lead generation related to it?

Inbound marketing is a type of marketing strategy that aims to attract customers by creating valuable content tailored to them, thus encouraging individuals to engage with the company’s brand actively. In contrast with outbound marketing which interrupts the audience with content they may or may not be interested in, inbound marketing offers solutions to problems your prospective customers already have.

Implementing an inbound marketing strategy typically involves creating digital resources or content marketing materials such as newsletters, ebooks, blog posts, and social media posts that offer value to potential customers. Most inbound marketing efforts aim to raise awareness, build trust, and manage the relationship between customers and your brand.

Although closely related, lead generation techniques and inbound marketing aren’t the same. In fact, lead generation is a part of a broader marketing strategy. While the process of creating leads helps bring more interested people to your company, inbound marketing efforts aim to nurture those prospective clients and turn them into paying customers that will eventually come back for more. In short, a synchronized implementation of the two practices ensures a sustainable approach to digital marketing.

The Importance of Lead Generation Strategies

When an individual shows interest in your company’s offerings without getting contacted first, the steps they take towards making a purchase seem more natural to them. After all, you’ve just helped them fulfill a need or solve a problem.

On the other hand, if people show no interest in the products or services you provide yet you still try to convert them into customers, they may feel like they are being forced to spend their money on something they don’t need. This could ultimately hurt your brand’s reputation, which is far worse than losing a couple of leads.

Using inbound lead generation techniques to find your target audience helps ensure that your brand is matched with the right customers in the right markets. Here’s an overview of some additional lead generation benefits :

  • Increased awareness: Lead generation can be beneficial when it comes to building brand awareness and reputation. 
  • Collecting prospect information: Another advantage of this practice is that it can gather vital marketing information from prospects. Being aware of your customers’ needs, wants, and preferences can prove invaluable when it comes to adjusting your product or service to suit your audience.
  • Brand loyalty: A strong lead generation strategy can assist you in building larger communities of like-minded customers, thus improving overall customer loyalty.

The Process of Lead Generation 

Now that we’ve pointed out the importance of lead generation and explained how it fits into a company’s inbound marketing strategy, it’s time to walk through the actual process of generating leads online:

  1. First, a visitor discovers your business through your website, blog, social media page, or another social media channel. 
  2. In the next step of the lead generation process, the potential customer clicks on your call-to-action (CTA), which can be in the form of an image, button, or message that encourages website visitors to engage with your brand.
  3. After that, the visitor will be taken to a landing page – a web page designed to capture lead information in exchange for an offer (an ebook, a course, etc.) that visitors must perceive as valuable enough to submit their personal information in exchange.
  4. Once on the landing page, your prospective client takes the final step of filling out a form in exchange for the offer. That’s it – as long as you’re following the lead-capture form best practices, you should have a new lead in your CRM system.

The process of generating leads is quite straightforward. Still, if you want to make sure that your efforts are rewarded with guaranteed success, here are a few more pieces of advice we suggest you follow: 

  • Know your target audience: You won’t be able to target and market your product effectively unless you make sure to define your audience first. Skip this step, and you’ll find it much more difficult to engage with potential customers. 
  • Provide value to users: As a part of an inbound marketing strategy, business lead generation is all about attracting potential clients to your company. To achieve that, you must be able to offer something valuable and helpful to them – free of charge. Depending on your target audience, options may include everything from free trials to freemium subscriptions, blog posts, and white papers.
  • Define your lead magnet: Take some time to figure out what types of content or free products resonate the most with your target audience. Conduct A/B testing and make sure to experiment as much as you can with different lead magnets. Don’t forget to ask for feedback. After gathering all the needed information, focus on developing content that appeals to your target audience the most to improve your lead generation campaign.
  • Develop relationships using newsletters: Once potential customers decide to share their contact information with you, remember to use that data wisely. Use email marketing to keep prospective customers aware of your brand and entice them to convert to paying clients. It is also an excellent tool for nurturing existing customer relationships.
  • Be present on social media: Similarly to email marketing, you can use social media marketing strategies to your advantage. Not only will your presence on social media make it more difficult for a potential customer to forget about your brand, but it will also allow you to connect and engage with your target audience in real-time. 

Common Problems Lead Generating Practices Can Solve

By now, you’re probably aware that a simple batch and blast approach to advertising doesn’t appeal to most customers. However, having a solid lead generation system in place can help you navigate the complexities of finding prospective clients in today’s crowded market. Let’s take a look at a few common problems the concept of lead generation can help solve.

Problem: You need to generate a high volume of leads. 

Solution: What is lead generation good for? Generating lots of leads, of course. The great thing about it is that you can use this practice just as effectively if you’re just starting out or an experienced marketer with a thriving business. If you’re at the beginning, a lead generation program can result in increased brand awareness, improved relationships with your audience, higher quality leads, and, ultimately, more sales. If you’re looking to optimize an existing inbound marketing strategy, we suggest reevaluating your audience profiles, buyer journey roadmap, marketing tactics, and communication channels. 

When developing a lead generation network, make sure to keep your goals, challenges, and customer concerns in mind at all times. That way, you’ll be able to create and deliver content that solves your target audience’s problems.

Problem: You don’t know how to generate higher-quality leads. 

Solution: There are several ways to explain why your sales team is struggling to convert leads into customers. Your sales and marketing teams should work together on planning lead generation strategies and agree on what constitutes a qualified lead. If the sales team approaches prospective clients too soon, they may feel put off. When it comes to sales lead generation, lead quality is of utmost importance, so we advise patience.

Problem: You’ve figured out how to bring in leads but don’t know what to do next. 

Solution: The act of generating customer leads is just one part of lead generation. Once you bring these contacts in, you must use lead scoring and nurturing to qualify leads before your sales team can step in and do their job. In other words, the best way to generate leads is to let your prospective buyers gather some information about your products or services on their own first. 

Problem: Your lead generation program isn’t bringing results anymore. 

Solution: If your lead generation efforts have yet to catch up to the age of the self-directed buyer, it’s time to rethink the whole strategy. Statistics reveal that companies using CRM successfully improve their sales by 29%. Why are we mentioning this?

Let’s say you’re a real estate agent who uses a CRM software solution to collect and track buyer and seller data. Did you know that your CRM tool can be very useful as a sales lead generator? The insights these programs provide can help you choose the most effective way to nurture your leads. Focus on increasing the brand visibility of your brokerage but also look to capture leads’ interest with informational content. You can focus on topics such as home staging, applying for a mortgage, relocating to a different part of the county, and more.


How is lead generation done?

So what is lead generation, and what are the phases of this inbound marketing practice? In short, lead generation is the process of attracting potential customers into a contact management system to nurture them throughout the buying process so that they may eventually become paying customers. You start by determining your audience and setting campaign goals. Next, you need to figure out what type of offer may attract your ideal client. After that, it’s time to create content and integrate the process with technology. Lastly, keep in mind that all lead generation systems should be tested before you start driving traffic and sourcing leads.

What are the types of lead generation?

There are two main categories lead generation falls into – outbound lead generation (cold calls, direct mail) and inbound lead generation (SEO, PPC, and social media).

Who needs lead generation?

No matter if you run a B2B company or a B2C company, you’ll find lead generation beneficial. It helps increase brand awareness, build relationships, and ultimately close deals for companies of all types and sizes.

Where do leads come from?

Leads may come from various sources or activities: digitally via social media sites or through personal referrals, telephone, advertisements, and events. After all, what is lead generation, if not a highly adjustable process that can easily integrate with various marketing and sales strategies?

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