Social Media Lead Generation- Does it work or not?
If you're in a service or trades type of industry, you understand the importance of getting high quality, qualified leads for your business. Whether they come from referrals, partnerships, or paid ads, you simply need them coming in to fill your sales funnel. But many people are skeptical of getting leads on social media, or the effectiveness of doing so. I've heard prospective clients say things such as, "I don't think it will reach the right type of people," or that they believe a lead generation website such as Home Advisor if you're in the trades, will provide better quality leads than you can get from social media. How do you know where the best source for leads will come from for your company? Have you taken the time to test, and run multiple variations of ad campaigns, and which source has the least amount of competition per lead? Where is your target demographic and what is their buying style or process? There are so many factors in determining which avenue to focus on putting your marketing dollars towards when your are looking to essentially buy leads.
1. Frequency or quantity of leads.
2. Cost per lead.
3. Conversion rate per lead.
4. Profit per lead.
5. Additional benefits beyond the individual leads.
Frequency or quantity of leads.
Sales is a numbers game based on volume. If you have don't have the volume of leads to work off of, all other factors don't matter. This is where many companies are either misguided, or have unachievable expectations on what can be accomplished on specific budgets. Marketing is not a magic source for instantly growing your business. It's not a, "Put $100 in and get $100,000 back instantly" kind of process. So many companies try going with the minimum they can spend on leads and hope that it will get them the leads right away. That isn't usually how it works. You've got to spend money to make money and with leads, it takes money spent upfront, testing multiple sources, to figure out where you can get the most leads from. For a contractor, spend $1000 on Home Advisor, and $1000 on Facebook and see which generates the most leads for you and over how much time. If both generate the same volume of leads but one does it faster, are they both equal? It all depends on the volume of leads you need and can handle, along with the other factors we will discuss.
Cost per lead.
Simply put, which source costs you more per lead? If you are working on a limited budget and need to see results quickly to be able to maintain spending money on marketing or buying leads, then it may be appealing to go with the highest volume of leads that you can get for your money. At the same time, you have to balance cost with quality.
This can get tricky to accurately asses which method of getting leads is most beneficial. If you aren't converting the leads you get from any given source, they're not worth doing. But the biggest thing that has to be accurately be figured out is WHY aren't they converting? I've seen plenty of companies blame the lead source for not sending them quality leads, but in reality, it was poor sales processes. Without diving into the sales methodology in this article, make sure that your sales model actually works for the type of leads you're going after or getting. That said, once you have a solid sales process that works, you can start evaluating multiple sources of leads to see which gives you the highest conversion rate for your method of selling. You may quickly find that what you get from your social media marketing are a different demographic or buying cycle than what you get from another source. This can be a good thing to diversify your client base and generate additional verticals to sell to. Don't pigeonhole yourself into a corner by being overly picky. If you expect to run a 100% conversion rate on any leads you get as a company, you're either sorely mistaken or have zero competition in your field! While it fluctuates from industry to industry, most people shoot for a 30-50% conversion rate on warm leads, with some going a bit higher or lower. The problem many companies run into is that they think they need to get instant success and sales from the leads they receive. If you are wanting a 50% conversion rate but only get two leads, you simply don't have the pool to get an accurate accounting from. Give yourself, your sales team, and your marketing team a big enough pool to get an accurate reading. You may go 0/10 at first but then you obtain9/10. This simply means that you need to be willing to invest upfront with the understanding that you may have a cold streak before hitting a run of great leads that all convert.
If you aren't making profit off your jobs then you're not going to make it as a business. However, not all job types have the same margins. Some are quick jobs that may not have a large total net profit but the margins may be much higher. If you are a custom home-builder who also does remodels, you may make $150k off a new house build that takes you 6 months to do. At the same time, you can do a remodel in two months and make $75k, meaning that in the same six-month period, if you were to do three remodels, you'd make an extra $75k. This is an area in which far too many businesses make mistakes. They want to take the one job with a guaranteed larger amount rather than taking a smaller one without a for sure that the next jobs will be there. Job security is great, but that mindset can cost you in the long run.
When comparing your lead sources, combining all the above factors should lead you to which source generates the best return on your investment. You can't look at any single factor to determine which is working best, but a combination of all. You can get one really good lead from one source that converts to a single job with OK profit margins, but then your sales funnel is dry. Or, you can get a large volume of leads that may not have the highest profit margins but you get them consistently and at such a good price that they keep your sales funnel full. In other words, there is no one-size fits all or correct way to do this. It's all about evaluating the whole picture of what is or isn't working for you and your business. This is also why you need to diversify and have multiple avenues for leads coming in.
Finally, additional benefits beyond leads.
While leads are great, if that's all you're using to grow your business, you're missing out on so many other factors and benefits of marketing. This is also the one huge area that I can confidently say will push social media marketing to the top of the effectiveness list versus most other marketing sources. Top of mind, brand awareness, increased customer referrals, new partnerships, and converting customers to advocates, are just some of the benefits of a strong social media marketing strategy for your business. You will get the leads from ad campaigns, but you will also be getting in front of people on a regular basis even if they're not in the market for your service at that point. When they, or someone they know, are in the market, they will be used to seeing your company and more likely to choose you. People go with a company they know like and trust, more often then just the first company they hear from or see when shopping. This is something that other lead generation platforms can't really give you and why it will often be the most effective place for marketing dollars to be spent. You get both the short term gain of leads, combined with the long term gain of brand awareness and staying top of mind!
As always, if you're not a marketing company, or someone with a natural bent towards it, get someone to do this for you! Our consultations are free and can save you a lot of time, energy and money versus trying to do it all yourself so give us a call or book a free consultation today!