What is Lead Generation?
For those of us that have worked in the online lead generation space, we can easily take for granted something that others find difficult to grasp, namely how to conceptualize the world of online lead generation. It’s a complex space that means different things to different people.
The challenge of understanding the lead generation space became more evident after setting up a Google Alert for the terms “lead generation” and “online lead generation.” In the daily email summarizing web stories and blog posts, the term lead generation was used broadly, too broadly in fact that some of the uses almost cheapened the word, something the industry can’t afford. As a result, I thought we should try to clarify.
When we use the term lead generation, it refers to activities in the ecosystem of online lead generation including those companies that attend our industry conference, LeadsCon, e.g. those focusing in online education, insurance, financial services, home improvement, and business services to name a few sectors. This ecosystem includes:
- Lead buyers both large and small. Large would be entities like the well-known University of Phoenix or Esurance. Small encompasses everyone from the individual insurance agent to contractor.
- Lead aggregators – marketing service firms that supply leads to multiple lead buyers. These companies can be technology specialists such as Vantage Media, conglomerates spanning multiple channels and verticals like Quinstreet, or vertically oriented firms such as Education Dynamics.
- Lead sellers – companies here tend to resemble mini-versions of aggregators. The biggest distinction between the two is that the classic lead seller doesn’t work directly with the lead buyer but with the aggregator who essentially plays the role of an affiliate network.
- Technology solution providers – those who make the funnel more effective and accurate, whether on the lead scoring, lead verification front, by enabling hot transfers, or making sure landing pages convert better.
- Consumer sites – sites building up their own brand and not just looking to buy traffic for instant conversion purposes, e.g., BillShrink, KnowBeforeYouApply, Credit Karma, and Tripology.
The above ecosystem shares the following in common.
- They connect users with companies – those interested in a good or service with a provider of that service
- They work on a real-time basis
- They more often than not solve an online to offline divide, i.e., users search online for a good or service but a key element of the transaction for that good or service generally occurs offline (be it phone calls or in person visits).
The above applies for evertying from refinancing one’s home, planning an adventure trip, to renting a crane for a construction site. It’s a very specific type of activity, but one that encompasses a multi-billion dollar ecosystem. It works for businesses connecting to consumers and businesses connecting to other businesses, although the vast majority of dollars and companies focus on B2C.
Lead Generation, as a term, tends to be used quite frequently in other areas as well, but these uses do not follow the above three principles above and so we list them for comparative purposes only.
- Sales Leads / B2B Lead Generation / Demand Generation – There is some debate among the online lead generation community regarding the term “Sales Leads.” Our friends at Pontiflex, make the distinction between Sales Leads and Marketing Leads, putting all of the above in the Sales Leads category because the compaies look to transact versus what they call Marketing Leads where a company looks to build its database of customers to market to, i.e. buying opt-in co-registration. While that distinction makes sense in the context of just online education or insurance vs. building an email list, it doesn’t do a sufficient job of helping differentiate between what they call Sales Leads and what the offline lead generation ecosystem calls Sales Leads, the latter in existence and in use well before Pontiflex decided upon such a term to help it sell co-registration to brands.
The classic Sales Lead is does connect a potential service user with a company offering that service, and it often is used for complex transactions that cannot take place online. The key difference though is that a Sales Lead as it is most commonly known doesn’t involve a real-time request from a potential customer. It is more often than not a name on a sales person’s list that matches the criteria of a potential candidate. It is more akin to cold calling. Demand Generation on the other hand, tends to refer to using techniques such as Whitepapers to create interest and/or at the very least a prospect list that a sales person can follow-up on to try and close. Again, they refer to a very different type of activity. - C2C (MLM) Leads – More frequently, we see the term lead generation used among the community of those trying to make money by joining various work-from-home programs, such as Amway, Herbalife, Monavie, and an unlimited number of lesser known but equally prominent schemes. It is something I’m very critical of especially when compared with the affiliate marketing industry. Those in this space focus on building their downstream, and the more web savy ones use online lead generation, i.e. buy leads of people who are being told they can make great money working from home not selling, etc. It is often a real-time request, but it doesn’t solve any online to offline issue. The gap is purposely put in there to create a sales environment.
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