David Kirkpatrick

Lead Generation: A closer look at a B2B company’s cost-per-lead and prospect generation

Update: All MarketingSherpa newsletter articles are now permanently open access.

 

Several weeks ago I had the chance to speak with Jon Miller, Marketo‘s Vice President, Marketing, and co-founder of the company. Our talk was extensive and covered Marketo’s entire marketing process and philosophy, and the main result was a MarketingSherpa B2B newsletter case study (members library).

Even though the story was extremely in-depth and revealing in covering the marketing automation company’s practices — so much so that when my editor tweeted the story he wrote, “#B2B Marketing Strategy: Revenue-oriented approach leads to 700% two-year growth http://j.mp/lWT7PS @jonmiller2 opens up the kimono” — not everything Jon and I discussed made it into the case study.

One result of the extra material I have on hand was a popular MarketingExperiments blog post on testing form field length, and a second result is today’s SherpaBlog post going into more detail about Marketo’s cost-per-lead across its prospect generation efforts.

It’s a prospect, not a lead

Even though “lead generation” and “cost-per-lead” are something of industry terms of art, Jon explained to me that Marketo has a rigorous naming system for its eight-stage buying cycle, or what it calls a “revenue cycle:”

1. Awareness

2. Names

3. Engaged

4. Prospect

5. Lead

6. Sales lead

7. Opportunity

8. Customer

For someone to move from “engaged” to “prospect,” they must visit Marketo’s website and either fill out a form or download content. At this point they undergo demographic lead scoring. Using this scoring, Jon says a prospect is, “the right kind of person at the right company.”

Marketo defines a “lead” how most companies might identify a marketing-qualified lead, so at Marketo “prospects” are in effect its traditionally defined leads. Confused yet?

This chart takes a look at Marketo’s prospect generation metrics for the last two quarters of 2010. You will notice above the line are efforts Jon pays some marginal cost for and each includes its cost-per-lead. Below the line are Marketo’s non-marginal-cost inbound marketing efforts.

Click to enlarge

Virtual beats traditional in trade shows

Virtual trade shows stand out in this list because they create the most prospects at the lowest cost-per-lead. In fact, the figure on the far right of this chart, lead-to-opportunity index, is calibrated to the virtual trade show statistics.

“For us, virtual trade shows work great,” Jon says. “You get the database really cheap and they become leads, too.”

He adds that pay-per-click advertising has a fairly high cost-per-lead, but they also convert to opportunities at a high level at the highest velocity (in terms of least days), and they almost double the closest conversion-to-lead figure. It is worth it to Marketo to spend the extra cost-per-lead money on PPC ads.

The worst overall performing tactic on the chart is the traditional trade show. These events have the highest cost-per-lead by a long shot and don’t offer a strong conversion-to-lead number, and the strong lead-to-opportunity conversion ratio doesn’t offset the weaker stats.

Based on this information from last year, Jon told me he plans on cutting back on traditional trade shows this year and is spending that money on traveling to captive event road shows.

Inbound rising …

One very interesting aspect of Marketo’s prospect generation chart is the performance of its non-marginal cost inbound marketing tactics. Across the board they meet, and often greatly exceed, the baseline lead-to-opportunity index. Velocity and conversion-to-lead also compare very favorably for most tactics.

And the cost-per-lead for these inbound efforts? Effectively zero.

What lead generation tactics do you find successful? Do you track the success rate and bottom-line impact of your inbound efforts? Let us, and your peers, know what you think in the comments section.

Related resources

Lead Gen Overhaul: 4 Strategies to Boost Response Rates, Reduce Cost-per-Lead

Custom Landing Pages for PPC: 4 Steps to 88% More Leads, Lower Costs

Lead Generation: How to get funding to improve your lead gen

Social Media Marketing: You value (and earn ROI on) what you pay for

Lead Marketing: Cost-per-lead and lead nurturing ROI

Search Engine Marketing: Finding appeal for your PPC Ads

Social Media Marketing Research: Rolling up my sleeves and getting social

Share and Enjoy:
  • LinkedIn
  • StumbleUpon
  • Facebook
  • del.icio.us
  • Digg

Inbound Marketing, Lead Generation



  1. July 14th, 2011 at 10:05 | #1

    Looks like a much deeper and dedicated focus on inbound marketing is the way to go! Why are they spending all that time and effort on tradeshows?

  2. July 14th, 2011 at 14:35 | #2

    I am a big fan of inbound, and believe that content, SEO, and other techniques are a great way to generate leads. We are in fact declining our investment in third party tradeshows. However, it’s important to always remember the synergies between these things. When someone sees us at a tradeshow, they very well may show up as an inbound lead a few weeks later.

    For a much deeper analysis of these metrics, feel free to check out http://bit.ly/DG2MM.

  3. September 22nd, 2011 at 20:50 | #3

    In lead generation, everything should be planned with great precision so couldn’t agree more on this post. Another thing, trade shows seem to work the best in generating leads and companies should give them a try.

    Thank you David!

  4. October 30th, 2011 at 22:04 | #4

    Inbound marketing for lead generation should always be done with due diligence. Furthermore, the marketing campaign’s success can be further achieved through outbound means; especially through outsourced cold calling services.

  5. January 1st, 2012 at 04:21 | #5

    Inbound is definitely great but don’t you need some buzz created through outbound before ?

  6. March 16th, 2013 at 02:16 | #6

    I wanted to ask the same question Alex. Anyway, it’ll be great to know the answer.

  7. March 18th, 2013 at 11:21 | #7

    Alex and Natalie,

    Good question, and this answer is going to be a little bland so apologies. But, it all depends on what works best for your business and marketplace.

    I’ve spoken with marketers who are extremely successful taking a 100% inbound tactical approach, and just as many who rely heavily on a variety of outbound efforts.

    A mix of all of the above is probably the best place to begin, and then test and measure to see what’s really working from there.

    Here’s one interesting idea. I’ve written about one marketer who just didn’t have the budget for outbound activities, but the company still participated in live events by following the hashtag on Twitter, downloaded decks from the presentations and was very active in online conversations about what was happening at the event that no one from the marketing team was actually attending.

    Here’s the link to that case study covering how one software company took an inbound-only approach to its marketing: http://www.marketingsherpa.com/article/case-study/how-software-company-generated-190

  1. July 19th, 2011 at 15:44 | #1