What is lead generation?

Every growing business needs to generate leads to grow their revenue. Let's go through definitions, types and best practices.


Last Updated: February 28, 2024

 by Lari Numminen.

In sales and marketing lead generation is one of those topics that involves a lot of opinions and discussion. In my experience as a CMO, lead generation does not have to be something that is overcomplified. Let's go through key definitions and examples.

What exactly is lead generation?

Lead generation is the process of attracting the interest of potential customers. Lead generation is most often a shared responsibility between sales and marketing with the goal to identify and reach ideal customers in the most effective and efficient way.

One common misconception is that lead generation is a transactional task, for example, through buying contact details from a sales directory or by collecting email addresses through a social media advertising campaign. Until you have qualified that the leads are relevant to your business these activities are not lead generation, it's contact generation. The quick and easy ways to acquire contact details rarely result in quality leads, and set the wrong expectations for effective lead generation.

Types of leads

Leads are categorized based on their interaction with your business and their likelihood of becoming a customer. Understanding these categories helps tailor your marketing and sales strategies effectively.

Sales Qualified Leads (SQLs)

Sales qualified leads are any relevant contacts who have expressed a clear interest in your product or service. This can be people who have requested a product demonstration on your website, or people who have accepted a sales meeting with your team.

Marketing Qualified Leads (MQLs)

Marketing qualified leads are typically relevant contacts that have engaged with your marketing content and can be contacted by your sales team. This can be persons who have submitted their email address to access sales material on your website or after seeing your advertisements on social media.

Product Qualified Leads (PQLs)

Product qualified leads are any contacts that use your product and show interest in paying to use the product more. This could be people who have used a product trial or free version of your product with interest in upgrading. 

The definition for an SQL, MQL or PQL differs in each company, or these abbreviations are not used at all. Some companies they simply talk about "leads." Whatever the case, sales and marketing teams need to be aligned on definitions, so to avoid any confusion or conflict down the line.

Strategies for effective lead generation

    1. Content Marketing: Creating valuable and relevant content that addresses the needs and questions of your target audience is a powerful way to attract leads. This can include blog posts, ebooks, white papers, and videos that offer useful information or solutions to potential customers.

    2. Search Engine Optimization (SEO): Optimizing your website and content for search engines can significantly increase visibility and attract more leads. By targeting specific keywords related to your products or services, you can ensure that your website appears in search results when potential customers are looking for what you offer.

    3. Social Media Marketing: Social platforms offer a vast audience for your content and messages. By engaging with your audience through these channels, you can increase brand awareness and generate leads. Paid social media advertising can also be highly effective in targeting specific demographics or interests.

    4. Email Marketing: Despite being one of the oldest digital marketing strategies, email marketing remains incredibly effective. By collecting email addresses through your website or other channels, you can send targeted messages to potential leads, nurturing them until they are ready to make a purchase.

    5. Pay-Per-Click (PPC) Advertising: PPC campaigns can drive immediate traffic to your website, helping to generate leads quickly. By targeting specific keywords and demographics, you can attract visitors who are actively searching for solutions that your business offers.

Frequently asked questions about lead generation

Q: How do leads differ from prospects?
A: Leads are potential customers who have shown some level of interest in your company but may not have been qualified yet. Prospects are leads that have been assessed and deemed fit with your target market criteria, indicating a higher likelihood of becoming customers.

Q: Why is lead management important?
A: Lead management is crucial for efficiently tracking and nurturing leads through the sales funnel. Proper lead management helps in prioritizing leads, ensuring timely follow-up, and increasing the conversion rates from leads to customers.

Q: What tools are used for lead management?
A: Various Customer Relationship Management (CRM) systems, email marketing platforms, and marketing automation tools are used for lead management. These tools help in organizing leads, automating communications, and analyzing lead behavior and campaign performance.

Q: How can I improve the quality of leads?
A: Improving lead quality involves refining your targeting criteria, creating more engaging and relevant content, optimizing your lead capture forms, and continuously analyzing and adjusting your lead generation strategies based on performance data.

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