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Updated Oct 20, 2023

What Small Businesses Need to Know about Lead Generation

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Adam Uzialko, Business Strategy Insider and Senior Editor

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No matter what service or product your business provides, finding and building a client base is critical to your success. While traditional advertising techniques may capture some attention, lead generation helps you find the people who are most likely to become loyal customers. In this guide, get expert recommendations for lead generation strategies and find out why CRMs (customer relationship management systems) are especially helpful.

Lead generation explained

A business that offers services to consumers or other companies must find its customers somewhere. The best way to do that is through lead generation.

“Lead generation is the process of creating and capturing interest in a product or service for the purpose of increasing your client base and revenue,” said Ari S. Goldberg, founder of investment firm RNMKR. “Lead generation often uses digital and social channels, and has been innovating rapidly the last few years with the rise of new online and social techniques.”

Without active lead generation efforts, growing a new business or scaling an existing one would be difficult – if not impossible. 

“You cannot serve clients until you get them, and you cannot get them without generating the initial lead to convert them from an unknown person to someone interested in your product or service to an actual paying client,” said Goldberg.

While attracting clients through advertisements is a somewhat passive process, lead generation leverages a variety of tools to actively engage potential clients or customers and spark their interest in your business. 

Rune Hauge, co-founder and CEO of Mentorcam, said that lead generation is valuable because people today are so bombarded with advertising that they tune it out.

“Traditional advertising is like shouting through a megaphone at a passing crowd, which is interruptive, expensive and ineffective,” he said. “Lead generation is more like meeting someone for coffee or going to a book club: It’s a way to start meaningful conversations with people. This is how businesses can build strong relationships and lasting loyalty, which will power their long-term success.”

Why lead generation matters

Strong customer relationships are at the heart of a successful small business, but acquiring new customers can be a challenge.

“Small businesses [can] … earn new customers by engaging leads through relevant content offerings, which establishes trust and the opportunity to form a relationship,” said Hauge. “Customers [who] have chosen to engage with your business and have initiated contact are likely your most loyal ones.”

Goldberg put it very simply: Lead generation “can make a small business a big business.”

Before you work on generating leads, Hauge suggests reflecting on your strategy and business goals. Then, to build your lead generation approach, try asking yourself the following questions:

  • Who are your potential customers?
  • What do they care about?
  • How will you measure success?

“Understand your audience and how your company can make their lives easier,” Hauge added. “Start meaningful dialogue. Focus on building a relationship, not making a sale.”

Lead generation tips from experts

Goldberg said there are hundreds of ways to be successful in lead generation – and you need to do as many of them as you can effectively. Give yourself as many lines in the water as possible, he said, and let your methods build on each other to foster exponential growth. 

“Any successful business owner, entrepreneur or executive is succeeding at lead generation. In fact, this is what is helping them create a pipeline of clients,” Goldberg said. “The best are the ones who are curious, who experiment, who use trial and error, who A/B test, who don’t get down on themselves and who are persistent.”

Hauge also said the key to generating good leads is understanding the needs and interests of your customers and providing them with content that’s relevant to them without coming across as “salesy.”

If you’re looking for tactics for lead generation, Goldberg says social media is a great way to go. Consistently posting on Instagram and Facebook and utilizing other content marketing methods such as email, drip campaigns, weekly newsletters and SEO are the best ways to drive traffic to your business’s website.

Hauge recommends offering something for nothing to attract potential clients. This item or service can vary depending on your business. For example, if you’re a home-improvement contractor, perhaps offer a free design consultation. During the consultation, listen to the prospective customer’s needs and respond accordingly. Hauge noted that good listeners are often the most successful at lead generation.

“Listening to a potential customer’s needs and understanding them fully is the first step to having a real conversation and is a critical component of successful lead generation,” he said.

Key TakeawayKey takeaway
Take advantage of multiple lead generation tactics that provide potential clients with useful, relevant information and address their needs.

Lead generation strategies

You should approach lead generation from multiple channels in order to build your client base. Therefore, there are a variety of approaches to keep in mind as you design your lead generation strategy. 

  • Consider your ideal customer. To build your lead generation tool kit, you have to know who you want to reach. Determine your ideal customer and consider their interests and needs. Where might they look for services or products? How do they conduct research? The answers to these questions will help you reach new customers. 
  • Educate your audience. Find ways to communicate to your client base about your products and services. Blogs and social media posts are two strategies useful for lead generation. Include inbound and outbound links for improved SEO.
  • Include a call to action. Develop a call to action (CTA) for all promotional materials. Use sales language to encourage people to take the next step, like, “Call now for a special exclusive offer for you.”
  • Collect audience insights. Each piece of marketing material should intentionally target your audience. Lead generation is fluid, and you need to create material that reaches your targets in a timely manner. Tools like Google Analytics are essential for tracking insights. [Check out our beginner’s guide to Google Analytics.]
  • Simplify the process. Lead generation is most successful when your marketing efforts all aim to reach the same point. For instance, your blog posts, social media posts and emails should all lead to the same website landing page.
  • Host relevant events. Informative, interesting events within your industry can attract new potential clients and provide an opportunity for your company to show off its strengths. You could host a popular industry expert for a Q&A, participate in a conference or even hold a webinar. [Learn how to plan a corporate event.]
  • Incentivize referrals. No one knows how great your product is quite like your existing clients. Referral programs that encourage them to speak with their friends and family about your product not only benefit your company but your clients, too, if you reward those clients for spreading the word about your business.
  • Prioritize quality content. Whether you put out newsletters, blogs, guest articles, podcasts, videos or social media posts, make sure your content is original, useful, well-written and skillfully produced. Try to answer real questions potential leads might have to capture their interest and build trust.

How CRMs make lead generation easier 

Managing all the facets of lead generation can be challenging, especially for smaller companies that may not have a digital marketing team. Fortunately, customer relationship management software (CRMs) can help.

CRMs are meant to improve your customer service and client interactions, from making it easier to provide support to facilitating communications to streamlining your sales workflow. These systems track company performance and important data about your customers. Increasingly, CRMs have also incorporated features that focus on lead generation and conversion. 

Such solutions utilize a combination of organization tools and automation techniques to make sure that the signals you receive from your audience are leveraged to turn them into leads and then convert those leads into customers. Your CRM can act as a repository for all the information you have about your leads, so you can access customer profiles and determine whether specific sales agents should reach out to them. A CRM can also notify you when a new lead enters the pipeline or becomes a customer. 

Some leads are less promising than others. For example, maybe a person reads one of your blog posts that they received via your email newsletter but doesn’t take any other action. Your CRM can help prioritize your leads so you can focus only on those with the most potential to become customers. Other CRM analytics can help you determine which lead generation techniques are most effective, identify any major gaps in your lead generation pipeline and observe how close individual leads are to conversion. 

You can leverage your CRM’s data collection, automation and organizational capabilities to build out your sales process, better develop communications and optimize your marketing tools to reach the leads you want. 

A wide range of CRM tools are available, so it’s important that you take inventory of your small business’s needs and research CRM platforms to find the best one for your company. Begin with our recommendations for the top CRM software.

Success starts with lead generation

No matter what your small business sells, lead generation is integral to its success. While classic customer acquisition methods like networking are still incredibly valuable, it’s vital to establish a lead generation strategy that makes sense for your business and to utilize the tools available to you. Try implementing a variety of methods, and keep track of what works and what falls short. In no time, you’ll be transforming those leads into loyal customers and getting your product and services into the hands of the people who need them. 

Source interviews were conducted for a previous version of this article. 

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Adam Uzialko, Business Strategy Insider and Senior Editor
Adam Uzialko, senior editor of Business News Daily, is not just a professional writer and editor — he’s also an entrepreneur who knows firsthand what it’s like building a business from scratch. His experience as co-founder and managing editor of a digital marketing company imbues his work at Business News Daily with a perspective grounded in the realities of running a small business. Since 2015, Adam has reviewed hundreds of small business products and services, including contact center solutions, email marketing software and text message marketing software. Adam uses the products, interviews users and talks directly to the companies that make the products and services he covers. He specializes in digital marketing topics, with a focus on content marketing, editorial strategy and managing a team.
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