Hey marshmallow!! If I break into your backyard and cut down your tree with a chainsaw – but you’re not home to hear me – did I make a sound?
Similarly, if you’re the best salesman in the world with the best branding and the most solid market research – but you have no leads – will you make any money?
You sure won’t.
In fact, the amount of money you make is directly proportional to how many leads you have. Zero leads, zero money. Many leads, many money.
Lead generation is one of the four key activities of marketing, along with market research, sales and branding. But only lead generation is the key to growth in your business.
Increasing your number of customers is not the only way to make more money in your business, but it is something you need to do. Lead generation is how to do it, because it brings a brand new customer into your business.
There are two types of leads – warm leads and cold leads. You need to be generating and using both in your business.
Keep reading this tutorial to learn the definition and the pros and cons of each. I’ll also point out later tutorials in the series that will teach you more about lead generation.
The Difference Between Warm and Cold Leads
Basically, warm leads are people who know you and cold leads are people who don’t know you.
The category of warm leads includes any customer who’s bought something from you already. It also includes someone who’s been stalking you on social media or your blog, someone who knows you personally, or someone who’s been referred by a mutual friend.
If someone already trusts you a little bit, they’re a warm lead. Or, they might be a long-time loyal customer who trusts you a lot, in which case you might call them a red-hot spicy chilli lead.
Warm leads have an interest in what you’ve got. That’s why they’re in contact with you.
Cold leads typically come from paid media, which you’ll learn about in a later tutorial in this series. These people might be on Someone Else’s customer list, or stalking Someone Else on social media. If you place a paid ad with Mr. or Ms. Someone Else, you can generate cold leads out of his or her audience.
Cold leads might have an interest in what you’ve got, but they might not. You can’t exactly trust them to. That makes you even, because they also don’t trust you quite like warm leads do. Thusly, don’t bother bullshitting about your business to cold leads. They ain’t gonna fall for it.
Why Generate Warm Leads?
Generating warm leads costs you much less than generating cold leads, because you may only need to call up a friend or blast your customer list. (Yes, I just said blast.) Generating cold leads typically costs you an advertising fee.
Furthermore, you’ll get a better close rate when selling to warm leads than cold leads – both on the first sale and on repeat sales.
Should you rely on warm leads only? Ask any multi-level marketer who got instructed to sell to all their friends and family. Your warm leads ain’t exactly an endless list.
Put it this way. If you wrote down the names of all your Warm Leads on a roll of toilet paper, you’d have a lot of leftover toilet paper.
Warm leads may be easier to sell to and cost you nothing to generate, but you run out of these people fast. That’s why you need cold leads as well.
Why Generate Cold Leads?
Generating cold leads out of total strangers will grow your business faster, because you have more total strangers than you can fit on a roll of toilet paper.
The volume of cold leads you can generate is only limited by your budget. You have to pay for them, remember? (And it’s not quite as cheap as toilet paper. Don’t get too excited.)
Also, there’s more risk with cold leads. If you don’t know what you’re doing, you could generate the wrong kind of leads who have no interest in what you’re selling. And you still have to pay for them.
Are you spending far too many hours per day speaking to potential customers, only to have most of them say no? Or are you spending fortunes on online ad campaigns and not seeing results?
The reason is you’re likely trying to sell to cold leads, and not to warm leads.
Have you heard the story of the first ever flight of an aircraft by the Wright brothers? Let me explain how the same principles to flying an aircraft also apply to your leads.
A Story of Flight
In the early 1900s, the physicist Samuel Langley wanted to be the first to ever fly an aircraft. The U.S. Congress even gave him a $50,000 grant to do it.
Langley reasoned that if he built an engine powerful enough, it would be able to lift an aircraft. He built a 52 horsepower engine that weighed 155 kilograms, and on December 8th, 1903, attempted to take flight.
His aircraft took off, and subsequently dived into the river.
There was public disappointment at Langley’s failure, but it didn’t last long. 9 days later, on December 17, Orville and Wilbur Wright came out of obscurity and successfully flew an aircraft.
What was different about the Wright brothers’ design? It was not focused on the power of the engine, but on the aerodynamics and the efficiency. It was efficient enough that it didn’t even need an engine as powerful as Langley’s.
In his book, Ultimate Guide to Google AdWords, Perry Marshall wrote:
“Langley had spent most of four years building an extraordinary engine to lift their heavy flying machine. The Wrights had spent most of four years building a flying machine so artfully designed that it could be propelled into the air by a fairly ordinary internal combustion engine.”
Why Less Is More
When it comes to leads, think of the volume of leads as like the power of the aircraft engine. Most business owners think like Langley and go after as many cold leads they can find.
They think, “if I expose my offer to more and more people, I’ll make more and more sales.”
That may be true, but it can also be costly. There are only so many hours in the day you can spend talking to potential customers. There is only so much money you have to spend on your online ad campaigns.
The smarter way is to recognise that less is more, like the Wright brothers did, and sell to warm leads.
Instead of focusing on the volume of people you speak to, find a way to filter your leads so that you only speak to the most qualified. You don’t need a big volume of unqualified leads to keep your business profitable. You just need a few of the most qualified leads.
Instead of pumping more money into inefficient online ad campaigns (and probably losing most of it), switch out your offer for a more appealing one with more compelling ad copy. With a good enough ad, you won’t even need to spend very much money to see results, and it will be more efficient.
A funnel is what it’s called when cold leads buy a smaller item first, become warm leads, and (hopefully) buy your big ticket items then.
The next part of this series will talk about funnels in more detail. But first, here’s why it’s so important.
If You’re Lazy, Funnels Are For You
If you use a funnel, you will save yourself a lot of headaches, and the reason is two-fold.
Firstly, you will have a marketing system that does all the heavy lifting for you. It attracts the best prospects, proves that you have many compelling advantages over your competitors and convinces them that you are the one they should be doing business with.
Usually, it’s not possible to make a big ticket sale unless you first introduce the customer to your brand through a series of small sales.
Without this, you would encounter a lot of objections and headaches when trying to make your big ticket sale.
By installing a funnel, you build value and build the relationship so that the prospect is sold on your big ticket offer before you even introduce it to them.
Mr. and Mrs. Marshmallow have a $7 introductory product, which is a 2 hour audio of the two of them talking about their stories and what they have to offer. They don’t even allow their customers to see other offers until they buy the $7 product.
Not All Cold Leads Become Warm Leads
The other benefit of a good funnel is it repels the wrong people from your business, while continuing to attract the right people. You know, like how shopping centres play classical music to repel the “youths.”
Who are the wrong people?
- Those who are not 100% serious about buying from you
- Those who can’t afford to buy from you
- Those who are likely to refund or chargeback
- Those who are likely to cause you the biggest headaches and hassles.
You don’t want everyone and anyone to buy. Luckily, there are devices you can use in your marketing that attract the right people and repel the wrong people at the same time. Using a funnel is one of them.
Maybe your products are not cheap, and require as much money as a good used car. Cold leads don’t buy products like that.
Now, let’s move on to the next tutorial in this series. We’re gonna talk about turning cold leads into warm leads.