The Real Cost of Poor Lead Quality

If the majority of your leads never convert, or even worse they convert but churn quickly, you’re not alone. Many companies experience low lead quality, and it is one of the biggest headaches for B2B marketers right now. From wasted marketing budgets to sales teams bogged down chasing unqualified prospects, poor lead quality affects just about every aspect of your business.

But why is this happening, and why are traditional lead generation methods failing to deliver? Let’s explore the main pain points behind poor lead quality, including the complexities of the modern buying journey, the pitfalls of traditional lead gen methods, and why metrics like Marketing Qualified Leads (MQLs) no longer provide a clear picture of marketing success.

Why Poor Lead Quality Persists

B2B businesses have drastically transformed their buying habits, but most marketers are still using outmoded lead generation techniques. Once upon a time, marketing used to be relatively straightforward. We get leads, we hand them to sales, and they do the deal. But nowadays buyers have so many options and so much information at their fingertips, it has put all the power back in their hands.

A typical B2B buying journey now involves multiple decision-makers and lengthy research periods, with teams gathering insights, comparing vendors, and assessing solutions. Recent studies reveal that buyers now complete about 70% of their journey before ever reaching out to a vendor. They’ve researched, compared solutions, gathered opinions from colleagues, and evaluated options long before contacting sales.

This complex journey means that most leads coming in aren’t ready to buy, they’re still researching, comparing, or simply collecting information. Yet, traditional lead generation tactics still push these leads into the funnel, assuming that any interest qualifies as a “lead.” In reality, many of these so-called “leads” are either too early in the journey or lack the necessary intent, resulting in wasted time and resources.

Why Traditional Lead Generation No Longer Works

Despite these shifts in buying behaviour, many businesses still rely on outdated lead generation tactics, like broad targeting and high-volume, expensive, paid search campaigns. Here’s why these traditional methods are falling short in today’s complex buying landscape:

Broad Campaigns Capture Low-Intent Prospects

Traditional lead generation methods often cast a wide net, hoping to capture anyone showing even a glimmer of interest. However, these broad campaigns attract a large volume of low-intent leads who are not yet ready to engage or buy. Without a targeted approach, sales teams end up spending valuable time on prospects who may never convert or who only fit superficially.

Paid Search Is Often Ineffective for B2B

Paid search is seen a quick way for companies to acquire leads, but for B2B it’s a very expensive, wasteful strategy. Pay-per-click may capture interest with keywords, but keywords don’t tell us when businesses are ready to buy. The result? High click-through rates, but low conversion because searchers are only researchers and not buyers. When B2B keywords are in high demand, the CPC for these clicks can be incredibly high and if these clicks don’t translate into revenue, the CAC increases significantly.

Reliance on Marketing Qualified Leads (MQLs)

The traditional measure of success in lead generation is the Marketing Qualified Lead (MQL). An MQL is typically someone who has shown some level of interest, by filling out a form or downloading a whitepaper. However, these actions do not represent reliable indicators of buying intent. They simply signal that the prospect is in the early research phase, and definitely nowhere near ready to engage with sales.

Prospect Abuse

Because we have mistreated prospects by inundating them with nurture sequences and sales calls once they have given us an email address, now many prospects will just hit the back button on seeing gated content. Unless your gated content is so different, so unique and a must-have, now prospects feel if they continue to search, they will find the information somewhere

By relying on MQLs as a primary metric, businesses can be misled into believing they’re generating high-quality leads when, in reality, most MQLs are far from ready to buy. This focus on MQLs incentivises quantity over quality, resulting in pipelines filled with leads that are unlikely to convert.

The Cost of Poor Lead Quality

Poor lead quality results in missed sales opportunities, but it can have a domino effect across your whole business resulting in wasted marketing spend, stressed and strained sales teams, high customer acquisition cost, low conversion rates throughout the funnel and increased customer churn.

It has an extremely high impact on businesses, and results in money and resource being put into the wrong place as we continue to feed the beast of lead generation without addressing the issue.

Warning Signs That Your Lead Quality is Suffering

So, how can you tell if poor lead quality is impacting your business? Here are a few common red flags:

1. Your conversion rates are consistently low despite a healthy volume of leads, it’s a sign that you’re attracting the wrong audience.
2. If leads take too long to move through the funnel, it could indicate that they lack the buying intent to begin with. This lack of sales velocity can be very costly for businesses as they keep adding resource to the wrong part of the funnel
3. If your CAC is increasing without a corresponding rise in revenue or customer lifetime value, it’s a clear sign that you’re investing in the wrong leads.
4. Poor-fit customers tend to churn quickly, so if you’re seeing a high churn rate, it may be because those customers weren’t ideal to begin with.
5. When sales reps repeatedly chase leads that don’t convert, they become frustrated and less productive. High lead volume alone doesn’t boost morale, but quality does.

What’s the Solution?

The key to solving poor lead quality lies in redefining your approach to lead generation. Instead of relying on outdated metrics like MQLs and high-volume paid search, consider focusing on Ideal Client Profile (ICP) We call it Fried Egg Marketing ®.

Define Your Ideal Client Profile (ICP)

Start by identifying the clients who bring the most value to your business in terms of revenue, growth potential, and alignment with your product. Analyse your best customers to create a profile based on demographics, behaviours, and pain points. This ICP will help you target prospects who not only show interest but also have a high likelihood of converting and staying.

Focus on Buyer Intent Signals

Instead of relying on MQLs, start focusing on intent signals. These could include repeated visits to key pages (like pricing or product comparison pages), multiple content downloads related to solutions, or interactions from multiple team members within the same company. Buyer intent signals indicate that prospects are moving through the buying journey and are closer to deciding.

Refine Your Paid Campaigns with Targeted Ads

While broad paid search may be ineffective, targeted paid campaigns based on your ICP can yield better results. Narrow down your audience based on your ICP characteristics and use platforms that allow detailed targeting, like LinkedIn or account-based marketing tools, to ensure your ads reach the right people at the right time.

Measure Success Beyond MQLs

Focus on Quality, Not Quantity

If poor lead quality is keeping you from scaling effectively, it’s time to change the way you think about leads. The complexities of B2B buying cycles, outdated metrics such as MQLs, and poor paid search techniques all contribute to the tendency to attract wrong-fit leads.

By refocusing on ICP and putting buyer intent at the top of the agenda, you can generate leads that are in the right mindset for your solution. By focusing on strategic efforts that stand out from the crowd, you’ll increase conversions, decrease acquisition costs, and establish long-term customers.

Let’s quit following every lead and start following the ones that really matter.

Learn more about this approach at our webinar!