Warning: Talking heads may be dangerous to your business

This is a guest post by Ian Gilyeat, the founder of I.R. Gilyeat & Company.

In my first corporate marketing job I was told, “Consultants are a waste of money. They tell you what to do but don’t stick around long enough to see if it works.”

I have similar feelings about market research. Research studies and customer satisfaction studies are wonderful – they make you feel good if they support your opinion – but they don’t always make good business sense if you measure your success by revenues and profits.

A few years ago, I had the privilege of working in a company where we had 200,000 “active” customers and we had a 95% customer satisfaction rating. However, as we dug in to understand what that meant, “active” meant the customer made at least one purchase within the last 12 months. A “95% satisfied” customer meant the customer gave us high marks and told us they were “extremely satisfied” or “very satisfied” on their most recent transaction. Pretty good marks, eh?

Yes, but what these two data points failed to capture was that over 90% of the customers never came back to make a second purchase and only 1% of the customers were profitable.

So, let’s transition to a research report that I think you should read. The title of this report is: Lead Generation Methods (most common and most effective). This report contains useful charts illustrating the most common and most effective lead generation methods across 26 different channels. This includes sources such as a TV, direct mail, web sites, email, LinkedIn, inside sales, etc.

It should come as no surprise that the most common method for lead generation is a web site and the most effective is the use of inside sales.


So, let me ask you a question: what does “effective” mean for your company? Is it the source that produces the highest percentage of leads? Or is it the source that produces the largest top line revenue growth? Or is it the source that creates more profit than any other lead source? Clearly the answer to the question as to which lead source is “most effective” may produce three different answers.

Don’t believe me? Let’s challenge the thinking:

Inside sales, working a cold list, produces a low volume of new leads, say half of 1% of acquisition. But the customers acquired through this method yield a trailing 12 month value that is 10 times greater than any other source. In this example, a customer is worth on average $50,000 per year but only 3% profit… and there are only 500 of them in the entire industry and the sales cycle is 9 months to land each one.

Inbound leads off of pay-per-click advertising gives great volume and produces 100 new customers per day at an average value of $500 annually, but no profit. These are like the 1-time buyers noted above.

Off the page print advertising leads produce wide brand recognition and 50 new customers per month, but these are the bread and butter customers with $5,000 in annual revenues and 23% profit.

Any chance your company looks something like this? It’s possible isn’t it?

So, back to our point today– think for yourself.

It’s a wonderful thing to draw on the value of research papers. It’s great to leverage the expertise of third-party companies like Acquirent, but think for yourself. Do your due diligence and make sure the lead generation methods you embrace fit your company, fit your product offering and fit your financial expectations.

Inside sales is a great go-to-market method but you need to know what you’re doing and how to make it work for your company. It’s not really as easy as it looks – even though more than a few talking heads say it is the most effective method out there.

Download our white paper on Lead Generation Methods today to inform your thinking!

Ian Gilyeat is the founder of I.R. Gilyeat & Company, an advisory firm that helps companies acquire and retain customers through design and adoption of automated marketing processes. Prior to starting his own firm he worked with Global 100 companies integrating inside sales with ecommerce, marketing automation, analytics and supply chain processes. Ian can be found on LinkedIn, Twitter and at ig@irgilyeat.com.