Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share with readers advice for entrepreneurs seeking investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast. The Angel Connection is published weekly.

RESEARCH TRIANGLE PARK – Your potential investors will be quite impressed if you can explain the quantitative dynamics of your marketing lead generation programs.

Whether you call it a lead funnel, or a lead pipeline or something else, knowing the basis of all of the contacts you are making in order to create qualified customer leads will give your investors greater confidence in knowing that you have a handle on what you have to achieve with your marketing programs.

Know the Basics for Success

All businesses have different productivity ratios for lead generation. Knowing the basics means that you have estimated the following:

  • How many qualified leads, on average, you need to close one sale
  • How many contacts you have to make to find one qualified lead

For example, if you need five qualified leads to close one sale and it takes 50 contacts to find one qualified lead, you will need to be contacting 500 prospects in order to generate 10 qualified leads from which you will close two sales every month. Just knowing how many contacts you need to make every month is sometimes a shocking revelation about the need for an effective marketing program.

Not All Prospects Are Equal

However, the quality of all your prospects is not the same. Your likelihood of generating a qualified lead from your personal contacts is much greater than from a list of industry contacts you bought off of ReferenceUSA.com. It could be that you will be able to generate one qualified lead from every 20 prospects from your personal contact list, versus one out of every 50.

Likewise, your chances of closing a sale from your personal contacts is also higher than from qualified leads you got from an industry list. It could be that you can close one out of every two qualified leads from your personal contacts, versus one out of every five.

When planning your marketing programs, you need to factor in all these different lead-generation productivity ratios, making sure that your lead-generation rates produce the number of qualified leads you need.

Know the Yield From Your Sources

For all of your lead sources, you need to know how many lead prospects are possible and what lead generation productivity you can expect. Lead generation sources are finite. Your personal contact list is of a known size. You can easily estimate how many prospect you are going to be able to generate from a trade show. The number of prospects that can be purchased from prospect listing services can easily be determined. You can estimate the number of leads you can get from a good Web site. Given that you have to generate new leads every month, your investors will want to know how you are going to find enough prospects to keep your lead funnel full.

Make Sure Your Analysis Hangs Together

The explanation you give to your investors about your marketing programs has to hang together with respect to the lead generation results you need to achieve. Make sure you can explain how and where you are going to find enough prospects to contact on an ongoing basis. Make reasonable assumptions about the productivity you can achieve from your lead-qualification programs. All of this has to add up to the number of qualified leads your sales team needs in order to close enough sales every month, leading to the achievement of your revenue goals.

Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.