Whether you have a B2B or B2C business, lead generation is something you can’t do business without. It’s one of the most important parts of the buyers’ funnel and if not done well, you might end up wasting your marketing budget without getting many conversions.

A strong lead generation strategy helps you attract new prospective customers at the top of the funnel (ToFu) and can also strengthen the middle of the funnel (MoFu), which, in turn, delivers great conversions of your sales prospects into new customers.

marketing funnel for lead generation process
The Marketing Funnel | Image via Skyword

There are numerous options for investing your (finite) marketing budget such as paid search, paid social ads, content marketing, and cold email outreach. Given the budget constraints, it can be a challenge to determine where to put the money.

As marketers, you’d want to have larger marketing budgets so that you can spend lavishly on each channel, but that’s what marketing’s all about right — spending money where it delivers the best ROI possible.

Among these channels, on a dollar for dollar basis, cold email outreach is the fastest way to:

  • Identify your ideal customer profile and validate your assumptions about who your ideal customer profile truly is
  • Test what messaging is resonating best with your prospects
  • Generate sales calls to build your sales pipeline
  • Grow your revenue

But how does it match up against paid search?

Let’s find out.

Paid Search vs Cold Emails: A Comparison

Paid search involves creating ad campaigns for search engines such as Google. To launch them, you need to select the right set of target keywords for which you want your ads to appear and also put up a CPC bid. Through it, you can drive traffic to your landing page and generate leads.

On the other hand, cold emails involve sending out targeted and personalized cold emails to your prospects. Each email would have a call-to-action (CTA) that nudges the readers to take the action you want them to for becoming your leads.

But how do these stack up against each other?

Let’s take a look at them.

Lead Generation with Paid Search

lead generation with paid search
Lead generation through paid advertising | Image via Google

While lead generation is slightly affordable for B2C companies, B2B companies can find it challenging. The reason? You guessed it — high cost per click (CPC).

If you’re a B2B company, you’re likely spending at least $4 per click to your website. That may not seem like a lot in the beginning, but when we bring in the conversion rate into the picture, things change.

Let’s say that you’re converting leads at 3%. That brings your cost to $133 per Sales Qualified Lead (SQL).

But that’s just half the job done. You’ve generated a lead and are yet to convert them into getting a scheduled appointment, which would turn them into a Marketing Qualified Lead (MQL).

Let’s say that, on a good day, you’re able to convert SQLs to appointments from Search at 50% (that’s rich, but follow me on this). That would bring the cost of your MQL to $266.

Taking it a step further, let’s say that the show rate from scheduled appointments to actually showing up for the call is 75% (also rich, but we’ll be generous for the point of illustrating the comparison of paid search versus cold email outreach). This would bring your cost to $354 for someone to show up to your sales call. That’s just the bare minimum, right?

Finally, let’s say that you’re able to convert 30% of these into a sale. That would bring your cost per sale to a staggering $1180. Your product would need to be pretty expensive to cover up for these costs.

Lead Generation with Cold Email Outreach

lead generation with cold email outreach
Lead generation through cold email outreach | Image via ActiveCampaign

Now that we’ve seen how costly each sale can be with paid search, let’s take a look at how cold email outreach fares.

Let’s say that you are sending out emails to 100 new people per day (2000 prospects per month). You send out a sequence of emails that has 5 steps in it — meaning, you’ll send your first email on day 1 of the sequence, the 2nd email on day 3 of the sequence. Similarly, you’ll send the 3rd email on day 5, and so on. But, in all, you’re targeting 2000 people in the month.

So, the total number of cold emails sent out altogether would be:

2000 people x 5 emails = 10,000 emails being sent in the month

Let’s now bring the email open rate into the mix. Assuming that your open rate is 40%, you’d get about 4,000 opens.

However, not everyone who’ll open your emails will book appointments. Let’s assume that your rate to book appointments is 1% of the total number of prospects that you reach out to. That brings your total scheduled appointments to 2000 x 0.01 = 20 scheduled appointments.

From these 20, let’s say that 75% of them show up. This means that 15 people would get on your sales call.

For consistency, we’ll take the conversion rate for these sales calls as 30%, just like in the case of paid search. This would mean that you’d get 4.5 sales, but let’s round that off to 4 to be on the conservative side.

The cost for the cold email outreach program is $3500 per month and you generated 4 sales during that duration. This would bring your cost per sale to $875 per sale which is drastically lower than $1180 per sale. It translates to a 25% discount from paid search. Also, the CPCs in paid search are often much higher than $4 per click, which would drive your costs up further.

Conclusion

Lead generation is an integral part of any sales funnel, and more so for B2B businesses where the cost of acquiring a single customer can be pretty high. You could leverage both paid search and cold email outreach for driving your lead generation efforts. However, the best way of going about it is by having a targeted approach.

We, at SSC, can help you with exactly that and this will help you generate a higher ROI and reduce your cost per sale. From developing your ideal customer profile (ICP) to driving conversions, we do it all.

So, get in touch with us now.

Shira Simmonds

Author Shira Simmonds

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