What is the cost of following bad leads?

As business owners, we need leads to generate new business. It doesn’t matter if you are B2B or B2C, you need leads to keep your business alive. There is a school of thought that many business owners adopt, and that is, just get me the lead and I’ll do the rest. However, not every lead is a good lead. In fact, some leads are just bad, and what we mean by bad is this:

A lead is bad if they have no intention of buying or do not fit the persona of your target audience.

We are going to explore the cost of a bad lead and what you can do about it. To do this, imagine that you are a B2B cleaning company that offers cleaning services to commercial businesses. Your best customers are office buildings with tenants such as doctors, accountants, lawyers, and other corporate businesses.

You decide you want to increase the volume of leads to generate new business, so you advertise to the masses including industrial companies, businesses working out of their homes, and retail shops.

The leads start coming in at an insane rate! At first, you are happy, but soon you start seeing a pattern:

  • Follow Up Fatigue – When you were following up with good leads, the sales cycle on average took 2 weeks. Now you are lucky if you can sign a cleaning contract within 4-6 weeks with the new leads after quadrupling your follow-up.
  • Higher customer cost per acquisition – When a lead does convert, after you look at the amount of follow-up, your profit margin is low. To convert new leads, you must spend more time convincing the potential customer that your service is a worthy investment.
  • Lower customer retention – You spend all of this time convincing the customer only to have them terminate the contract after 3-4 months. The main reasons for termination are too much overhead cost and they no longer see the benefit of a cleaning service.
  • Fewer quality lead conversion – Because of all the follow-up with bad leads, you do not have the time to nurture good leads, so they look elsewhere.
  • Frustrated sales team – Your sales team is frustrated with you and their prospects. Instead of building quality customer relationships, they are constantly pursuing businesses that are not really interested in the first place. In fact, your sales team might be thinking about looking for another job and that is not good.

The bad leads are consuming your time and instead of growing your business, you are struggling. So, how does a business attract good leads and minimize bad leads?

Don’t underestimate the power of a persona

Every business has an idea of its ideal customer. In the case of your cleaning company, your audience personas include the following characteristics:

    1. They rent office space that is at least 3,000 square feet
    2. They have an in-house staff that primarily works in the office
    3. They handle confidential information
    4. They have a budget for cleaning services

When you create personas of your ideal customers, you can target businesses that meet your persona criteria. It keeps you accountable, so you are not chasing every lead. If a lead enters your sales funnel that is a small business with 2 employees who sell handmade crafts and leases a 700 square-foot space, based on your persona, they would not be a good fit for your business.

If you do not have a persona, we recommend that you take the time to create personas that your sales team can use as a baseline when pursuing leads.

Your CRM holds the key to customer analysis

Your CRM holds the key to valuable customer information. This information includes industries, buying behavior, and other characteristics. By diving into your CRM, you can unlock insights about your ideal customers.

    1. What do your best customers have in common?
    2. What is their greatest need that you are fulfilling?
    3. Where did you meet them?
    4. What is their preferred contact method?
    5. Which of your services has the least impact on a sale?

By answering questions like these, you and your sales team have the answers to find like-minded customers. You can even determine which network events to attend. You will know which service to highlight first when you are speaking with a prospect. You will know when and how is the best way to communicate.

On the flip side, you can also use your CRM to analyze bad leads and their characteristics. This will help you identify signs of a bad lead before spending too much wasted time following up with them.

Flip your sales funnel upside down

Most businesses operate with a sales funnel to capture every lead. The problem is that bad leads clog the funnel and keep the good leads from moving through the tunnel. An upside-down sales funnel keeps the bad leads out and the good leads flow through the funnel to conversion.

To create an upside-down sales funnel, you need to create content, lead generation forms, and advertisement that are clear and precise. It needs to speak clearly to those prospects that are most like your best customers. It needs to address their needs and your solutions. The impact of your prospect engagement, created with your CRM, from the first interaction (i.e. a lead generation form) to lead nurturing (automated email drip campaign) to signing the contract needs to be tailored to your personas and not the masses. As a result, your sales funnel narrows and attracts your ideal customers.


It doesn’t matter if you operate a commercial cleaning company (B2B) or a chiropractor (B2C), bad leads will suffocate your business and it will cost you financially, mentally, and possibly physically. Following the recommendations in this article will help you weed out bad leads and target the good leads.

A CRM is a necessary tool to attract and nurture leads. X2CRM is an open-source CRM with enterprise support and features that help businesses sell more with less Follow Up Fatigue. Contact us today to schedule a demo and learn how it can help your business grow.

FREE ebook:
Build More Revenue with Less Follow Up Fatigue

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