7 ways to make money and scale your business with Amazon

 Amazon can be a great place to build your business, whether you want to sell a few products as a side hustle or are thinking about adding an online sales channel to your existing business. From choosing a product to building your own brand, explore some of the different ways you can make money with Amazon.

7 ways to make money on Amazon

1. Choose a product type or specialize in a niche

Choosing a product to sell can be a challenge. Start by thinking about your interests and hobbies, allowing you to draw on your strengths and capitalize on knowledge you might have about a particular industry. Other times, inspiration can strike when you least expect it.

You might try selling a single product, or source a variety of items from different product categories. You might find yourself gravitating toward one category, like clothing or toys. You may want to expand your catalog, or narrow it down to a handful of products—maybe even just one top seller.

Check out this guide to find product ideas, and get inspired by this list of successful online businesses.

Use Product Opportunity Explorer in Seller Central to identify popular product categories and niches.

Keep an eye on purchases, and let sales analytics guide your decisions.

2. Sell handcrafted items

If you’re a pro at sewing, woodworking, or another skill, turn your expertise into an ecommerce business. Amazon Handmade is an online community of artisans selling unique goods to a global audience. This program comes along with a fee waiver for a Professional selling plan, plus other perks for artists and creatives who want to share their work with the world.

Learn how other artisans turned their handmade passions into a business in the Amazon store.

See how you can easily list your first handmade product.

Explore how Amazon Lending can help you fund your business.

3. Create and distribute merch

Maybe you have a great idea for a funny T-shirt or coffee mug. Bring your ideas to life with Amazon Merch on Demand. This program allows you to design custom apparel and accessories on a print-on-demand basis. Products print after each sale (so you don’t have to worry about unsold stock) and ship through Prime so customers can receive orders quickly).

Have an idea but need someone to bring it to life? Amazon’s Merch Collab is a licensing program where brands collaborate with qualified designers and manufacturers to create branded merchandise.

Keep in mind considerations for selling clothes online and running an online clothing business.

Learn more about requirements for brand names and logos in the Amazon store.

4. Sell to businesses

Amazon Business provides a suite of features and tools that can help you connect with business-to-business (B2B) customers. Business customers often buy in larger quantities and return items less—which means you can sell more with less time and effort. Reach business customers with customized prices, bulk selection, certifications, and other B2B features.

Use certifications and a business profile to help your products stand out to procurement professionals and other B2B customers shopping on Amazon Business.

Understand and manage your B2B sales in this B2B Central overview.

Get B2B product and pricing recommendations using Business Discount Insights.

5. Earn passive income by recommending products

You don’t need to sell products to make money with Amazon. Amazon’s affiliate marketing program, Amazon Associates, lets you monetize traffic through social media and other channels by recommending products for sale in the Amazon store. This affiliate marketing model allows you to earn up to 10% in commissions. Interested in earning passive income?

Associates Central has resources for reporting, payments, account information, and more.

Associates use easy link-building tools to direct audience to recommendations.

If you have a following on social media platforms, you can also join Amazon’s Influencer Program. You can monetize your social media content by recommending Amazon products and earning commissions on qualifying purchases.

6. Sell books online

Selling books online can be a great way to generate some extra income. Whether you want to resell children’s or comic books, list rare collectibles, or self-publish a book you wrote, selling books online can help you reach readers around the globe.

Secondhand books are generally easier to find, cheaper to acquire, and can be more profitable if you find good deals locally or online. Learn about Amazon’s condition guidelines for books.

Have you written the next great novel or play? Self-publish through Kindle Direct Publishing, which allows you to maintain control of your rights, set your prices, make changes anytime, and earn royalty on sales.

Book prices depend on variables like type and condition. It can be a good idea to monitor the prices of other booksellers and adjust your prices accordingly to make sure they’re competitive. Amazon’s Automate Pricing tool lets you automatically adjust prices based on pricing rules and preferences.

7. Resell, wholesale, or dropship products

Rather than creating your own product or establishing a brand, other ways to make money with Amazon are by reselling, sourcing wholesale, or dropshipping products.

Resell products: Amazon can be a great channel to resell for a profit. Just be sure to follow Amazon’s selling policies and code of conduct for sellers.

Source wholesale: If you’re planning to move lots of inventory, work with a wholesaler or a manufacturer to set up a supply chain and get products into the hands of as many customers as possible.

Dropship or print on demand: Don’t want to invest in procuring and storing inventory until the product sells? You can work with a dropshipper to send orders directly to customers after they place purchases. You might also use a print-on=demand solution like Amazon Merch.

You can start out with just one of these strategies, or try a combination. Get inspired and learn more with this guide to inventory management.

Strategies to drive ecommerce sales

Once you’ve decided how you want to make money in the Amazon store, there’s a range of ecommerce strategies you can use to grow your business.

Build your own brand

Building your own brand takes effort and investment, but it can pay off in customer loyalty. Plus, Amazon offers a suite of brand-building tools and protection benefits through Amazon Brand Registry. From enhancing your product detail pages and increasing customer engagement, to generating customer reviews and protecting against counterfeits, the program takes the guesswork out of brand management.

Build your brand with tools that help grow awareness for your brand, improve customer consideration, increase conversion, and build brand loyalty.

Protect your brand with programs and tools like Transparency and Report a violation to give you peace of mind.

Make strategic decisions to grow your business based on aggregated customer data with Amazon Brand Analytics.

Set competitive prices

Do you have a pricing strategy? If not, researching the competition for products you’d like to sell can be helpful. This is especially important when you first list products, but sales can benefit in the long run if you set up a system to conduct pricing research on a regular basis.

Dedicate some time to analyzing prices for similar products in Amazon search, or use our Automate Pricing tool to automatically set prices across your portfolio based on current demand.

Optimize listings to connect with more shoppers

To connect your offerings with more potential customers, use SEO best practices to help product listings rank in search results. Basic search engine optimization involves targeting specific keywords in product titles, bullet points, and product description.

The Listing Quality Dashboard on Seller Central can help you identify ways to improve the discoverability of your products by recommending product attributes and other details to add to your product listings. This can improve the customer’s experience and fix time-sensitive issues that may result in your listing being hidden from search results.

Cross-sell, advertise, and offer special deals

Depending on the products you’re selling and your ideal audience, trying new sales and marketing tactics can be a great way to boost your bottom line. Here are a few ideas for driving sales on Amazon:

Cross-sell or up-sell: Cross-selling is where you help the customer find products related to the one they want to buy. For example, someone purchasing a phone might also want a phone case. With Virtual Bundles, you can combine two to five complementary products from your enrolled brand on a single product detail page. Up-selling is where you recommend a premium version of a product or an upgrade, such as an add-on. Use comparison charts in A+ Content to subtly cross-sell or up-sell.

Advertise: Amazon offers cost-per-click ads to help you reach current and future customers, including Sponsored Products and Sponsored Brands. Reach customers outside of Amazon by using Sponsored Display.

Offer deals and coupons: You can entice customers with digital coupons and promotions. Two common types are Lightning Deals (random deals that appear throughout the day) and Best Deals (short-term promotions where an item is featured for a limited number of days).

To land on the Amazon Deals Page, try promoting your offers with seasonal sales, or run deals for holidays and shopping events such as Prime Day. Learn more in this guide to ecommerce marketing.

Experiment with A/B Testing

What content works best? With A/B testing, you can find out by comparing different versions of titles, images, and other parts of a product listing.

Experimentation can increase sales by up to 25%. Run A/B tests (also known as split tests) on Amazon product content to optimize for conversions using the Manage Your Experiments tool found in Seller Central. Learn more about how running A/B tests can help your bottom line.

Engage your audience

Engaging with your customers can be a key part of creating customer loyalty. You can do this a few ways.

After a customer purchases a product, you can follow up with them via email and invite them to leave product reviews. Amazon offers email templates to help you shape the customer journey to improve sales.

If your customers spend time on social media, it might be worth investing in social media marketing. You can hold contests, post trivia, and use other interactive ways to show people products and channel traffic to visit your online store. If you want to take it to the next level, social selling through a destination like Amazon Live is a way to do product reveals in real-time, give customers tailored product suggestions, and more.

Tools and program to help you scale

Signing up for Amazon’s Professional selling plan comes with access to a host of programs and tools to benefit your business—whether you’re already established in ecommerce or considering selling in the Amazon store for the first time.

Take advantage of fulfillment solutions

The fulfillment process—picking, packaging, shipping orders, and handling returns—can consume valuable time and resources, especially as you scale. But you have several fulfillment options based on your specific needs: fulfill orders on your own, outsource fulfillment, or do both.

Fulfillment by Amazon (FBA) lets you outsource order fulfillment to Amazon. Once you send your inventory to Amazon’s fulfillment network, we store, pick, pack, ship, and provide customer service and returns. The program can help you increase sales and stay focused on growing your business.

You can also use FBA’s Multi-Channel Fulfillment (MCF) program to outsource fulfillment for purchases made on your own website or another sales channels.

Streamline operations with ecommerce automation

Amazon provides sellers with automated technology for inventory management, tracking sales and orders, responding to customers, and other essentials. Simplify and automate daily tasks to keep your business running smoothly, such as marketing workflows and analytics reporting.

Automating your business can save you time, improve customer satisfaction, maintain a consistent brand presence, and help you gain valuable business insights.

Process payments

Payment processing is a key part of providing customers with a seamless shopping experience. Amazon Pay offers shoppers the trust and convenience of Amazon for your online store, while Amazon Currency Converter in Seller Central lets you sell globally and get paid in your local currency.

Amazon ACoS Explained: How to Calculate It And Improve Campaign Performance

 What do you do when you don’t know where you are going? You open Google Maps. 

ACoS is like Google Maps for Amazon Ads. It tells you if your advertising strategy is on point and scaling toward your business goals. 

But how do you calculate ACoS for your business? And what parameters affect it?

This blog gives a quick overview of Amazon ACoS, how to calculate it, and strategies to reduce your ACoS to maximize profits. 

Let’s jump into it!

A quick peek into the article:

• What is Amazon ACoS and How to Calculate It?
• What is ROAS?
• ACoS vs. ROAS: What are the Differences
• How to Find the Break-even ACoS?
• How to Find Your Target ACoS?
• What is a Good ACoS for Your Business?
• What is TACoS (Total Advertising Cost of Sales)?
• 4 Advanced Strategies to Lower Your Amazon ACoS
• Final Thoughts

What is Amazon ACoS and How to Calculate It?

Before jumping into strategies, let’s first understand what Amazon ACoS is!

By definition, Amazon ACoS, or Advertising Cost of Sales, measures the efficiency of your advertising campaign. 

 It is the percentage ratio of the total amount spent on advertising to the total amount of revenue generated from those ads. 

Here’s the formula: 

ACoS = (Ad Spend / Ad Revenue ) x 100%

In short, ACoS tells you how much money was spent on advertising for every dollar earned from the ad campaign.

For example, if you spend $100 on ads and generate $200 in revenue, your ACoS is 50%. This means that for every dollar you spend on ads, you earn two dollars in sales.

We always advise you to keep a low ACoS, which indicates that your advertising cost is lower for the revenue generated. 

However, the ideal ACoS for your business depends on many factors, such as:

Factor #1: Your Product

The first factor that influences your ACoS is your product itself. 

The quality, price, demand, and competition of your product will determine how well it sells and how much you need to spend on advertising to attract customers.

For example, if your product is unique, high-quality, and in high demand, you can achieve a low ACoS because customers will be willing to pay a premium price and buy from you without much persuasion. 

On the other hand, if your product is generic, low-quality, or in a saturated market, you might need to spend more on advertising to differentiate yourself from the competition and convince customers to buy from you.

Factor #2: Your Keywords

The second factor that affects your ACoS is your keywords. Choosing the right keywords for your advertising campaigns is crucial for reaching the right audience and keeping your ACoS low.

For example, if you sell dog toys, you might want to use keywords such as “dog toys,” “dog chew toys,” “dog squeaky toys,” etc. 

These keywords are relevant to your product and have a high search volume. 

You might face high competition and high bids for these keywords. This results in a high ACoS.

On the other hand, if you use long-tail keywords like “dog toys for aggressive chewers,” “dog toys for large dogs,” “dog toys made in the USA,” etc., these keywords are more specific and have lower search volume, meaning low competition and low bids.

This can result in a low ACoS because you pay less for each click.

Factor #3: Your Bids 

The third factor that impacts your ACoS is your bids. 

Having the right bidding strategy is essential for controlling your ad spending and maximizing your return on investment (ROI).

For example, if you bid too high on a low-performing campaign, you might get comparatively more clicks and sales, but your profit margins will be low, thus increasing the ACoS. 

On the other hand, in a high-performing campaign, even if you don’t bid high, you’ll get relatively more sales on these campaigns, thus reducing the ACoS. 

However, both scenarios could be better because both limit your growth potential. The optimal bidding strategy is to find the balance between clicks, sales, ad spend, and profit margin. This will result in an optimal ACoS that maximizes your ROI.

Now, it would be impossible to discuss ACoS without mentioning ROAS, so let’s take a look at how these two are related:

What is ROAS?

ROAS (Return on Advertising Spend) measures how much revenue you make in sales for each dollar you have spent on ads on Amazon. It helps you evaluate the effectiveness and profitability of your advertising campaigns. 

It is the ratio of the total ad-attributed sales to the total ad spend. For example, if you spent $100 on ads and earned $500 in sales from those ads, your ROAS would be 5. 

A higher ROAS usually means a more successful ad campaign.

Here’s the formula:

ROAS = (Ad Attributed Sales / Ad Revenue ) x 100%

ACoS vs. ROAS: What are the Differences

Not much, actually! They’re essentially two sides of the same coin. 

ROAS and ACoS both measure ad effectiveness and profitability by analyzing the relationship between ad spend and ad revenue.

Imagine you run an Amazon ad campaign, and you spend $200 on advertising and generate $1,000 in ad revenue. 

To calculate ACoS, you would divide your ad spend by ad revenue: 

ACoS = $200 / $1,000 = 0.20 or 20%

This means that for every dollar in ad revenue, you spent 20 cents on advertising.

Using the same example, with $200 in ad spend and $1,000 in ad revenue, ROAS is calculated as follows: 

ROAS = $1,000 / $200 = 5.0

This means that for every dollar you spent on advertising, you earned $5.00 in revenue.

These metrics help you assess the efficiency and profitability of your Amazon advertising campaigns. ACoS focuses on the cost aspect, and ROAS emphasizes the return aspect. 

You can choose to go with either or both based on your preferences. 

Now, let’s delve into how to make the most of these metrics in your Amazon advertising strategy.

How to Find the Break-even ACoS?

The break-even ACoS is the point where your advertising costs are equal to the profit margin. 

In other words, it is the maximum ACoS you can afford without losing money on your ads. 

To calculate your break-even ACoS, simply divide your profit margin by your product price and multiply by 100.

Let’s say you sell a product for $200, and the total costs associated with that product, including manufacturing, shipping, and Amazon fees, add up to $150 per unit. 

Then your profit margin is ($200-$150)/$200*100= 25%. 

The break-even ACoS for a product is equal to your profit margin, which, in this case, is 25%. 

As long as your ACoS remains below 25%, your Amazon ad campaigns are profitable.

How to Find Your Target ACoS?

While break-even ACoS ensures you’re not losing money, target ACoS goes a step further. 

Your target ACoS is where you’re not just breaking even but also achieving a specific profit margin after accounting for advertising costs. 

Target ACoS = Profit Margin Before Advertising – Target Profit Margin After Advertising

It may be lower or higher than your break-even ACoS, depending on whether you want to maximize profitability or growth.

For example, if you are launching a new product or entering a new market, you may be willing to accept a higher ACoS to gain visibility and market share. On the other hand, if you have an established product or a competitive advantage, you should keep target ACoS lower to increase your profit margin and ROAS.

Let’s continue with the same product example. If you want to maintain a profit margin of 10% after advertising, your target ACoS would be calculated as follows:

Target ACoS = 25% – 10% = 15%

So, your target ACoS, in this case, would be 15%. This means that if you want to keep a net profit margin of 10%, you should only spend 15% of your revenue on advertising. 

Note: There is no one-size-fits-all formula for finding your target ACoS, but a good starting point is to use your break-even ACoS as a reference and adjust it according to your goals and situation.

What is a Good ACoS for Your Business?

There is no such thing as perfect ACoS. It depends on the business’s profit margin, industry, and other specific factors.

However, as a general rule, a low ACoS is considered good. However, it may change according to your business goal. 

For example,

Goal: Generate Brand Awareness

If you’re in the initial phase of your business, your primary goal is to build brand awareness. In this phase, you’d want to get as many impressions as possible for your brand without losing money. 

So, keep your Advertising Cost of Sale (ACoS) at break-even in this stage to maximize your impressions without incurring a loss. 

Goal: Product Launch

If you’re launching a new product, your primary objective is to increase sales velocity, get more reviews, and push the product up on Amazon SERP. 

In this case, you can go beyond the break-even ACoS to get the initial traction on your product. Even if you run into a loss, the initial traction and sales will give you a better return on investment in the long run. 

Goal: Advertising Profit

If your goal is to achieve a certain profit margin, then calculate your target ACoS and work towards achieving that. 

However, it’s important to note that Amazon ACoS only considers the revenue you generate through Amazon PPC. It may not be the right metric to track if you want to understand the true profitability of your business. 

That’s where total ACoS comes into the picture!

What is TACoS (Total Advertising Cost of Sales)?

While ACoS measures the relationship between ad spend and ad revenue, TACoS takes a more holistic approach and shows you the relationship between ad spend and your total revenue (organic + ad-attributed sales).

TACoS = Ad Spend / Total Sales (Ad Sales + Organic Sales) * 100

The most common TACoS use cases are:

Analyze Business Profitability After Advertising

Track the Total Advertising Cost of Sales (TACoS) to understand the overall profitability of your business. 

For example, if your monthly ad spend was $1,000 and your total sales were $10,000 ($7000 organic & $3,000 ad sales), 

then even though your ACoS is ($1000/$3000)*100 = 33%, which is on the higher side, 

the total ACoS would be ($1000/$10000)*100 = 10%, indicating overall good profitability for your business.  

Analyze Profitable Products

If you track the TACoS of each product in your portfolio, you can easily pinpoint products that are heavily dependent on Amazon.

For example, if you see a few products having a high TACoS, it can indicate a high dependency on ads. 

Rework the product listing, optimize them with keywords, and get more reviews to increase the CTR and conversion rates, increasing both ad and organic sales for the product. 

On the other hand, a low TACoS suggests lower ad spend and more organic sales compared to other products. In that case, you can increase your ad budget to get more ad sales and improve the bottom line.

4 Advanced Strategies to Lower Your Amazon ACoS

Getting your ACoS below break-even is the key to Amazon PPC success. Here are some ways you can do this.

Prioritize Your Best ASINs

Not all products in your portfolio are equally profitable. So, give a quick scan through your product portfolio and find the best-selling products with high CTR and CVR. 

Focus more ad budget on these high-performing products, and avoid wasting money on the low-performing ones. 

With the SellerApp Advertising dashboard, you can easily identify the high-performing ASINs in your campaigns. 

Keyword Harvesting From Auto Campaigns

Auto campaigns are excellent for discovering new keywords relevant to your products. Amazon automatically matches your ads to new and unique search terms based on your product information and category.

Run automatic campaigns for a minimum of two weeks, and use the Search Term Report to find the keywords in your automatic campaigns, driving more clicks and sales. 

Move these keywords to your manual campaign for better control and to reduce your ACoS. 

Also, audit your manual campaigns and find high-converting keywords in your broad match and phrase match campaigns. Move these keywords to exact match for fine-tuning reach and improving conversions. 

The SellerApp Advertising dashboard streamlines the process by showing you your best-performing keywords. With one click, you can also move them to your manual campaign. Here’s how:

Use Negative Keyword Targeting to Reduce Ad Budget Waste

Analyze your existing automatic and manual campaigns for search terms with low CTR or sales. 

If a search term has a good amount of clicks but no sales, they’re essentially draining your budget. Exclude these search terms as negative keywords to conserve your ad budget and reduce ACoS. 

Also, check for duplicate search terms across different targeting options like phrase, broad, and exact match. Find the targeting option with the best conversion and stick with it. Remove the others for better results.

It also saves ad spend and enhances your campaign efficiency.

Set Different Budgets For Different Conversion Windows

Utilize Amazon Marketing Stream to identify high conversion hours and days in a week for your products.

Shift your ad budget from low-converting times to high-converting time windows to boost sales and lower your ACoS.

This is just the scratching of the surface. If you want to learn more strategies to optimize your PPC and reduce ACoS, read the complete guide. 

Final Thoughts:

In the end, Amazon ACoS is definitely an essential metric to gauge the success of your advertising campaigns. But it should always be seen through the lens of your business goal.

If you want rapid expansion of your business, a high ACoS is inevitable. However, if you want to increase your business profitability, prioritize total ACoS over obsessing solely about lowering your Amazon ACoS. 

7 THINGS YOUR CLIENT IS DYING TO HEAR

 It’s time to give your sales funnel LIFE and learn 7 things your client is dying to hear you say. Everywhere you exist online (aka your “sales funnel”) is meant to do three things for you, and always:

Attract

Connect

Convert

You’ll know it’s not working, when you find yourself asking questions like these:

• How do I get people to my website?
• How do I convert views into sales?
• How do I get fans to see my posts on Facebook?
• How do I get social media fans onto my email list?
• What am I supposed to say in email broadcasts?
• How do I find new customers?
• How do I make more sales?

All of these questions mean that you have the gears of an online business in place, but they’re not moving. They’re static, stalled or stuck. They’re failing to work together.

Enter copywriting. I know what you think copywriting is – you probably know the textbook definition of it, which is to write in a persuasive way that markets, advertises and raises brand awareness. And yes, it’s all true, but it’s so much more than that.

Good copywriting adds movement. It honors the buying process. It’s what motivates your customers through the sales funnel, guiding them from new visitor to loyal friend. The language you use online is what gets these gears moving.

Copywriting is the language that builds relationships online, and that’s the best way to look at it! It’s a language to be learned. It will help you build an online sales machine that represents you in the most authentic way imaginable.

When you learn copywriting, it makes everything you do online more successful. You begin to say what your customers have been dying to hear, you easily attract more interested buyers, you connect in a way you never thought possible, and converting sales becomes the easiest part of the job.

Here’s what customers want to hear from you …

#1 First and foremost, they want to know what your product will do for them. People like to feel appreciated and served. To start the conversation, you want to tell your customer how your product is going to make their life better, solve their problems, create happiness or more convenience, and leave them feeling satisfied with their purchase long after they check-out.

#2 They want to imagine the product or service in their lives. In fact, until they envision this, they will not buy. They want to know how they’re going to use it, where they’re going to put it, and how they’ll feel differently once it’s over and done.

#3 They want to know how it’s going to be delivered. For product-based businesses, share a photo of your orders being fulfilled, and tell customers how fast you ship. For service-based business, always let your client know “how it works” – explain the delivery and process they can expect after-purchase.

Tell them why buying with you is a quick and painless process they’ll enjoy!

#4 They want a powerful offer. Yes they do! They want you to take the stage and present yourself as a confident business owner that has a valuable product for sale. They’re important, their time is valuable, and they want you to deliver a strong presentation.

#5 They want you to give them a reason to buy. They can’t justify the expense right now without a few good reasons to do so. Off the top, you should know three good reasons your customer should buy now, and then add a dash of urgency and sprinkle scarcity on top.

I love it when a company gets me over the hump and him-hawing of indecision. I love a good reason to buy now!

#6 They want you to grab their attention. Everyone’s scanning the internet (Facebook, Pinterest, Instagram, Twitter, blog, Facebook, blog, Twitter, Instagram, Pinterest, repeat) for something, ANYTHING, that interests and engages them.

Creatives have been taught the “don’t ask, just exist” approach to sales and online business. How’s that approach treating you? What results are you creating?

Instead, try a gripping headline. Get a little flashy. Be different. Dare to be interesting.

#7 They hate their own inertia. They want to be moved.

“Inertia is the resistance of any physical object to any change in its state of motion, including changes to its speed and direction. It is the tendency of objects to keep moving in a straight line at constant velocity.” – Wikipedia

Whenever you create a new product or run a promotion, you need to create a sense of scarcity to help the buyer overcome that resistance to the purchase. If your product is available forever at the same price, the potential customer might think about it for just as long (or forget about it altogether)!

There are three standard ways to move your customer out of their state of inertia: (1.) Limited number, (2.) Limited time, and/or (3.) Special pricing.

Lead Generation

 We’ve all been there. You finally sit down for dinner at the end of a long day. You’re about to take a bite when the telephone rings. It’s a telemarketer asking about your oven preferences.  

This frustrating interruption doesn’t need to happen. Inbound lead generation offers a solution. 

Let’s start with defining a lead. Then, we’ll cover why you need lead generation and how to qualify someone as a lead. Soon, you’ll know exactly why inbound lead generation is much more effective than simply buying leads.

What is a lead?

A lead is any person who indicates interest in a company’s product or service in some way, shape, or form.

Leads typically hear from a business or organization after opening communication (by submitting personal information for an offer, trial, or subscription) … instead of getting a random cold call from someone who purchased their contact information.

Let’s say you take an online survey to learn more about how to take care of your car. A day or so later, you receive an email from the auto company that created the survey about how they could help you take care of your car. This process would be far less intrusive than if they’d just called you out of the blue with no knowledge of whether you even care about car maintenance, right? This is what it’s like to be a lead.

And from a business perspective, the information the auto company collects about you from your survey responses helps them personalize that opening communication to address your existing problems — and not waste time calling leads who aren’t at all interested in auto services.

Leads are part of the broader lifecycle that consumers follow when they transition from visitor to customer. Not all leads are created equal (nor are they qualified the same). There are different types of leads based on how they are qualified and what lifecycle stage they’re in.

Marketing Qualified Lead (MQL)

Marketing qualified leads are contacts who’ve engaged with your marketing team’s efforts but aren’t ready to receive a sales call. An example of an MQL is a contact who fills out a landing page form for an offer.

Sales Qualified Lead (SQL)

Sales-qualified leads are contacts who’ve taken actions that expressly indicate their interest in becoming paying customers. An example of an SQL is a contact who fills out a form to ask a question about your product or service.

Product Qualified Lead (PQL)

Product qualified leads are contacts who’ve used your product and taken actions that indicate interest in becoming a paying customer. PQLs typically exist for companies who offer a product trial or a free or limited version of their product with options to upgrade, which is where your sales team comes in.

An example of a PQL is a customer who uses your free version but engages or asks about features that are only available upon payment.

Service Qualified Lead

Service-qualified leads are contacts or customers who’ve indicated to your service team that they’re interested in becoming paying customers. An example of a service-qualified lead is a customer who tells their customer service representative that they’d like to upgrade their product subscription; at this time, the customer service representative would up-level this customer to the appropriate sales team or representative.

These lead generators are just a few examples of lead generation strategies you can use to attract potential customers and guide them towards your offers. (We talk about more strategies later.)

Whenever someone outside the marketing world asks me what I do, I can’t simply say, “I create content for lead generation.” It’d be totally lost on them, and I’d get some really confused looks.

So instead, I say, “I work on finding unique ways to attract people to my business. I want to provide them with enough goodies to get them naturally interested in my company so they eventually warm up to the brand enough to want to hear from us!”

That usually resonates better, and that’s exactly what lead generation is: It’s a way of warming up potential customers to your business and getting them on the path to eventually making a purchase.

Why do you need lead generation?

When a stranger initiates a relationship with you by showing an organic interest in your business, the transition from stranger to customer is much more natural.

Lead generation falls within the second stage of the inbound marketing methodology. It occurs after you’ve attracted an audience and are ready to convert those visitors into leads for your sales team (namely sales-qualified leads).

As you can see in the diagram below, generating leads is a fundamental point in an individual’s journey to becoming a delighted customer.

Lead Generation Process

Now that we understand how lead generation fits into the inbound marketing methodology, let’s walk through the steps of the lead generation process.

First, a visitor discovers your business through one of your marketing channels, such as your website, blog, or social media page.

That visitor then clicks on your call-to-action (CTA) — an image, button, or message that encourages website visitors to take some sort of action.

That CTA takes your visitor to a landing page, which is a web page that is designed to capture lead information in exchange for an offer. An offer is content or something of value that’s being “offered” on the landing page. This can be an ebook, a course, or a template. 

Once on the landing page, your visitor fills out a form in exchange for the offer. 

See how everything fits together?

To sum it up: Visitor clicks a CTA that takes them to a landing page where they fill out a form to get an offer, at which point they become a lead.

By the way, you should check out our free lead generation tool. It helps you create lead capture forms directly on your website. Plus, it’s really easy to set up.

Lead Generation Marketing

Once you put all of these elements together, you can use your various promotional channels to drive traffic to your landing page to start generating leads.

But what channels should you use to promote your landing page? Let’s talk about the front end of lead generation — lead gen marketing.

If you’re a visual learner, this chart shows the flow from promotional marketing channels to a generated lead.

There are even more channels you can use to get visitors to become leads. Let’s go into depth on these and talk about a few others.

Content

Content is a great way to guide users to a landing page. Typically, you create content to provide visitors with useful, free information. You can include CTAs anywhere in your content — inline, bottom-of-post, in the hero, or even on the side panel.

The more delighted a visitor is with your content, the more likely they are to click your call-to-action and move onto your landing page.

Email

Email is a great place to reach the people who already know your brand and product or service. It’s much easier to ask them to take an action since they’ve previously subscribed to your list.

Emails tend to be a bit cluttered, so use CTAs that have a compelling copy and an eye-catching design to grab your subscriber’s attention.

Ads and Retargeting

The sole purpose of an ad is to get people to take an action. Otherwise, why spend the money?

If you want people to convert, be sure that your landing page and offer match exactly what is promised in the ad, and that the action you want users to take is crystal clear.

Blog

The great thing about using your blog posts to promote an offer is that you can tailor the entire piece to the end goal.

So, if your offer is an instructional video on setting up Google Search Console, then you can write a blog post about how to select your marketing metrics … which would make your CTA highly relevant and easy to click.

Social Media

Social media platforms make it easy to guide your followers to take action, from the swipe up option on Instagram stories to Facebook bio links to bitly URLs on Twitter.

You can also promote your offerings on your social posts and include a call-to-action in your caption. Learn more about social media campaigns in this post.

Product Trials

You can break down a lot of barriers to a sale by offering trials of your product or service. Once a prospect is using your product, you can entice them with additional offers or resources to encourage them to buy.

Another best practice is to include your branding in your free versions so you can capture other potential customers, too.

Referral Marketing

Referral, or word-of-mouth, marketing is useful for lead generation in a different way. That is, it gets your brand in front of more people, which, in turn, increases your chances of generating more leads.

Whatever channel you use to generate leads, you’ll want to guide users to your landing page. As long as you’ve built a landing page that converts, the rest will handle itself.

Why not just buy leads?

Marketers and salespeople alike want to fill their sales funnel — and they want to fill it quickly. Enter: The temptation to buy leads.

First and foremost, any leads you’ve purchased don’t actually know you. Typically, they’ve “opted in” at some other site when signing up for something, and didn’t actually opt-in to receiving anything from your company.

The messages you send them are therefore unwanted messages, and sending unwanted messages is intrusive. (Remember that disruptive call I got when I was trying to eat my spaghetti? That’s how people feel when they receive emails and other messages from people they didn’t ask to hear from.)

If the prospect has never been to your website and indicated an interest in your products or services, then you’re interrupting them — plain and simple.

If they never opted in to receive messages specifically from you, then there’s a high chance they could flag your messages as spam.

Once enough people flag your messages as spam, you go on a “blacklist,” which is then shared with other email providers. Once you get on the blacklist, it’s really, really hard to get back off of it. In addition, your email deliverability and IP reputation will likely be harmed.

It’s always, always, always better to generate leads organically rather than buy them. 

How to Qualify a Lead

As we covered in the first section, a lead is a person who has indicated an interest in your company’s product or service. Now, let’s talk about the ways in which someone can actually show that interest.

Essentially, a sales lead is generated through information collection. That information collection could come in many ways.

Perhaps a job seeker shows interest in a position by completing an application. Or a shopper shares contact information in exchange for a coupon. Maybe a person fills out a form to download an educational piece of content.

Gauging a Lead’s Level of Interest

Below are just a few of the many ways in which you could qualify someone as a lead. Each of these examples shows that the amount of collected information used to qualify a lead, as well as their level of interest, can vary.

Let’s assess each scenario:

Job Application: An individual that fills out an application form is willing to share a lot of personal information because he/she wants to be considered for a position. Filling out that application shows their true interest in the job, therefore qualifying the person as a lead for the company’s recruiting team — not marketing or sales teams.

Coupon: Unlike the job application, you probably know very little about someone who has stumbled upon one of your online coupons. But if they find the coupon valuable enough, they may be willing to provide their name and email address in exchange for it. Although it’s not a lot of information, it’s enough for a business to know that someone has interest in their company.

Content: While the download of a coupon shows an individual has a direct interest in your product or service, content (like an educational ebook or webinar) does not. Therefore, to truly understand the nature of the person’s interest in your business, you’ll probably need to collect more information to determine whether the person is interested in your product or service and whether they’re a good fit.

These three general examples highlight how lead generation differs from company to company, and from person to person.

You’ll need to collect enough information to gauge whether someone has a true, valid interest in your product or service — how much information is enough information will vary depending on your business.

Lead Scoring

Lead scoring is a way to qualify leads quantitatively. Using this technique, leads are assigned a numerical value (or score) to determine where they fall on the scale from “interested” to “ready for a sale”.

The criteria for these actions is completely up to you, but it must be uniform across your marketing and sales departments so that everyone is working on the same scale.

A lead’s score can be based on actions they’ve taken, information they’ve provided, their level of engagement with your brand, or other criteria that your sales team determines. For instance, you may score someone higher if they regularly engage with you on social media or if their demographic information matches your target audience.

Borrowing from the examples above, you might give a lead a higher score if they used one of your coupons — an action that would signify this person is interested in your product.

The higher a lead’s score, the closer they are to becoming a sales-qualified lead (SQL), which is only a step away from becoming a customer. Scoring criteria should be tweaked along the way until you find the formula that works. Once you do, you’ll transform your lead generation into customer generation.

Lead Generation Strategies

Online lead generation encompasses a wide range of tactics, campaigns, and strategies depending on the platform on which you wish to capture leads. We talked about lead capture best practices once you have a visitor on your site … but how can you get them there in the first place?

Let’s dive into lead-generation strategies for a few popular platforms.

Facebook Lead Generation

Facebook has been a method for lead generation since its inception.

Originally, companies could use outbound links in their posts and information in their bios to attract strangers to their websites. However, when Facebook Ads was launched in 2007, and its algorithm began to favor accounts that used paid advertising, there was a major shift in how businesses used the platform to capture leads.

Facebook created Lead Ads for this purpose. Facebook also has a feature that lets you put a simple call-to-action button at the top of your Facebook Page, helping you send Facebook followers directly to your website.

Twitter Lead Generation

Twitter has Twitter Lead Gen Cards, which let you generate leads directly within a tweet without having to leave the site. A user’s name, email address, and Twitter username are automatically pulled into the card, and all they have to do is click “Submit” to become a lead.

LinkedIn Lead Generation

LinkedIn has been increasing its stake in the advertising space since its early days. When it comes to lead generation, LinkedIn created Lead Gen Forms, which auto-populate with a user’s profile data when they click a CTA.

PPC Lead Generation

When we say pay-per-click (PPC), we’re referring to ads on search engine result pages (SERPs). Google gets 3.5 billion searches a day, making it prime real estate for any ad campaign, especially lead gen.

The effectiveness of your PPC campaign relies heavily on a seamless user flow, as well as your budget, target keywords, and a few other factors.

B2B Lead Generation

B2B is a particular business model that requires a particular approach to lead generation. SmartInsights found that referrals are the top source for capturing business leads. Not to mention, effectiveness varies by channel.