Are you chasing more leads, or the right ones?
The answer could be the difference between stagnation and sustainable, profitable growth.
It’s not about volume; it’s about who you’re attracting.
In customer acquisition, the debate between lead quality and quantity is central to real growth. While it’s tempting to focus solely on filling the “Top of the Funnel” (ToFu) with high volume, qualified prospects are far more critical.
Consider these two typical funnels:
High Volume, Low Quality: An advertising agency might boast low Cost Per Click (CPC) and high Click Through Rate (CTR). However, if these clicks come from mis-targeted ads leading to leads with generic email addresses (Gmail, Yahoo) and incomplete applications, the Cost Per QUALIFIED Lead can be outrageously high, making the high volume ineffective and the funnel “leaky”. (I’m looking at you, agencies!)
Optimal Quantity, High Quality: An “overly effective” funnel, converting at 100%, might seem ideal, but it actually indicates you’re leaving money on the table. If all prospects convert, you could likely be charging more or are over-qualifying your leads, missing out on other good-fit prospects.
The “Newsvendor Problem” illustrates this: over-qualifying means lost revenue from potential customers “kicked out” too early, while under-qualifying leads to a leaky funnel with non-buyers.
The ultimate goal isn’t just more leads, but more of the right leads.
Businesses with fewer, higher-paying customers often achieve the same gross revenue with lower overall expenses, as the cost to support each customer can be consistent regardless of transaction amount.
This also empowers you to spend more to acquire a customer, outcompeting others.
Tracking each step of your funnel is vital to identify where lead quality issues arise and where to optimize for better conversions.
How do you prioritize lead quality or quantity in your current funnel? How do you define a “qualified” lead?