Types of Lead Sources
At Barrel, we’ve stumbled into a number of different lead sources over the years, and the mistake we made was in not taking the time to understand the source and how to keep the flow strong. We recognized the source and assumed that they’d organically continue coming.
To start, these are the most common lead sources I’ve experienced. It’s not a comprehensive list by any means (e.g. it doesn’t have inbound leads from content marketing or speaking engagements for example), but covers roughly 90% of leads we’ve seen over the years:
- Existing (or former) client
- Client moving over to a new job
- Solutions partner
- Private equity or venture capital partner
- Complementary agency
- Competitor agency
- Solo consultant
- Existing or former employee
A Note on Paying Commissions
The question of whether or not you want to compensate lead sources is really up to you as agency operator. A typical arrangement is to pay a commission – around 10% or so of the new business referred, either the first project or up to a period of time (e.g. 1 year) – to the lead source.
A commission arrangement doesn’t work when there are obvious conflicts and optics involved, like a former client who moves to a new job and hires you at their new company or an investor recommending you to a portfolio company. But for referrers like solo consultants or complementary/competitor agencies, this is fairly common.
We’ve taken a pragmatic approach and evaluated each opportunity case-by-case. Our preference is to refer leads to others and to receive leads from others without commissions, but with certain partners who prefer the commission arrangement, we’ll accept if we think it can be a productive partnership.
Going Deeper with Lead Sources
For each of the lead sources, I’ve presented some suggestions on keeping the flow of leads strong. As with any advice dispensed for free on the Internet, your mileage may vary. Keep experimenting.
Existing (or former) client
Existing clients who love working with your firm can be powerful referrers. The fact that they can vouch for you and speak intimately to what it’s like working with you make them the most value lead source.
The best way to keep this source strong is to continue delivering on the work and making the client look good. If your firm falters here, leads will not only dry up but clients may churn and become anti-advocates, warning people to not work with your team.
Assuming the work is going well, you can continue to deepen your relationship with the client by continuing to market in various ways. This blog post has excerpts from a book that helpfully outlines a number of specific activities. The primary outcome is to have the client buy more services from you, but the other benefit is that you’ll be top of mind for them to refer you to a peer.
Former clients are also very valuable, although I find that their referral strength diminishes over time, especially if your agency’s offerings evolve and the people who worked with the client are no longer around. However, it’s still worthwhile to stay in touch to see what they’re up to and to share what’s new on your end. In many cases, these clients can end up being in the next category, the client who moves over to a new job.
Client moving over to a new job
When an existing or former client switches jobs and lands in a role where they can influence or decide buying decisions at the new company, they instantly become a hot lead source.
It’s hard to predict when a client will move and end up in a position or situation where they can present your agency with a new opportunity, so strengthening the lead flow from this source means making bets for the long-term.
When we work with clients, it’s very possible that we’re interfacing with more than one person. The client has several stakeholders, from the primary decision maker, people in the background, and junior folks who support the higher-ups. This means that there could be multiple people who represent future leads.
By connecting and building relationships with everyone you come in contact with on the client side and finding ways to stay in touch (e.g. adding them to a company newsletter, posting on LinkedIn, doing periodic outreach), a single client (company) relationship can have the seeds for several leads in the future.
We’ve had situations where a junior person on the client side who worked with us years ago went on to more a senior role at a different company and brought us in after remembering that they had a good experience with us. Don’t ignore junior people on the client side – treat them with utmost respect and stay in touch.
This lead source really depends on what you’re selling as an agency. If you do a lot of work closely aligned to a certain solution – in Barrel’s case, it’s Shopify – then it can be very critical to develop deep relationships with these partners.
One thing I wish we had done better early on was to establish stronger ties with Shopify and to be more involved in helping merchants adopt Shopify Plus. We lagged behind on activity here, and as a result, we’ve not had the quality nor quantity of leads we might’ve had. We’re working hard to turn this around, but it’ll take some time.
I can’t say we’ve got it figured out, but the way to strengthen relationships with solutions partners is to find ways to bring them opportunities, collaborate together to land deals successfully, and put out case studies and other marketing materials to show positive outcomes together. And in the process, get to know sales folks and other people on their side very well, to the point you can call them friends or even hire one to work for you.
There are scores of agencies who’ve built incredibly successful businesses on these partnerships, especially with more mid-market and enterprise solutions provided by the likes of Salesforce, Microsoft, and Adobe.
Private equity and venture capital partner
If you have a good relationship with someone at a private equity or venture capital firm and their portfolio companies can benefit from your services, you can develop a steady stream of leads as long as you continue to deliver good results.
We’ve benefitted from these types of relationships in the past but probably didn’t do enough to expand our footprint within these firms and to keep adding more relationships. A few things I’d do differently:
- Get intros to other partners at the PE or VC firm and get to know the companies they’ve invested in or are looking at and see where you can add value, even if it’s in the form of suggestions or light consultation.
- Find opportunities to provide free resources and knowledge share to the founders of portfolio companies – some PE and VC firms may willingly partner and provide a forum for such exposure, leading to direct connections with potential leads.
- Ask for intros to partners at other PE/VC firms who invest alongside or in similar categories. Many of these people know each other and may be happy to pass along your name. This will give you exposure to a new portfolio of businesses.
Agencies that offer complementary services can be valuable partners, especially if they target similar clients. In Barrel’s case, we’ve had some good runs with brand studios, SEO-focused firms, PR agencies, and performance marketing agencies. We’ve also been a source of leads for these companies as well. In some cases, we commission agreements in place and in others, it’s just a “I’ll hook you up with leads and you hook me up with leads” handshake arrangement.
My suggestion for this type of relationship is to stay in touch, learn about what they’re offering or not offering, if their sweet spot of client target has evolved, and what kinds of work for which brands they’re putting out. In turn, be sure to share the same about your agency and if your ideal client profile has evolved. The more current these contacts are about what you’re looking for, the more helpful they can be.
I’ve not been the most disciplined about this particular lead source over the years, so I’ve had some poor fit leads come in because my contacts assumed we did the same work from five-plus years ago. If this type of lead source is a compelling one, find ways to stay in touch, either through one-on-one email reach outs quarterly or a casual LinkedIn message.
One thing we’re planning to test is a monthly newsletter focused on reaching our network on complementary agencies, keeping them posted on what we’re up to and encouraging them to keep us posted as well.
I use the term “competitor” loosely in this sense, but I’m basically talking about an agency that has overlapping services and goes after the same types of clients. I’ve become close friends with a number of people who run agencies that pop up as direct competitors when pitching clients. We’re all good sports about it and find value in talking shop and comparing notes on what’s working and not working.
The reason to consider these competitors as a lead source is that every once in a while, there are situations where a competitor may have to pass on an opportunity. The reasons are typically around client conflicts (e.g. an existing client is adamantly against the agency taking on a client in the same category) or bandwidth challenges.
In some cases, if the competitor agency is much larger or much smaller, it can be a matter of budget and scope. A larger firm might feel that the budget isn’t quite there, so they’d rather refer a smaller shop to the prospect. A smaller firm might be intimidated by scope or feel that they can’t commit the resources required on the project, so they opt to refer to a larger shop.
We’ve been in all of these situations, having sent and received leads. One week, we might be the larger shop that gets referred a project deemed to complex by a smaller one and the next week, we might be the ones passing on a lead that’s too much for us to handle.
I don’t think competitor agencies as a lead source is worth prioritizing over some of the others because the strength of the leads are weaker than, say, a referral from an existing client, a PE/VC partner, or even an agency that’s already working with the client in a different capacity. The one exception is if a competitor is willingly resigning from an existing client account and is hoping to find a soft landing. If the client trusts the agency, they might be inclined to take a referral recommendation seriously.
Over the past five or so years, I’ve seen an increasing trend towards solo consultants who position themselves as “fractional” executive roles and have impactful influence on founders and CEOs.
In our line of business, we’ve come in contact most frequently with fractional chief marketing officers, chief technology officers, marketing directors, and directors of e-commerce. They typically have had experience working at a handful of companies of varying sizes and keep a slate of 2-4 clients at a time.
One of the responsibilities often charged to these consultants is to draw up an RFP for important projects and to find agencies that can get it done. This is where having deep relationships with solo consultants can be a great source of leads. Their stamp of approval can immediately catapult your agency’s chances to land new business.
As with the other lead sources, an important activity is to stay in touch. Keep tabs on who these consultants are working with, what challenges they may be facing, and how things are going in general. Keep them in the loop about what your agency has been up to and offer up any insights that they might find helpful to take back to their clients.
Also, be on the lookout for any opportunities that may land them their next gig. A sure way to increase lead flow is to continually place these consultants with companies. In the best of cases, it’s like having someone on the inside who is proactively looking to find ways to work with you. Of course, this is assuming you make them look good and always deliver on your promises.
Existing or former employee
Every employee that comes through your business is a potential lead source. They bring to your business their network of relationships, whether through family and friends or previous jobs or where they went to school. When they leave your company, provided it was on good terms, they can be advocates for the agency if they come across opportunities that seem relevant.
The first step is to treat people well and build strong relationships with them. Assuming this is in place, there are a few ways to encourage and nurture leads from employees:
- Periodically educate and remind employees about the types of clients the agency is targeting and the types of services that the agency offers. It’s easy to assume everyone knows this, but I’ve been surprised over the years about how little some people fully know how the agency positions itself and the services we offer. It’s not that they’re bad employees, but their day-to-day may be drastically different than say, a team executive who is constantly involved in new business discussions.
- Offer referral bonuses to employees for bringing in new business opportunities and keep reminding people of this. Also make sure they know who to talk to about leads and how to go about making the introduction.
- Share recent work and what the agency did for the client. The more employees are exposed to the work happening across the agency, the better they’ll be equipped to detect potential opportunities.
For employees who’ve left the company, it’s worth thinking about the value of the network as they continue on with their careers. At Barrel, we have a Barrel Alumni email list that we send to periodically with updates about the company. We try to host events as well, bringing together former Barrel employees together in what feels like mini reunions. These are all great opportunities to learn what people have been up to, share what we’ve been up to, and just be top of mind for each other.
My favorite instances are when I can still be a resource or facilitator for someone who’s left Barrel a long while ago. It’s a good feeling to know people had a positive experience at the company and value relationships made there. I have no expectation for them to do anything for me or Barrel in return, but I know that if given the opportunity, they won’t hesitate.
Prioritize, Stay Organized, and Stay Disciplined
One of the approaches we’re taking at Barrel is to prioritize a few of these lead sources and then build systems to help us stay engaged as we go deeper. It’s possible to continue getting leads every now and then from all of these sources, but in order to create a steadier and higher quality flow of leads, it’s worth focusing efforts on a handful and dedicating the necessary resources.
For us, the primary focus will always be on existing clients (and with that clients who might take us to a new company). Along with that, we’re paying more attention to a handful of solutions partners who’ll be key in helping us land certain target accounts. The majority of our inbound nurturing efforts will be on these two lead sources.
For the other lead resources, we’ll have a few activities that’ll keep them warm, especially with complementary agencies and solo consultants. Our goal there is to expand the number of contacts and to meet with them regularly. We’ll have to divide and conquer among some of our team leaders to cover ground. The key is to ensure that these activities–1:1 emails, newsletters, and calls–happen on a weekly basis. We have targets and do weekly shares of touches to keep ourselves accountable.
The longer I do this, the more I find that there’s no magic bullet for generating a wealth of inbound leads. It’s just the hard work of maintaining a good reputation (mainly by following through and delivering on the work) and the discipline of continually staying in touch with folks and finding ways to be a helpful resource to them, regardless of whether or not they ultimately get you leads.