Creating a winning B2C lead-gen to sales model

You might think that all online-led consumer businesses are just about digital marketing and website conversions, but a large number have a significant, often in-person, sales aspect to them.  These “lead-gen to sales” models are prevalent across several verticals – including home improvement, assisted living products, holiday home letting, secondary/higher education providers, and financial and legal services like insurance, wills, and family law.  They share several common characteristics, including:

• infrequent, high-consideration, high-value, or high-stakes purchase

• where consumer engagement happens at point of need

• often reliant on making direct contact with prospects to arrange a sales meeting (which then can occur in-home, in-showroom, or via a video call)

• where product or service differentiation is thin or hard to grasp from a customer perspective

We think these models often represent an attractive investment opportunity for private equity investors (PE) due to the significant potential for organic value creation.  We commonly find these businesses running on a cost-efficiency driven operating system inherited from a manufacturing or operationally focused past; well organised but lacking sophistication and a value creation mindset.  

The key opportunity for businesses in this space to outperform is via Go To Market (GTM) optimisation.  Growth can be unlocked via iterative investment in (primarily existing) marketing channels, generally with high conviction, after proving the Return on Investment (ROI) of marketing spend.  Value creation can be organic and largely self-funding, without requiring transformational capex or business model change.  Common value creation opportunities for B2C lead-gen to sales models include: 

• Spending the existing marketing budget more efficiently

• improvements to the website to drive get-in-touch conversion

• process and activity changes across the sales funnel

  
  

Underpinning it all is a common enabler: better data, better insight, and instilling a test-and-learn culture.  We have created a framework of 6 best practice principles to support assessment of the lead-gen to sales model opportunity.

Volume and cost rather than value and profit

Several "lead-gen to sales" models we have encountered began as localised product manufacturing businesses, and this heritage often shapes the Management DNA.   When meeting Management, it is common to be in a Head Office that still sits above the factory.  Operating processes are well established over many years; and operational efficiency is the primary instinct – managing capacity or production & installation, or delivery personnel. 

One important observation is that these businesses are often managed with cost and capacity rather than value maximisation in mind.  On a recent PE deal we were involved in, the CEO insisted growth could not exceed 3% p.a., because he wouldn’t be able to fulfil more appointments with the sales team he had, or install more at the same quality with the installation team he had; both of which he couldn’t grow because it was more cost efficient to outsource rather than insource both functions. 

This capacity constraint, framed by the cost efficiency, is the ‘tail that wags the dog’: there was more demand out there, but the marketing team’s brief was just ‘enough’ demand, and not more.

Lead generation detached from underlying economics

It is common to find in these models constraints on lead generation activities that seem disconnected from the underlying economics of those activities.  For some, marketing is viewed primarily as a cost rather than a profit centre – success is defined by marketing teams in terms of how much ‘budget’ they can acquire; and by Boards as keeping spend below a given percentage of sales, or minimising cost per lead/sales appointment.   Sometimes it can be genuine operational cash constraints restricting spend, serving also to divert spend into the most immediate response channel despite not being the most efficient from an ROI perspective.  

Careful cost management in these businesses often results in under-invested marketing teams from a resource and capability perspective – who can then be prone to rely too heavily on external agencies for direction setting, execution, and reporting.  

Being a level removed in this way can constrain visibility of what is going on: for example, we were able to help one client demonstrate that recent significant cost per lead inflation was driven by influenceable internal factors (organic search position decline, paid-search account restructuring), rather than market externalities – in other words showing that they could take corrective action.

Marketing teams in lead-gen to sales businesses can often lack good information; about the performance of their spend activities, and about the quality of leads they are generating.  We tend to find lower adoption of data-driven insights and more reliance on traditional marketing tactics (e.g. a fixed marketing calendar, continuation of long-standing historical activities, a lack of testing/experimentation, a high mix of poorly measured traditional offline media). For one client, we demonstrated that a material marketing channel was in fact loss-making – on the back of enhanced attribution modelling.  When asking teams how they would hypothetically spend incremental budget, their answers often describe opportunities in similar adjacent channels (e.g. newspapers, direct mail, radio) – rather than through a lens of relative ROI.

Disconnected operating systems means marketing teams can often lack a view on prospects in terms of their likelihood to convert, or expected profit, by source channel; and so are prone to managing spend on pure cost measures (i.e. the “cheapest” channel from a cost per lead perspective) rather than value (i.e. the channel delivering the most profit per lead).

Well organised and cost efficient, but unoptimised sales funnel

There is much to admire about the selling models we have encountered.  In fact, if you were designing the process from scratch today, it would not look significantly different.   

Notable features include: (1) the outsourcing of selling activities to self-employed sellers – and in so doing, creating a true variable cost, and a highly incentivised seller base; (2) a well refined and effective in-home selling process involving sophisticated conversion tactics; (3) a dedicated appointment-booking function, used to both qualify and engage leads through the funnel. 

However, as for lead generation, a focus on cost efficiency rather than optimising for value appears to act as a constraint on sophistication across the funnel in these models.

We find examples of under-invested websites.  This includes missed opportunities to communicate effectively on brand and proposition – particularly important given the relatively short customer consideration / purchase cycle in these categories; and limited website call-to-action experimentation, despite its relative importance to lead generation, persuading customers to get in touch.

For many, the responding call centre hours still follow a traditional ‘weekdays 9-5PM’ schedule, rather than flexing to times when leads come in.  We were able to establish for one client the clear correlation between time of response to an inbound lead and funnel stage conversion rate.

There are also examples of a lack of investment in tech enablement.  CRM take-up is inconsistent or seller usage not effectively enforced.  The adoption of appointment self-booking functionality has been inconsistent.  Despite the general shift from voice to text-based communication, these models are still heavily reliant on telephone for contacting enquirers – with many still shunning email / SMS / WhatsApp technologies.  Other opportunities include using AI to enhance call centre activity monitoring.

Whilst generally we find seller incentivisation models to be effective, one we reviewed had the potential consequence of leaving cash on the table.  At deeper levels of discount offered, seller commission disproportionately drops to zero.  Whilst designed to protect against known seller ‘bad behaviours’ – i.e. dropping too quickly to the lowest price – it inadvertently disincentivises the seller to convert, despite a conversion being profitable at the zero-commission rate of discount.

Similarly to lead generation, quality of data capture acts as a constraint on funnel optimisation.  There is often insufficient capture of prospect characteristics (e.g. budget, location, circumstances) at form-fill that would enable better lead response prioritisation in the funnel (e.g. allocating our best sellers to the most attractive prospects).  We have seen instances of whole funnel stages unmeasured – e.g. whilst one client knew lead and appointment volumes, it did not track whether or not contact was actually made in between; and other missed opportunities to improve understanding of conversion drivers; including time-to-contact; quantum and type of outbound contact efforts; and reasons for appointment cancellation / not sat.

6 best practice principles for lead-gen to sales models

We identify 6 key “best practice principles” for lead-gen sales models to aspire to today, and example value creation opportunities we have found in these models 

Best practice principle	Example value creation opportunities
Data-driven, multichannel demand generation, run to explicit CPL targets with activity optimised to channel economics	Build a view on true channel and activity ROI, and shift spend accordingly  Expand spend in productive and under-invested channels with demonstrable ROI  Switch bidding strategy to value based (expected order value, ROAS) rather than raw conversion volume, passing realised lead values back to Google & other platforms
Lead capture optimised for ‘rods in the water’; low-friction enquiry routes and compelling CTAs that maximise the volume of contactable leads and qualify leads effectively at point of entry	Undertake A/B testing on multiple and intricate form-fill page design options, including page copy, form-fill design and copy, and relevant lead qualifiers, to optimise for contactable, qualifiable volume  Develop a compelling brand story and proposition clarity online  Operate multiple online “brands” as part of a maximising “rods in the water” strategy
High lead-to-contact conversion, enabled by fast, persistent and multichannel contact efforts (call, SMS, email) run to explicit contact-rate and time-to-contact targets	Move from a single office-hours outbound call model to a persistent, multi-attempt cadence across call, SMS and email  Prioritise outbound effort by lead value / intent rather than treating all leads equally  Extend / re-shape contact-centre hours to match when leads arrive
Speed to appointment and high appointment sit rates, enabled by effective on-call booking, active appointment confirmation, and sufficient seller capacity	Introduce more active and varied appointment confirmation with prospects (frequency, channel, persona; including field salesperson contact)  Capture appointment-decline and cancellation reasons in the CRM, and target the biggest causes of no-shows  Utilise AI to expand internal call review coverage
Appointment conversion enabled by effective discovery and proposition tailoring; prospect rapport-building and closing tactics; and aligned seller incentivisation	Strengthen discovery, proposition tailoring and value-building tools within the appointment  Optimise the seller incentive scheme for overall cash profit rather than order value / discount level alone – e.g. via splitting commission across a flat reward for conversion and a variable amount corresponding to the discount %   Establish “save the sale” as a managed stage – tracking offers made, incremental discount applied, and outcomes – with faster, rep-led lost-sale follow-up
End-to-end data capture and feedback loop; consistent measurement across every funnel stage; feeding GTM reporting and continuous optimisation	Implement a single source of truth and rules-based, cross-channel attribution via a GTM data platform  Measure profit (not just cost) by channel and by lead, and build a lead-scoring model  Establish a standing test-and-learn cadence (including incrementality testing) that feeds forward campaign planning  Measure all of the key actions identified above (e.g. % leads responded to within the target time, rather than using an average response time KPI)

An attractive PE opportunity

As we have said before, GTM value creation is becoming an increasingly important lever for PE to derive its returns.  The "lead-gen to sales" model carries many genuine organic value creation opportunities through GTM optimisation.

These businesses have a cost-efficiency focus inherited from their manufacturing/ operational past that results in them operating below their potential.  A common theme is shifting the mindset to value rather than cost optimisation.  This comes through in shifting marketing spend from the lowest cost per click to the highest profit per lead.  In re-allocating spend to the channels delivering the best ROI.  In spending more through the funnel where it delivers higher overall cash profit – and that may be operating hours, lead contact processes, website functionality, technology, or seller commission.

The nature of these value creation opportunities makes them attractive to PE: the performance of investment can be predictable via prior trial and experimentation; spend can be deployed iteratively behind evidence of what works; and pay-back periods can be short (almost immediate in the case of digital marketing).  Many value creation changes don’t require heavy capital outlay – e.g. changing the terms of a commission model; adjusting processes; upskilling teams.

Improved data and insight is the major enabler of this opportunity.  These businesses have typically under-invested in data in the past (in one, finance reporting of marketing & sales costs still ran entirely through excel sheets), and demonstrate poor tracking and reporting.  Many have basic systems in place, but that are disconnected.  Taking a value rather than cost lens will typically require an analytical upgrade of the type Coppett Hill has supported clients with in the past.     

10 questions to ask the CEO / CCO / CMO

• If you had an extra £100k of marketing budget, where and why would you spend it?

• How accurate is your view of where leads come from today?

• What is your cost per lead by channel; where and why has it moved over the last year?

• Can you measure profit per lead, not just cost, tracking leads through the sales journey by source channel?

• What is the difference between how you are set up to capture leads online relative to your key competitors?

• What proportion of leads do you actually successfully make contact with, what is your target time-to-first-contact and how often is that achieved?

• Do you capture why appointments are declined or cancelled?  Has it driven a change in your process?

• What is the spread of conversion rates across your sellers, and what drives the difference?

• Are your sellers disincentivised to close a deal at a certain discount that would still generate a profitable sale?

• How often do you run structured tests, and how do the results feed forward planning?

If you would like to learn more about our work with B2C lead-gen to sales business models, get in touch here.

All views expressed in this post are the author’s own and should not be relied upon for any reason.