When a potential customer taps your Instagram ad and gives your product catalog a scroll, they may not buy anything right then and there. Even if you don’t make a sale, the ad has proven to be a valuable lead source, and you can keep marketing your product to the user until they make a purchase.
By tracking your lead sources, you can identify effective ad campaigns and marketing channels for drumming up interest in your product. Your lead sources may not prompt an immediate purchase, but they get potential customers interested and can capture customer information for more targeted advertising.
Learn more about why lead sourcing is important for ecommerce, and how you can use it to improve your sales strategies.
What is a lead source?
A lead source is the channel through which potential customers first interact with a business or brand. Let’s say a customer sees your product in an Instagram ad. Later, they buy your product. Even if they place an order directly through your website, the lead source still traces back to the original introduction—the Instagram ad.
Determining lead sources is part of the marketing attribution process, which analyzes the marketing materials that contributed to a customer’s buyer journey. It can help you allocate your marketing budget and determine which ads are most effective at lead generation.
Why lead sources matter in ecommerce
Lead sources help you understand where your customers come from, allowing you to determine which marketing strategies work. By allocating more resources to channels producing the most leads, you can improve your return on investment (ROI) by spending less on ineffective channels.
Lead source data also sheds light on customer preferences, helping you tailor your content strategy, promotional offers, and life cycle marketing to different customer segments. Understanding which channels attract high-quality leads means you can align your sales strategies with customer behavior, improving performance overall.
What are lead source channels?
Lead source channels are the paths by which customers discover your business. Thirty years ago, traditional advertising like TV commercials reigned supreme. Today, social media holds the biggest share of ad spend globally, but it hasn’t completely monopolized the market. Here’s an overview of the different types of leads that help businesses diversify their marketing strategies:
- Paid ads. Running paid ad campaigns can generate traffic on a pay-per-click basis across search, social, and display networks.
- Social media. In addition to buying ads, you can promote posts and collaborate with influencers on heavily trafficked social media channels like TikTok, Facebook, Instagram, X, Pinterest, LinkedIn, YouTube, and Twitch.
- Content marketing. Original blog posts and long-form articles can hook prospects with relevant content.
- Referrals. A personal recommendation from trusted friends, family, or colleagues creates a warmer lead compared to other channels. You can encourage this behavior with a generous referral program.
- Organic search. Optimizing your website for organic search can help generate leads by improving your position on search engine results pages (SERPs) and boosting click-through rates.
- Email marketing. Contacting potential customers through newsletters, campaigns, or promos helps your brand reconnect with lost leads or stay connected with leads that aren’t ready to buy yet.
- Direct mail. Postcards, letters, and special drops like coupons or branded stickers still reliably reach certain audiences.
Best practices for lead source tracking
You can improve your overall marketing strategy by tracking how your customers first hear about your business. Here are some tips that you can adapt to fit your specific business needs:
Use UTM parameters
UTM parameters are short lines of text you can add to URLs to track where traffic to your ecommerce store comes from.
These parameters tell you information like:
- The traffic source, such as Instagram or Google Search
- What type of traffic it is, such as whether it came from a paid ad or organic search
- If it came from a specific marketing campaign
When you create links to your store to share via different channels, you can use UTM parameters to ensure the incoming traffic is sorted appropriately.
For example, you might run multiple lead generation campaigns—each with its own UTM parameters. This allows you to track which campaign sends the most traffic back to your landing page.
Collect customer data in your CRM
A customer relationship management system (CRM) can help you collect information to more easily identify lead sources, spot trends, and generally manage your business. You can use a CRM to capture and store information about your customers—like sorting incoming leads based on UTM parameters. From there, when a shopper makes a purchase or fills out a form on your website, your CRM automatically adds this information to their profile—creating valuable intel for your sales team.
The CRM system that’s right for you will depend on your goals. For example, if you’re just starting out or only make a few sales per week, Google Analytics might offer the reporting you need, and you can manage leads via a spreadsheet. As you expand, or if you sell in higher volumes, you’ll likely seek out dedicated CRM software. There are plenty of options out there. For instance, HubSpot and Salesforce both integrate with Shopify.
Set goals, track results, and adapt
Identifying lead sources is a practical step toward realizing your growth goals. For example, let’s say you want to improve your conversion rate. You might use your CRM to sort a list of customers who purchased a product on their first visit to your site. You could then assess those customers’ lead sources and look for patterns.
Maybe customers who found your store via organic search converted more quickly than those who found it via Instagram ads. By investing in search engine optimization (SEO), you could improve your overall conversion rate.
Testing teaches you what does and doesn’t work, so you can find the best payoff and focus your efforts there. You might use A/B testing to compare two different calls to action (CTA) in an email marketing campaign, for instance. By identifying which lead sources perform well, you can adapt and hone your strategy in real time.
Lead source FAQ
How do you increase lead sources?
When it comes to generating leads, you can diversify your marketing efforts by expanding to new platforms, running targeted ads, and pursuing referrals to generate fresh leads. While content marketing can be a large undertaking, it can be good for generating quality leads and improving customer engagement in the long run.
What is the best source for leads?
The best source for leads will vary by industry and audience. For example, while social media and paid search are the most popular lead sources, referrals, email marketing, and even offline lead sources may outperform them in certain sectors.
What tools can you use to track lead sources?
Lead tracking tools like Google Analytics and HubSpot are plentiful and can facilitate your lead-generation efforts. They provide in-depth tracking, reporting on lead source performance and the buyer’s journey, and other metrics you can use to plan future campaigns.
