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Why leads are cheap, but there is no sales: diagnostics by steps

The problem of low conversion of leads to sales: a general view

Many companies, especially in B2B and e-commerce, face the paradox of low-cost leads, but low-cost sales. Cheap leads are seemingly the dream of any business, because marketing costs are minimal. However, if those leads don’t convert to real customers, all of the budget and effort is wasted. In this article, I’ll look at the reasons why this happens, and offer a step-by-step diagnosis based on my 10 years of experience in marketing and sales. We’ll go through each stage of the sales funnel, and make some typical mistakes and make practical recommendations.

In practice, I’ve seen companies spend thousands of dollars on advertising, get hundreds of bids, but end up not closing even 1% of deals, and it’s not always a marketing problem — often it’s a divisional mismatch, poor lead skills, or a lack of clear process, so let’s look at how to find bottlenecks and fix things.

Step 1: Lead quality analysis

The first thing to start with is to understand what your leads are like, and cheap leads are often low-quality, and that’s one of the main reasons why you don’t sell. By quality, I mean, the lead fits your target audience (CA) and the willingness to buy, and if you attract people who aren’t interested in your product or don’t have a budget, no sales effort will work.

1.1. Verification of compliance of the target audience

Start by looking at who is coming to you through advertising channels. Often, cheap leads are the result of too broad targeting settings. For example, in contextual Google Ads or targeted social media (Facebook, VK), companies are targeting the widest possible audience to reduce the cost of clicks. They end up getting applications from people who are not their customers. One of my customers, an industrial equipment manufacturer, got leads for $2, but 90% of them were from individuals who needed household tools, not B2B solutions. After narrowing the targeting to a specific click, the conversion rate increased to a 5-fold in sales.

Recommendation: make a detailed portrait of the CA. Consider age, geography, occupation, pain and needs. Check the settings of the advertising and make sure you do not “catch” everyone in a row.

1.2. Assessment of Purchase Intention

Another common problem is leads that are too early in the funnel, and they may be interested in information but not ready to buy, like a person who downloaded your free instruction or subscribed to a newsletter, but doesn’t plan to buy a product in the coming months, and leads that often come from content marketing or free offers, and they’re cheap, but they’re useless for closing deals quickly.

Recommendation: Implement lead qualifications; use application questionnaires or surveys to gauge how ready a person is to buy; for example, ask, «Do you plan to buy in the next month?» or «What budget are you willing to allocate?»; this will allow you to weed out cold leads and focus on the warm ones.

1.3 Source of leads: where is the problem?

Not all engagement channels are equally effective for your business. Cheap leads often come from low-entry channels, such as mass mailings or affiliate programs with questionable sites. In my experience, a company has attracted leads through Cost Per Action for $1, but 95 percent of the requests were from bots or people who were just “hunting” for bonuses.

The recommendation is to analyze where your leads are coming from and rate their quality across each channel, use UTM tags to track sources and a CRM system to analyze conversions across channels, and disable sources that only bring junk traffic.

Step 2: Evaluating the Sales Funnel

If the quality of the leads is fine, the problem may be your sales funnel. The funnel is the path that the customer takes from first contact to purchase. If there are failures at any point, you lose potential customers. Let’s look at the key stages and the typical mistakes.

2.1 First contact: speed and quality of processing

The speed of response is one of the deciding factors, according to the study. HubSpot, the probability of a successful lead contact drops by a factor of 10 if you don’t respond within the first 5 minutes, but many companies ignore this fact. I’ve seen sales managers process applications after 2-3 days when a customer has already found a competitor or simply lost interest.

Recommendation: Set up automatic notifications for new leads (e.g. via CRM or Telegram bot) and set a response standard of no more than 5-10 minutes. If you have a large flow of applications, implement a call center or chatbots for initial contact.

2.2 Communication: What do your managers say?

Customer quality is a direct influence on conversions, and often sales managers are unable to identify needs, work on outdated scripts, or improvise without a clear structure, and one of my clients lost 70 percent of their warm leads because managers would start selling head-on without understanding the client’s problems.

Recommendation: Develop sales scripts that include the steps of identifying needs, presenting solutions, and dealing with objections, conduct regular training for managers and analyze call records to identify weaknesses in dialogues.

Transparency of the proposal

If you don’t understand or have doubts about your offer, the customer will leave, and this is especially true for complex products or services, for example, in the B2B segment, customers often refuse to buy if they don’t understand what they’re paying for, and I’ve seen a company offer IT solutions but use too many technical terms in the commercial offer, which scares customers away.

Recommendation: Make your offer simple. Use clear language, clearly state benefits and costs. Add case studies and testimonials to build trust. Make sure that the site or presentation has all the product information.

Step 3: Verification of the product or service

Even if the leads are good, and the funnel is tuned, there may be no sales because of the product itself, which is a less obvious but very common reason. Let’s look at what to look at.

3.1. Market conformity of the product

If your product doesn’t solve real customer problems or has a competitive edge, sales will be low, even with the perfect marketing strategy. I consulted a startup that offered a task management app, but it was no different from dozens of peers on the market. Despite cheap leads ($3 per sign-up), conversion to paid users was less than 0.5%.

Recommendation: Survey current customers and leads who have abandoned a purchase, find out what is stopping them, and compare your offer to competitors, and maybe need to refine the product or change the positioning.

3.2. Pricing policy

Price is another important factor: if it’s too high for your CA, sales will be rare, even if the product is of good quality. On the other hand, too low a price can cause distrust. In my practice, there was a case where a consulting company set low prices for its services to attract more customers, but potential customers perceived this as a sign of poor quality.

Recommendation: study the market and the prices of competitors. Make sure your price matches the value of the product. If you’re just entering the market, offer discounts or a test period to lower the entry barrier.

Accessibility of product information

If customers can’t find your product quickly, they leave, which is especially important for online businesses, if there’s no description, no pricing, no reviews, trust drops, and I once worked with an online store that had 80 percent of the leads missing from the purchase because the site didn’t have instructions on how to place an order.

Recommendation: Check the usability of the site. Make sure all product information is available in 1-2 clicks. Add FAQ, instructions and support chat to promptly answer questions.

Step 4: Analysis of the Sales Department

Even if marketing has produced quality leads and the product is in line with expectations, sales may be out of the box because of low sales efficiency, a bottleneck that is more common than it seems. Let’s look at the key aspects.

Managerial skills

Sales is a skill that requires constant development, and if your managers can’t handle objections, close deals, or build trust, conversions will be low, and I’ve seen a situation where 50 percent of the company’s leads have been merged because managers couldn’t answer technical questions about the product.

Recommendation: Organize regular training for the team, use role-playing games, analyze successful and failed trades, implement a mentoring system where experienced employees help newcomers.

Motivation and KPI

If managers are not motivated to close deals, they will work backwards. Often companies only set KPIs by the number of calls or meetings, without considering the end result of sales, which leads managers to “work numbers” rather than focus on quality.

Recommendation: Rethink motivation, set KPIs for converting leads to sales, and enter bonuses for executing the plan, which motivates employees to work for the result.

4.3 Use of CRM

Without a CRM system, it’s hard to track where leads are lost, and many companies still keep records in Excel or in their heads, which leads to chaos, and one of my clients lost 30 percent of their deals just because managers forgot to call back.

Recommendation: Implement a CRM (e.g. Bitrix24, AmoCRM, or Salesforce) to set up automatic task reminders and track the status of each lead, which will increase transparency and efficiency.

Step 5: Evaluation of the after-sales service

Selling isn’t the end of the road; if a customer is unhappy after a purchase, they not only won’t return, they can scare others away by leaving negative feedback, and after-sales service problems often cause low repeat sales conversions, which affects overall profitability.

Quality of support

If a customer has problems after a purchase and support is slow to respond or doesn’t resolve the issue, trust in the company drops. I’ve seen an online store lose 40 percent of repeat orders because support ignored return requests.

Recommendation: Set up operational support via chat, email and phone; Set up a Service Level Agreement (SLA) for maximum response time; and train your customer-centric staff.

Collecting feedback

Many companies don’t ask customers after they buy, missing out on an opportunity to improve a product or service. Feedback helps identify problems you might not have noticed. One of my clients put in surveys after each purchase and found that 20 percent of customers were unhappy with delivery times. After fixing the situation, repeat sales increased by 15 percent.

Recommendation: Send short surveys after purchase. Use NPS (Net Promoter Score) to gauge how much customers are willing to recommend your company. Analyze responses and implement improvements.

5.3 Negative work

Negative feedback can scare off potential customers, especially if you ignore it. It’s important not only to solve problems, but also to show that you’re open to dialogue. In my practice, there was a case where a company publicly apologized for an error in an order and offered a customer compensation, which not only kept the customer loyal, but also attracted new ones who appreciated the approach.

Recommendation: Monitor reviews on a website, on social media, and on sites like Otzovik, respond to negative feedback constructively, offer a solution to the problem, and that will increase brand trust.

Step 6: Analyze competitors and the market

Sometimes the lack of sales is not due to internal processes, but to external factors, and competitors can offer better terms, and the market can change faster than you can adapt.

Comparison with competitors

If competitors offer lower prices, better terms or unique features, customers will choose them.I advised a company that lost 50% of leads because a competitor implemented free shipping and they didn’t.

Recommendation: Do competitive analysis. Study sites, ads, and reviews about competitors. Identify what they are, and think about how you can stand out. It could be a unique offer, an improved service, or bonuses.

6.2 Adaptation to market changes

The market is constantly changing, and if you don’t follow the trends, you risk being left behind, for example, in 2020, many offline businesses lost customers because they didn’t go online in time. StatistaGlobal online sales grew 27.6 percent in 2020, and companies that didn’t adapt missed out on a huge segment of the audience.

The recommendation is to follow industry news and trends, subscribe to news outlets, attend conferences, if the market goes online, invest in digital channels, and if customers are looking for cheaper solutions, offer low-cost products.

Seasonality and external factors

Sometimes the lack of sales is due to seasonality or economic situation, for example, in the construction industry, sales fall in the winter, and in the economic crisis, customers postpone large purchases. One of my clients in the tourism industry faced zero sales in 2020 due to the pandemic, but refocused on domestic tourism and was able to get a positive.

Recommendation: Consider seasonality and external factors when planning. If sales are falling because of a crisis, offer installments or discounts. If it is a seasonal decline, use this time to refine processes and prepare for a high season.

Practical checklist for diagnostics

To make the analysis process easier, I’ve put together a checklist that will help you identify problems at each step, and use it as a step-by-step guide.

  • Quality of leads: Are your leads relevant? What percentage of them are ready to buy? Which channels are bringing in the most junk traffic?
  • Sales funnel: How quickly do you respond to requests? How well do managers communicate with customers? Is your offer transparent?
  • Product: Does your product solve real problems? Is the price meeting the expectations of Central Asia? Is product information available?
  • Sales department: Are managers trained? Are they motivated to close deals? Is CRM used to track leads?
  • Post-sales service: How does support work? Do you collect feedback? How do you deal with negative feedback?
  • Competitors and the market: What do your competitors do better? Do you take into account market changes? How does seasonality affect sales?

Answer these questions and record the results, and it will help you see the full picture and identify where the problems are.

Sources

In-depth analysis of the sales funnel: where customers are lost

Now that you have a basic checklist, let’s dive into the sales funnel analysis, and often leads get a little sleep at certain stages, and it’s important to understand why. The sales funnel has multiple levels: Attraction, Interest, Decision, Buy and Hold, and each of them can have its own problems.

An example of this is that an online clothing store attracted a lot of traffic through contextual advertising, but sales remained low. The analysis showed that 70% of users left the site during the shopping cart phase due to the high shipping cost. After introducing free shipping on an order from a certain amount, conversions increased by 25%.

To analyze the funnel, use tools such as Google Analytics, Yandex.Metrica or CRM systems (for example, AmoCRM or Bitrix24) to show where customers leave and help find bottlenecks.

Step by step analysis of the funnel stages:

  • Attraction: How many leads are coming from each channel? What percentage are you targeting? If most of the traffic is irrelevant, rethink your ad settings or content. For example, if you sell premium services but you attract an audience looking for «cheap and fast,» that’s your targeting mistake.
  • Interest: How do customers interact with your content? How long do they spend on a site? If they leave quickly, maybe your offer is unclear or the site is inconvenient. Check the page load speed (according to Google, 40% of users leave a site if it loads longer than 3 seconds).
  • Decision: Why don’t customers go to buy? They may have objections: price, no reviews, unclear terms. Add cases, reviews, and clear warranties to the site. For example, one of my clients increased conversions by 15 percent by adding a «Frequently Asked Questions» section with transparent answers.
  • Purchase: Are there barriers to the final stage? Complex order forms, no convenient payment options, or unexpected additional costs (as in the example of delivery) can scare the customer away. Simplify the process: minimum field in the form, maximum payment options.
  • Retention: If not, think of loyalty programs or emails with personalized offers. According to HubSpot, it costs 5-7 times more to attract a new customer than to retain an existing one.

    • The recommendation is to do A/B testing at every step, change the headings, shapes, buttons, and track what works best, and it won’t take long, but it will give you accurate data for improvement.

    Real Cases: How Companies Find Problems and Increase Sales

    To reinforce this theory, let’s look at some more examples from the field, and these cases show how diagnostics helped businesses emerge from the crisis.

    Case 1: A low-conversion IT startup. The company offered a SaaS product for small businesses, but out of 1,000 leads per month, sales were only 1%. Analysis showed that managers did not return calls on time (median response time is 48 hours). After implementing automatic notifications and reducing response time to 2 hours, conversions rose to 5% in the first month.

    Case 2: Beauty salon with «junk» leads. The salon was heavily promoted on Instagram, but most of the entries were from people looking for free treatments or promotions. After clarifying targeting (age, interests, geography) and focusing on unique services (such as author’s coloring techniques), the share of targeted leads rose from 20% to 60%.

    Case 3: Furniture manufacturer and seasonality. The company lost sales in the low season (winter), used that time to create content (production videos, furniture tips) and launched a stock email, resulting in a 30% increase in sales during the high season (spring-summer) due to a trained customer base.

    The bottom line is that every problem requires a personalized approach, sometimes it’s enough to speed up the answers, sometimes it’s enough to rework the ads or use quiet periods to prepare.

    Additional checklist for the sales department

    Sales is the heart of converting leads into deals, and even if you have the perfect ad and product, inefficient managers can mess it up.

    • Reaction rate: Do managers respond within 5-10 minutes to bids?, according to Harvard Business Review, the probability of closing a deal drops 10 times if it takes more than an hour to respond.
    • Quality of communication: Do managers use sales scripts? Can they handle objections? Record calls and analyze them.
    • Product knowledge: Can managers explain the benefits of a product and answer complex questions? If not, organize training.
    • Motivation: Do the KPI team have bonuses for the plan? Without motivation, the employees work to check the box.
    • Use of CRM: Do all leads log in? Are there any reminders of the next steps? Often, trades are lost because of human error.

    Recommendation: Have weekly meetings with the sales team to discuss results and case problems, which will help to correct errors quickly.

    Sources

    Sales Funnel Analysis: Where Do Leads Get Lost?

    To understand why cheap leads don’t turn into sales, you need to look at the sales funnel in detail, which is a structure that shows where potential customers fall off, and it can be at the entrance (non-targeted leads) or at the final stages (weak handling of objections).

  • Attraction: How many leads are coming from each source? Use UTM tags in ads to figure out which channels are getting the most submissions. Example: if 80 percent of Instagram leads don’t make it to the negotiation stage, maybe the audience on that platform isn’t ready to buy your product.
  • First contact: What percentage of leads get a response? If only 60 of 100 requests are processed, 40 percent of leads are lost because of slow response or lack of managers. Fact: According to InsideSales, 35 to 50 percent of sales go to the company that answers first.
  • Qualifications: How many leads are targeted? If managers spend time on people who are «just interested,» it reduces efficiency. Solution: implement filters at the application stage (e.g., mandatory questions in the form: budget, deadlines, needs).
  • Negotiations: What percentage comes to the commercial offering? If leads hang around at this point, the problem could be price or lack of value in the offering. Check how managers present the product.
  • Closing of the transaction: How many deals are successful? If customers turn down the final step, you may not be refining with objections or offering bonuses/discounts. Example: one of our customers increased conversions by 15% by adding a money back guarantee to the offer.

    • Recommendation: Use CRM systems (such as AmoCRM or Bitrix24) to track each phase of the funnel, see bottlenecks and fix them quickly, and regularly collect feedback from customers who have abandoned a deal to understand their reasons.

    Practical case: how we corrected the situation with leads

    Let’s take a real-life example: an online course company got a lot of cheap leads through Google Ads, which is about 200 RUB, but the conversion rate was only 2%, and we ran a diagnostic and we found some problems:

    • Non-target audience: Advertising attracted students who were looking for free content rather than paid courses, so they added the wording “paid tuition” to the ads and eliminated keywords like “free.”
    • Slow processing: Managers responded to requests after an average of 3 hours. Solution: implemented automatic notifications in instant messengers and put KPIs in response within 15 minutes. Conversions increased by 8%.
    • Weak offer: So, the customers didn’t see value in the courses, the solution: they added student case studies and offered a free trial lesson, and it increased trust and increased conversion by another 5 percent.

    Bottom line: after 2 months, conversions rose to 12%, and the cost of a lead remained at 220 RUB. This case shows that even small changes at each stage can produce significant results.

    Checklist for analysis of advertising campaigns

    If the leads are cheap, but there’s no sales, the problem may be the ads themselves, maybe you’re attracting the wrong audience, or you’re not communicating the value of the product in the right way.

    • Target audience: Do you have ads that match your target? Check your targeting settings (age, geography, interests). Example: if you sell B2B services and the ads are shown to teenagers, that’s a waste of budget.
    • Text of announcements: Do they have a clear call to action (CTA)? Compare «learn more» to «get 20% off right now.» The second option motivates better.
    • Landing: Where does the ad lead? If a page loads slowly or doesn’t have clear information, the customer will leave. Fact: According to Google, 40% of users leave a site if it loads longer than 3 seconds.
    • Relevance: Is the text of the ad meeting the user’s expectations? If you promise a discount and you don’t have it on the site, it’s a source of disbelief.
    • Analytics: Are there counters installed (Google Analytics, Yandex.Metrica)? Without data, you can’t tell which campaigns work and which ones leak budgets.

    Recommendation: Do A/B testing of ads. Create 2-3 options with different titles and CTAs to see what best «go» your audience, this will take 1-2 weeks, but will help save budget in the future.

    Sources (supplement)