Leads are the lifeblood of any organization, but this basic business process is broken in many companies.
This year, almost 45% of salespeople will miss quota. Unfortunately, it seems the solution is to do the same wrong thing with the expectation of different results—such as demanding that marketing increase the number of leads generated at a lower cost—and then increasing quotas.
Guess what? It isn't working.
Here are actions you can take to improve lead generation results:
1) Define, segment and test your market. Identify the largest, most-targeted market possible, and then segment to identify prospects more likely to buy. While qualifying 1,000 companies may generate a 5% lead rate, a review typically identifies segments with higher and lower lead rates. There may be five segments with lead rates of 9%, 7%, 5%, 3% and 1% that average an overall 5% lead rate. However, work the best segments first.
2) Agree on the definition of a lead. We do not recommend dependence on the totality of BANT (budget, authority, need and time frame). Yes, authority and need are critical prospect qualifiers. However, need also implies time frame, and should be supported by a compelling event linked to finding a solution. Similarly, budget is driven by need and is more important in identifying the process and players involved.
3) Agree on expected metrics. For target metrics, implement a best-practices lead progression framework. Sales and marketing consultancy SiriusDecisions uses its demand waterfall to define lead stages, with marketing-qualified leads leading to sales-accepted leads, which in turn become sales-qualified leads. Measure the percentage of each that converts to the next level. Progress occurs the closer that percentage gets to 100%.
4) Define required reporting and frequency of reports. Measuring and regular reporting are critical to understanding success. While a cost-per-lead metric may work for high-volume lead acquisition, cost-per-opportunity and cost-per-deal are better indices when measuring prospect development. For a complex sale, a long sales cycle and a high-investment solution, benchmarks should be: opportunity quality, conversion and ROI.
5) Provide fewer but more-qualified leads. Standard lead-generation has a focus on quantity, which floods the pipeline with far too many low-value leads that don't deliver ROI. Take a less-is-more approach and send only the best opportunities to the field.
6) Effectively nurture longer-term leads. Companies that are qualified but are not likely to be customers in the short term are mostly ignored by sales. However, by optimizing long-term lead value, it's possible to nearly double program revenue with a relatively small incremental investment.
Let's say you started with 1,000 prospects and found 40 short-term qualified leads that resulted in eight deals, plus 40 long-term opportunities. After these are considered, you could either start over to get the same results or nurture the 40 long-term opportunities to get eight more deals but at a fraction of the cost.
7) Use multitouch/multimedia/ multicycle processes. Good campaigns include just enough contact to engage buyers while providing them with enough space to respect demands on their time. The trick is to know what media to use, contact timing and the number of cycles required to optimize response. Use a series of touches employing multiple media over a period of time to educate and stimulate a buyer.
8) Create offers based on conditions of need, benefits and buying reasons. Review your offers to determine how they measure up. “Need” might include fear of loss, a deteriorating situation or an opportunity to improve. By contrast, an offer of “benefits” might help the prospect save money or time, or improve a product. “Buying reasons” might include job security, recognition or compensation.
9) Set realistic actions and time frames. Set up formal discussions between sales and marketing, and get all to accept accountability for each step in the buying cycle. Assess where you stand with the other actions above, and continually focus on lead quality over quantity. Conscientiously applied, these best practices increase efficiencies, improve lead and close rates, and drive more revenue.
Dan McDade is president-CEO of prospect development company PointClear (www.pointclear.com), and the author of “The Truth About Leads” (Onsei, 2011). He can be reached at [email protected]