“It’s the economy, stupid” was a slight variation of the phrase “The economy, stupid”, coined by James Carville during his stint as a campaign strategist for Bill Clinton during Mr. Clinton’s successful run for president in 1992.
While Mr. Clinton’s opponent, President Bush, enjoyed a 90% approval rating days after the ground invasion of Iraq, that approval rating dropped to 36% a year later due to the then-prevailing recession.
I have to wonder sometimes if companies (specifically marketing departments in companies) realize that revenue generation and ROI are ultimately the difference between economic success and failure. Much if not most marketing, especially in larger companies, is focused on lead quantity and cost per lead. If you see the same poor quality marketing leads I see from many companies it’s no wonder you frequently hear sales say, “I don’t get quality leads from marketing.”
What’s more concerning is that I recently talked to a group of marketing people at a very large company and they honestly did not know that there were ways to generate leads outside of marketing automation. “What is outbound lead generation?” they asked.
In an excellent article by Karl Schneider, Senior Revenue Engineer at The Pedowitz Group, he states:
“While [volume and cost per lead] are good metrics to keep an eye on, they are extremely shortsighted because true performance is measured in outcomes (such as revenue) rather than outputs (such as lead counts).
“The reality is: sales doesn’t want lots of leads – they want leads that will buy. They want leads that are ready for a sales conversation and can be moved into AND THROUGH the pipeline. In other words, sales wants more from less – not the other way around!
“So it’s up to marketing to deliver high quality leads; to deliver quality over quantity.”
In a white paper I authored (“Why Your Sales Force Needs Fewer Leads”) I contrasted old school and new school marketing as follows:
Old School: “We’re on track for a great quarter in lead generation. This month we generated 1,278 leads from all sources – that’s a 30 percent gain over last year! And in spite of higher ad rates, we continued to keep our cost per lead under $100.”
New School: “This month marketing added 14 new prospects to our Prospect Development program. A total of 41 sales opportunities are currently under development by marketing. In June, sales received 10 fully nurtured sales opportunities representing $3.5 million in potential near-term revenue. I have attached a summary report.”
If you are a senior executive don’t dismiss this issue by thinking “not in my company.” One of the largest software companies in the world (the name is withheld to protect the guilty) wastes precious marketing dollars as follows:
- Marketing provided 9,000 leads to sales in one year.
- Sales reported receiving no leads from marketing.
- PointClear audited the lead sources and found that the source providing most of the leads was a content aggregator.
- The lead rate from that source was 1.28% meaning that the effective cost per qualified lead was $2,662.24 compared to the cost per PointClear, proactive outbound nurtured lead of $1,357.25.
- Marketing’s reaction to this was “well, that is still an important source of leads for our company, so we just won’t have you qualify them, we’ll send them straight to sales.”
- Sales’ reaction was “and we’ll keep ignoring them”…
- Wasted cost per year to the company: $138,900
- Opportunity cost to the company (based on a conservative 20% close rate and an average deal size of $100,000): $2,046,785!!!
My friends, the example above is not an isolated circumstance. If your company’s marketing department is measuring results on quantity and cost per lead, I hope it is not too late when you find out that “it is the economics, stupid.”