One very well-known analyst group documents 70 percent or more of leads aren’t being followed up by sales. Another group claims 80 percent of marketing investments are wasted. It would be easy to place blame and point fingers. However, neither marketing nor sales executives are really at fault. The responsibility rests with C-level executives and other senior managers who fail to understand or act upon the real problem.
Marketing has been rendered powerless in most companies. This function is often seen as one-dimensional, responsible for trade shows, advertising, brochures, websites and in many cases, social media. Marketing is given a meager budget and a mandate to generate an impossible number of leads.
The sales force, on the other hand, is frequently filled with people who are misused or wrongly deployed. Companies don’t capitalize on their sales people’s strengths. Instead, hunters (also called closers) are expected to generate leads and farmers (relationship specialists such as account managers) are expected to close deals. People are being asked to do what they aren’t good at—and the results of those requests are inefficiency and ineffectiveness. The responsibility for leveraging the strengths of the team starts at the top.
Marketing has been forced to default to cost-per-lead as the measurement of success for their programs. In keeping with the old expression, “You should never go to war with the sales force,” marketing does the best it can to follow senior management’s direction and keep its collective head down during inevitable frays. As a result, they’re forced to employ methods of lead generation that more often than not produce poor-quality leads.
For too long, marketing has provided sales with low-level leads that are generally a waste of time. Unqualified trade show names, unsolicited inquiries, and referrals written on cocktail napkins are often termed leads, and provided to sales. If only five out of 100 leads turned over to sales are actually real opportunities, how much effort would your sales force invest in qualifying leads from your company? Not much.
If leads are not closing, begin the process of finding out why! Remember these statistics for all qualified leads:
- Ten percent will close within three months.
- Another 16 percent will close within six months.
- Another 19 percent will close in one year.
A total of 45 percent of qualified leads will buy from your company or a competitor within a year. How effective is your company at staying on top of qualified leads?
The battle is raging between marketing and sales, but when the smoke clears, it is companies that are getting hurt. You must define the process that will lead to success. Until you do, your company will stagnate, or worse.
Here is what to do:
A Five-step Program to Close the Gap
- Stop the carousel on marketing programs. The tendency is to be afraid of jeopardizing short-term sales by doing anything different. Look at all of your planned programs—advertising, trade show promotions, direct marketing, webinars—and stop or cut back the ones you can by evaluating their effectiveness. Don’t keep the merry-go-round going because they’re already started. Stop, recalibrate and make sure programs are moving in the right direction.
- Plan to crawl, walk and run. You will not be able to roll out tested marketing programs next month. No company can effectively impact current quarter results with current quarter marketing. Plan carefully and execute thoughtfully for long-term sales success.
- Pinpoint your market. For example, one client used a market research firm that determined that the prospect universe exceeded 80,000 companies. Almost immediately we cut the universe in half by focusing on larger opportunities that closed as easily as smaller opportunities and represented profitable business rather than marginal business. After another six months we reduced the prospect universe to under 30,000 companies based on back-end analyses that included close rates by vertical. Currently, that client targets approximately 22,000 companies and we will, continue to work the universe down based on the appropriateness of the fit and the potential margin to ourclient. NOTE: I don’t recommend depending on one list source to build your database. The best databases contain data from multiple sources which are then verified and enhanced five to 10 percent at a time.
- Test your market, media and offer before investing. Before spending significant dollars on a marketing program, it is imperative that you test your list or database (market), the communication platforms you plan to use (media), and your price, package, terms, guarantee, differentiators, etc. (offer).
- Measure your results. If you do not have a process to track and measure the ROI of your marketing programs, you are just throwing darts. Only by quantifying the success of each program can you know if your efforts are worthwhile. In fact, you may be surprised to find that anecdotal evidence does not align with the facts. Here’s an example: One of my clients complained that the company’s cost-per-lead was too high. While I don’t advocate measuring cost-per-lead, as quality is far more important, we proceeded to examine this situation. When we took a close look—by breaking out the costs—we learned that the cost-per-lead generated through trade show programs was indeed too high, as were those generated through response management programs. These leads were costing $1,500 and $1,000 each, respectively. Leads generated through pure cold calling, on the other hand, were running $500 each. This kind of analysis gives you the power to make the right decisions concerning your marketingprograms.
Credit Line: This article is an excerpt from Dan McDade’s game-changing book, “The Truth About Leads,” published in 2011. Now in its second printing, McDade’s book is regarded as the Rosetta Stone of lead generation. “The Truth About Leads can be purchased on Amazon: http://www.amazon.com/The-Truth-About-Leads-McDade/dp/098302670X McDade is President of PointClear a B2B sales prospecting company, which he founded in 1997. He can be reached at Dan.McDade@pointclear.com.