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Not All Leads are Created Equal
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October 2003
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Teresa Caro
Caro Consulting
Last month you focused on tracking your campaigns from source to close. Now, let's be certain you are making the most of every step in between.
The most effective sales strategy looks at lead generation from a long-term perspective. It is impossible to cost effectively target only prospects that are ready to buy. In fact, to exclude the others, eliminates the potential for future sales and increases cost per lead. A long-term sales strategy casts a wide net in the right target market; segments the prospects by a predefined set of criteria; very quickly has sales address the needs of the hot prospects; and nurtures the others.
What's Hot and What's Not?
What is segmentation? It's different for every company. Fundamentally it is the separation of prospects into categories based on what many refer to as the BANT formula—budget, authority, need, and timeframe.
Obtaining this information is easy. For online leads, include questions in the online information form. Call centers can ask these questions of inbound callers. Or, employ a pre-sales person to contact and pre-qualify the lead. With this step in place you have what is needed to determine if the lead is relevant and in which category (or segment) it falls. Of course, the leads in the ready-to-close segment—"hot leads"— go to sales.
When is a Lead Really Bad?
Next, avoid throwing leads over the proverbial wall between marketing and sales—you never know where they fall. According to AberdeenGroup 80% of leads given to sales are not followed up on. Hard to believe?
Okay, imagine you are a salesperson. You take a cold call approach: find companies; blue print them; and attempt contact. It is a thankless job, but you manage to hit your numbers. One day the Marketing Manager returns from a tradeshow, gives you 100 leads, and tells you they are interested.
You put aside your cold call list and call the tradeshow list. You find they are not relevant to your business, are consultants, or never call you back. What do you do? You put the list away and return to your tried and true cold call list. When the Marketing Manager stops by and asks how it's going, you respond the leads were worthless. Unless she calls each lead herself, the Marketing Manager doesn't know any better and considers not attending next year's show.
What is wrong with these results? What can be improved upon before all the Marketing Manager's hard work is put on the bottom of the pile and a potentially profitable show is cancelled?
This is where segmentation comes in—before giving a lead to a salesperson, take it through the BANT formula. You will find some are hot and some are not. Take the consultants, one of them could have been a sales & marketing consultant like me. Since I have technology experience, I am often hired to review software solutions and make buying decisions—a hot lead. Yet, I send emails requesting more information and do not receive responses, because someone assumed a consultant is a bad lead.
As to the leads that did not return your one voicemail, suffice it to say a single phone call does not cut it. A recent study completed by specialty search site, KnowledgeStorm, has shown a minimum of four attempts, both phone and email, is required before a lead is considered bad.
Nurturing
So what do you do with the good leads that are not ready to buy? Let's take it up a level on this topic in next month's issue.
The Bottom Line
By taking a long-term approach, the costs to follow up with and nurture these prospects can be properly allocated and optimized. According to Gartner Group, the average email communication cost is $0.30. A phone call is $3.00. Meet the person one-on-one and it is $100 to $200 per meeting. By qualifying and segmenting the prospects upfront, the company will find not all of them need to be met in person or even called directly—quite often incurring the cost of sending an email is sufficient.
Want to reduce your costs and increase your bottom line? Want to do it with lead segmentation and more efficient distribution to sales? Send me an email and let Caro Consulting help you out.
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