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Oct. 31, 2007 at 8:01am Eastern by Jon Miller
Lead Management: When Conversion Is Not Enough
Let's listen in on a call between a sales rep and a new lead generated by a paid search campaign:
Hello Sarah, my name is Brian, and I’m your sales rep from Widgets Inc. I noticed you recently clicked one of our ads and registered to download our paper "10 Ways to Better Profits through Widgets." I'm calling to see if you have any questions... You haven’t read it yet? Oh, OK. Do you mind if I ask you a few questions anyway? Do you have a Budget approved to buy widgets? Are you the Decision Maker? When do you expect to purchase a Widget solution?.... Oh, I see, you’re just researching right now. OK, I’ll call back next month. Bye!
Most of these questions are entirely inappropriate at this stage of Sarah’s buying process (and a little rude if Sarah is a gatekeeper but not the final decision maker). As a result, Sarah is left with a negative impression of the company.
At the same time, Brian is compensated for driving revenue this quarter, so this lead is useless to him. As a result, he’ll be more likely to ignore the next marketing lead he receives. Lastly, unless Widgets Inc. has a good process for recycling Sarah back into marketing, she may never hear from the company again and will end up buying from a competitor.
Unfortunately, search engine marketing makes this problem worse, not better. As today's customers increasingly use online channels to research purchases, Marketing meets prospects earlier than ever in the buying process. Ironically, this means the success of search engine marketing has actually increased friction between Sales and Marketing!
Lead management to the rescue
The fundamental issue is that Sales executives don’t care about raw leads. They wants winnable opportunities in their pipeline. This means they care more about quality (defined as likely to drive revenue this or next quarter) than quantity.
In response, companies should use lead management to cross the chasm between the time marketing first captures a lead and the time a prospect is ready to engage with a sales representative. Lead management requires the following capabilities:
- Lead scoring to identify when prospects are ready for sales
- Lead nurturing to build relationships with qualified prospects who are not yet sales ready
- Lead distribution to pass the customer to the right sales channel seamlessly (and to recycle the lead back into marketing if necessary)
Lead scoring
Lead scoring is the process of using explicit demographic information and implicit behavioral information to identify which leads are ready to engage with sales, which are disqualified, and which require further nurturing.
A survey in RainToday.com's report, "What's Working In Lead Generation," found that for most companies, only 10-30% of marketing-generated leads were sales-ready. Respondents also reported an average of 25% of leads should be disqualified, but that the remaining 50% require "further nurturing."
You can identify which category your leads fall into with lead scoring. Lead scoring should use three types of information:
- Explicit information is the information the prospect gives you when he fills out one of your online forms. It can include company size, buyer role, industry, and timeline. The closer this is to your the ideal customer profile(s), the higher the score. (Explicit information can also include any data you purchase about the prospect to augment their lead record.)
- Implicit information is everything you can collect by observing lead behavior. It can include lead source info (some sources and offers drive better leads) as well as behavioral or activity-based information, such as email opens and clicks, visits to high value web content (HVWC) such as your pages with pricing information, and additional searches with more exact keywords.
- Time reflects the fact that leads go stale with age, so a brand new lead is hotter than an older lead, and leads with recent activity are more valuable than ones with older activity. (This is the concept of "Recency" in Recency-Frequency-Monetary, aka RFM, analysis used by database marketers.)
A key value of implementing a lead scoring system is that it forces Sales and Marketing to formalize the way they define the potential value of leads and when a lead is ready to be distributed to sales. This process alone is critical to building sales-marketing alignment.
However, it is important to recognize that lead scoring needs to be a dynamic process. Depending on your market conditions, you will want to modify definitions and move the needle dynamically to meet your company's current needs.
Lead nurturing
Lead nurturing is the process of using the Web, e-mail, phone, social media, and other online and offline channels to build relationships with qualified prospects who are not yet sales ready.
Lead nurturing is not just sending a monthly email newsletter to your entire database, or calling prospects every few weeks to see if they are ready to buy yet. It is your opportunity to build a relationship with a real person and progressively understand more about his needs. It is about demonstrating the value your company can provide by showing the prospect how he might be treated as a customer. The end goal is to stay within the buyer's awareness so that when he is ready to speak with a sales person, your company is an obvious choice.
Beware: Many demand generation applications will let you design complicated programs that in theory automate the entire process, but in reality leave you with something that's difficult to change and adapt without additional professional services. You can't predict future challenges and opportunities, so make sure your marketing programs can adapt as you review results and evolve goals.
Lead distribution
When it is time to pass the lead to sales, a few best practices can make all the difference between success and failure.
- Give sales detailed information to ensure a seamless hand-off. Don't just toss the lead over the wall and leave it up to the sales rep to create a continuous experience for the customer. Give sales email templates and call scripts to guide them during their initial contact with the lead, and indicate which product the customer is most likely to be interested in based on his responses to date.
- Track sales follow-up and recycle leads as appropriate. Since lead scoring can never be perfect, make sure sales has a process for recycling leads back to marketing that turn out not to be sales ready. Also, to help ensure follow-up, report on which leads get NO activity and aren't being touched by sales, and try to make sure sales management looks at those reports.
- Let sales tell you which leads are good. Talk to sales to close the loop on lead quality, and use that information to refine your lead scoring criteria.
What's the value?
Prospects who are nurtured before being passed to sales tend to buy more, require less discounting, and have shorter sales cycles than prospects who bought but were not nurtured. Companies that use lead scoring pass fewer leads to sales, which means greater sales efficiency, but since the leads are higher quality, win rates and revenue can actually increase. And, these companies have better alignment between marketing and sales, which means marketing actually is valued and gets the respect it deserves.
Jon Miller is VP of Marketing for Marketo, a provider of affordable, easy-to-use marketing automation software. Contact Jon if you want to learn more or sign up to participate in a free beta of Marketo's lead management software. The Strictly Business column appears Wednesdays at Search Engine Land.
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