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How To Optimize When You Have Long Sales Cycles
When I speak to lead generation marketers at conferences and shows, the first thing I tell them is to get beyond a Cost Per Lead (CPL) metric and to tie their closed deals back to the lead and back to the ads that produced the lead. Once they’re able to do this, they can then judge the performance of their ads in terms of profit and loss versus deeming an ad to be successful just because it produced a cheap lead.
One question that often arises from lead gen marketers is, “How do I optimize ads when I have a long sales cycle?” This question comes from two types of companies:
1. Those with long sales cycles and few conversions over the course of a year, like an individual Realtor.
2. Those with long sales cycles and a higher volume of orders, like a large B2B company, such as SAP.
The challenge that affects the first group is that they don’t have enough conversions during the course of the year to have enough statistically sound data to judge ads solely on the basis of their ability to produce profit.
The challenge that the second group has is not as difficult as the first group. When launching new campaigns or ads, however, they still have to wait for weeks, months or longer for the sales cycle to be completed. In the meantime, how should they determine if their new ads are having the desired impact or not when it is too soon to be able to tie conversions and profit back to the ads?
In the absence of having conversion data to make optimization decisions, the next best method which satisfies the two examples above is to develop a lead scoring system or lead scorecard. A lead scorecard is a method for assigning value to a lead to determine how qualified that lead is. It could be represented in terms of an actual score (10 being most qualified, 1 being least qualified) or it could be scored according to the stage of the sales process that the lead resides in (new, first call, completed demo, sent out proposal, closed won/lost).
An online ad is good if it produces a qualified lead. An online ad is bad if it produces an unqualified lead. A qualified lead is one that is from a company or person in your target market, and they have the means to afford the product/service you’re selling, they are looking to make a decision in an acceptable timeframe, and they are responsive to your sales team’s phone calls and correspondence.
With your lead scorecard in place, you can now begin to make optimization decisions based on the quality of a lead that is generated from your advertising versus simply looking at the cost per lead or waiting until enough sales have occurred to make a statistically sound decision. For example, a Realtor should determine that an ad is successful if the leads that came from it took their phone call, setup a face-to-face appointment to see houses, were approved for a loan, and were looking to buy in a reasonable timeframe.
When you are a lead gen marketer, each sale requires two things. First, a lead must be generated, and second, the sales person has to do an effective job of selling. If you find you are generating a ton of qualified leads, but are not converting enough to sales, you most likely have a sales problem and not an advertising problem. All lead gen marketers can ask is for their advertising to produce qualified opportunities. If we focus on CPL, we are ignoring quality and are solely focused on quantity. It is important to remember that leads do not pay the bills. Qualified leads, when combined with a skilled sales team do. Make sure you are generating qualified leads and have the right sales team in place, and you will be a successful lead gen marketer.
Some opinions expressed in this article may be those of a guest author and not necessarily Search Engine Land. Staff authors are listed here.