What is a lead?
The only people in B-to-B marketing who know that answer may be salespeople. At least that’s the way it seems to John Coe, of the Sales & Marketing Institute.
“We focus on sales cycle, but don’t necessarily understand buying process of customer by segment, and we don’t align them, which is reason for low response rates,” he said, speaking at the Chicago DM Days & Expo.
Take the case of the Northwestern software company that was facing flat sales. The firm’s was producing a high number of leads, offering a book as a premium. but 55% of the inquiries received in a single year were never touched by the sales force, and the conversion was less than 1%. Moreover, the cost of customer was $26,900, exceeding the two-year revenue potential.
There were many reasons for this, but the main one was the company had not separated leads from inquiries and sales opportunities from leads.
The solution: The company redefined what a lead was, then redirected its list and hardened its offer. It offered a technical white paper. The result: Conversion to sales is now over 15%.
“Why didn’t they touch 55% in old the regime?” Coe asked. “They had figured it out. They figured out that people who came in based on book request were crappy leads. It doesn’t take a salesperson more than two or three calls.”
Sometimes it’s an issue of how leads are handled. Lardal Medical, a medical equipment firm, was facing skyrocketing sales costs accompanied by only modest sales gains. Salespeople were making only five or six calls a day and regional managers were demanding more salespeople.
The company decided to try a new approach in its Southern region. It set up an internal auditing group that worked closely with the salespeople and shared the commissions. It is a “delicate issue” to monitor what salespeople are doing, but the group soon reduced the number of calls by 22% by narrowing the types of calls that salespeople should make.
“Some salespeople were dropping off batteries to customers,” Coe observed.
In addition, the firm started e-mail, mail and telephone coverage in the territory. In one year, there was a 20% increase in sales with no additional salespeople. Margins increased. And the money paid to the internal group? The increase in revenue more than made up for it.
Coe believes that sales and marketing have to work more closely together. Of the most common errors made by B-to-B marketers, one is handing inquiries and not leads over to sales. Another is not obtaining feedback from sales on results.
“It’s Don Quixote’s dream to get feedback from sales,” he said.
