On Monday, I asked what subject matter to tackle first as we look at selling during difficult economic times. "Lead generation" emerged as the winner, so here goes:
According to scientific research from CSO Insights, sales professionals believe that only 23 percent of the leads they get from marketing are worth following up. Even the marketeers believe that only 38 percent of the leads they provide turn into actual customers. Even if marketing is right, that's still forcing the sales group to follow up on dead ends 62 percent of the time. Maybe that's acceptable in good times, but during an economic crisis, you need 80 to 90 percent of your leads to convert. The only way to achieve that is to follow the rules:
- RULE #1. Lead generation is actually "bad lead elimination." Almost every lead generation program operates under the assumption "the more leads, the better." Hey, want a lot of leads? Buy a booth at a trade show and run a raffle for a new iPhone. You'll have business cards coming out your ears. But your cost of sales will go through the roof because the sales reps will be chasing geese. Effective lead generation only results in as many leads as the sales team can close, and only leads that are likely to close.
- RULE #2. Leads are only useful if they convert into customers. Any lead that peters out and doesn't convert adds to the cost of sales. Every second that a sales professional spends trying to develop a lead that doesn't convert is money down the toilet. If you like, you can blame the sales rep for not being able to close the lead, but the truth is that if a lead is really good, virtually any moderately skilled sales pro can close.
- RULE #3. A lead is a "good" lead if (and only if) it is easy to close. This isn't to say that you should expect to make a $1 million sale after a 10 minute meeting. What I'm talking about here is spending as short an amount of time as possible developing the opportunity so that there's a short sales cycle compared to the amount of revenue that's generated. Because the sales cycle is short, such leads are more profitable than leads that take a long time develop and then don't generate much revenue.
- RULE #4. Good leads require a quantitative profile. The ONLY way to create a profile of a good lead is to find out exactly what type of prospect is likely to buy. To do this, you must gather accurate quantitative data, by interviewing sales reps who've sold the product (or something similar), customers who've bought the product (or something similar) and, most importantly customers who didn't buy.
- RULE #5. You must use metrics to hone the profile. You use the profile to eliminate all leads that aren't likely to close. As your firm continues to sell, you track which "good" leads actually closed, so that you can continuously correct course, and create a profile that more accurately identifies those small number of leads who are quick and easy to close.
Ironically, doing such research is much less difficult than it sounds. In small companies, it's usually a matter of a few days of interviews and building a spreadsheet. The main thing is to make it measurable and then measure it.
But there is no way around the fact that you have to build a profile and measure it. Any lead generation program that isn't based on research, isn't measurable and isn't measured is a waste of time and money. And, frankly, most lead generation programs are exactly that -- a waste.
Sad, but true.