The Gap Between Marketing and Sales Impedes Your Lead Process | SalesAndMarketing.com
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The Gap Between Marketing and Sales Impedes Your Lead Process

Why 70 percent of sales leads aren't followed up

By DAN McDADE

One well-known analyst group documents that 70 percent or more of leads aren’t being followed up by sales. Another group claims that 80 percent of marketing investments are wasted. It would be easy to place blame and point fingers. However, neither marketing nor sales executives are really at fault. The responsibility rests with C-level executives and other senior managers who fail to understand or act upon the real problem. The following describes that problem, its cost and some actions you should consider taking to reverse these fatal choices.

Marketing has been rendered powerless in most companies. This function is often seen as one-dimensional, responsible for trade shows, advertising, brochures, websites and in more and more cases, social media. Marketing is given a meager budget and a mandate to generate an impossible number of leads.

The sales force, on the other hand, is frequently filled with people who are misused or wrongly deployed. Companies don’t capitalize on their salespeople’s strengths. Instead, hunters (also called closers) are expected to generate leads and farmers (relationship specialists such as account managers) are expected to close deals. People are being asked to do what they aren’t good at – and the results of those requests are inefficiency and ineffectiveness. The responsibility for leveraging the strengths of the team starts at the top.

Marketing has been forced to default to cost-per-lead as the measurement of success for their programs. In keeping with the old expression, “You should never go to war with the sales force,” marketing does the best it can to follow senior management’s direction and keep its collective head down during inevitable frays. As a result, they’re forced to employ methods of lead generation that more often than not produce poor-quality leads.

For too long, marketing has provided sales with no more than low-level leads that are generally a complete waste of time. Unqualified trade show names, unsolicited inquiries, and referrals written on cocktail napkins are often termed leads, and provided to sales. If only five out of 100 leads turned over to sales are actually real opportunities, how much effort do you think your sales force is going to invest in qualifying leads from your company? Not much.

While marketing has contributed its fair share to the lack of good leads, sales is not immune from criticism. Read the scenarios below as examples:

Scenario #1: The following is the background behind a short-term lead once presented to a client. Note the follow-up from the sales representative. Keep in mind that the lead was classified as a short-term opportunity for a company that implements ERP solutions. A 10‑minute recording of the conversation, documenting the facts, was provided to the client and, hence, the field sales representative:

“ABC Company is a division of [well-known parent company]. ABC Company is a contractor for the Department of Defense. The company plans to replace its ERP system. [Prospect’s First Name] wants a more versatile ERP system that will handle manufacturing processes throughout theorganization. The company is currently using a [Legacy Solution] it has had in place for the past eight years. The company has not begun to evaluate solutions, but its initial intention is to select a solution like PeopleSoft®or Oracle®. A steering committee and analysis committee will be in place to evaluate a potential solution. A budget has not been determined, although the purchase is expected to be a capital item during the next fiscal year [approximately three months away]. [Our client] should make contact immediately and stay in touch to keep advised.”

The prospect went on to describe problems with a proprietary database, a budget estimate of approximately $400,000 and an openness to communicate immediately with our client.

What was the sales representative’s response? “Not a lead. No reason for follow-up.” Without even a single discussion, this individual decided that his company didn’t have an opportunity in this large manufacturing company (which, by the way, was in the sweet spot of their target market). The reason? “Decision-making time frame too far out.”

The sales representative, no doubt, read that it might take longer than one quarter for this deal to close. Like many sales representatives who survive on a quarter-to-quarter basis, it was apparently too onerous to consider either attempting to accelerate the process and decision-making time frame and/or nurturing the account to write, rather than respond to, the RFP when it was issued. As one might expect, the prospect was compelled (by a competitor) to begin the investigation sooner rather than later and our client was not even in the hunt, much less short-listed, when it could have owned the evaluation. A smarter, and/or better managed, sales representative won the business for a competitor.

Scenario #2: I recently discovered that a short-term lead presented to a client a year ago was barely followed up by sales. That prospect recently inked a seven-figure deal with a competitor of our client. When I asked the client to research what happened, it was discovered that the sales representative had spent several thousand dollars creating and binding white papers for a presentation to the prospect, sent the bound documents to the prospect, and then never called to follow up.

Scenario #3: On behalf of a large company that sells a technology product to colleges and universities, my organization contacted just over 100 schools in July – the peak buying season. More than 40 of the schools had not heard from their sales rep for “some time,” even though the company dedicates sales reps to this market. The school-to-rep coverage model was very manageable. The bottom line: The sales representatives were not getting the job done. So while the giant slept, competitors were gaining market share. Incredibly, the same sales force killed a program focused on following up with another portion of the same market to make sure that a back-to-school campaign was being properly executed. The reason? Sales representatives were “too busy to help” identify target contacts and really did not want someone in their accounts at that time. It would be laughable if it were not so costly.

As hard as it is to admit, the same stories – or worse – could be told about your company. If you find that leads are not closing, begin the process of finding out why!

Remember the following statistics for all qualified leads:

  • 10 percent will close within three months.
  • Another 16 percent will close within six months.
  • Another 19 percent will close in one year.

A total of 45 percent of qualified leads end up buying from your company or a competitor within a year. How effective is your company at staying on top of qualified leads?

The battle is raging between marketing and sales, but when the smoke clears, it is companies that are getting hurt. You must define the process that will lead to success. Until you do, your company will stagnate, or worse.

Here is what to do:

A Five-step Program to Close the Gap

1.    Stop the carousel on marketing programs. The tendency is to be afraid of jeopardizing short-term sales by doing anything different. But take a look at all of your planned programs—advertising, trade show promotions, direct marketing, webinars—and stop or cut back the ones you can while you take the time to evaluate their effectiveness. Don’t keep the merry-go-round going just because they’re already started. Stop, recalibrate and make sure these programs are moving in the right direction.

2.    Plan to crawl, walk and run. You will not be able to roll out tested marketing programs next month. No company can effectively impact current quarter results with current quarter marketing. Don’t try. Instead, plan carefully and execute thoughtfully for long-term sales success.

3.    Pinpoint your market.For example, one client used a market research firm that determined that the prospect universe exceeded 80,000 companies. Almost immediately we cut the universe in half by focusing on larger opportunities that closed as easily as smaller opportunities and represented profitable business rather than marginal business. After another six months or so, we reduced the prospect universe to just under 30,000 companies based on back-end analyses that included close rates by vertical. Currently, that client targets approximately 22,000 companies and we will, no doubt, continue to work the universe down based on the appropriateness of the fit and the potential margin to our client. NOTE: I don’t recommend depending on one list source to build your database. The best databases contain data from multiple sources which are then verified and enhanced five to 10 percent at a time.

4.    Test your market, media and offer before investing. Before spending significant dollars on a marketing program, it is imperative that you test your list or database (market), the communication platforms you plan to use (media), and your price, package, terms, guarantee, differentiators, etc. (offer). Simple as this seems, it almost never happens. This practical testing step can hugely impact sales and save tens of thousands of dollars.

5.    Measure your results. If you do not have a process to track and measure the ROI of your marketing programs, you are just throwing darts. Only by quantifying the success of each program can you know if your efforts are worthwhile. In fact, you may be surprised to find that anecdotal evidence does not align with the facts. Here’s an example: One of my clients complained that the company’s cost-per-lead was too high. While I don’t advocate measuring cost-per-lead, as quality is far more important, we proceeded to examine this situation. When we took a close look—by breaking out the costs—we learned that the cost-per-lead generated through trade show programs was indeed too high, as were those generated through response management programs. These leads were costing $1,500 and $1,000 each, respectively. Leads generated through pure cold calling, on the other hand, were running $500 each. It’s important to note that lead quality across the programs was consistent. This kind of analysis gives you the power to make the right decisions concerning your marketing programs.

 

Dan McDade is the president of PointClear, a consultant for nurturing business-to-business leads. This article is an excerpt from his latest book, “The Truth About Leads.”