The Search for Qualified Life
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- Brandon Gilmore
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1 Who Should Read This Paper: CEOs and Boards of Directors Senior Sales and Marketing Leaders IT Leaders and Professionals This White Paper Helps Managers Understand: Where automation contributes to effective lead management and where it is challenged. Why organizations underestimate the value of human contact in the lead management process. How lost revenue from poor lead management impacts brand and other opportunities to learn why customers buy. Why outsourcing lead management is a cost-effective solution organizations should consider. The Search for Qualified Life While automation has made big contributions to improving lead management effectiveness, it is no substitute for the variable that matters most: human contact.
2 Evidence shows that 80 percent of leads fall dormant because marketing identifies inappropriate buyers for what is being sold. THE SEARCH FOR QUALIFIED LIFE While automation has made big contributions to improving lead management effectiveness, it is no substitute for the variable that matters most: human contact. In the film, Close Encounters of the Third Kind, scientists define three progressive levels of alien encounter each leading to greater confidence that intelligent life beyond our planet exists. Encounters of the first kind? UFO sightings. The second kind? Physical evidence. The third kind? Human contact. The film s message? Contact from humans is the only watertight evidence that proves earthlings are not alone. Not surprising from the likes of scientists. Another film, appropriately entitled Contact, based on the novel by Carl Sagen, arrives at the same conclusion. and have a mortgage payment to make and the kids college years looming, you learn not to forecast a deal until you ve actually qualified the opportunity with information resulting from an encounter of the third kind: human contact. And people in sales whether trained in telephone sales or pitches of the face-toface variety are simply more motivated than most marketing types to ask the types of questions that will qualify a prospect. In fact, evidence shows that 80 percent of leads fall dormant because marketing identifies inappropriate buyers for what is being sold (Lead Generation for the Complex Sale, Brian Carroll, McGraw-Hill, 2006). Where Do All Those Leads Go? Even if sales and marketing vehemently agree on what constitutes a lead, the source of the problem is often at the lead distribution stage (some call it the lead handoff between marketing and sales). As marketing and sales professionals, we are not unlike skeptical scientists. We too understand that close encounters of the third kind deliver the ultimate intelligence required to qualify a sales lead. Marketing and Sales are Just Different Marketing professionals tend to get more zealous than sales people about encounters of the first and second kind. An encounter of the first kind might provide a name from a marketing database, while a second encounter could feature a reply to a marketing program which demonstrates more physical evidence that a warm body exists behind the name. But if you re in sales Most marketing people believe they are handing leads over to sales people just fine and complain that sales people lack follow up or argue that sales people don t know how to close. Sales people say leads from marketing are junk. It s a common scenario across all industries that have been the source of a vicious cycle for decades. How Much Can You Reasonably Automate? Business leaders overwhelming turn to automation to address the lead management process, with applications from Siebel, Peoplesoft, JD Edwards (all acquired by Oracle) or by leveraging the capabilities of their existing ERP vendor (such as SAP). 2
3 While CRM applications are certainly intended to help track and report on leads and their evolving status, they are only as good as the human intelligence behind them. Further, enterprise software designed for customer management isn t born from lead management requirements, leaving executives disappointed when CRM investments don t deliver performance breakthroughs in lead effectiveness. Facing the facts. Even if marketing and sales agree to collaborate on entering new prospects in the database, there is an ensuing problem with who owns the maintenance task, which isn t trivial. But you ve got to do it. That hot prospect you were selling to suddenly changes jobs, the department re-organizes, or the company is acquired and senior managers bail. No one can predict the events that will impact a lead s status, and you ve simply got to keep people on top of the dynamics occurring in your prospect companies. Just ask Mark Singleton, CEO of Citizen s National Bank outside Dallas, Texas. In 2006, his organization abandoned a Siebel implementation which was originally intended to manage leads and opportunities to cross-sell the bank s existing customers. After three years of trying the bank opted for a custom solution. CEO Mark Singleton concluded: We spent way too much time turning off capabilities that we didn t need. (A Banker s $500,000 CRM Lesson, Baseline Magazine, February 2007.) Unfortunately, Citizen s National Bank is a common scenario. Several other issues add to the problem: Who enters and maintains lead data? More unresolved conflict arises as to who should enter data about a prospect s changing status: marketing or sales. This is a big contributor to the data integrity problem that so often accompanies lead management effectiveness. We struggled delivering our message broadly, explains Televerde client Mark Yeager, Vice President of Marketing for ilinc, a web conferencing provider. Sometimes the best way to find prospects is to simply connect with them over the phone. However, that takes a ton of leg work. Reforming lead management is indeed a worthy effort and investment. And it s bigger than you think. An Overlooked Growth Strategy Ask business managers to cut costs and they get to work fast, reducing staff, consolidating vendors, and eliminating process redundancies. Many will have their cost reduction strategy on your desk the next day. But ask these same managers to grow revenue by 20 percent and the scenario gets more timely and costly. Offsite meetings occur (at the expense of focusing on current marketing and sales) and complex up-sell and cross-sell strategies are put into place. New product ideas are conceived, market research is commissioned to uncover growth opportunities in emerging markets, and sales people start discounting to motivate customers to sign. But that 20 percent growth is right under 3
4 their noses. Our research Sometimes the best way to and observations show that find prospects is to simply connect companies, large and small, with them over the phone. can increase revenue by However, that takes a ton of leg percent by simply managing work. the leads they already have or engaging in a lead management program that leverages the product line already in place. The Real Cost of Poor Lead Management While lead management is no substitute for sustaining a pipeline of new products, millions of dollars of lost revenue points back to poor lead management practices. Besides lost revenue, lost deals compromise opportunities to: notes CEOs prefer to hire more sales people versus spending money on marketing and lead generation programs, especially if the costs are comparable. However, experience proves time and again that reinforcing existing sales people with improved lead management programs will outperform a larger sales force every time. Recovering Lost Revenue Shoring up the lead management process to capture lost revenue is a viable growth strategy that is guaranteed to deliver. But it takes measures that all marketing and sales organizations need to realize before they can start yielding the benefit. Important things to recognize include an understanding that: Improve brand awareness. Putting your product in more hands not only provides market awareness, it gives you new feedback mechanisms for product development. Grow market share. Capturing lead revenue more effectively augments your absolute number of customers and increases wallet share of those customers that already exist. Both are metrics loved by Wall Street. Gain insight into buying behavior. Analyzing why new customers buy provides great insight into competitive positioning. But, even if you lose a sale, you ve garnered useful insight into buying motives that will help you the next time (and inform product development). Author Guy Powell (Return on Marketing Investment, RPI Press, February 2003) Lead management is not a core competency of most organizations. With competency comes a disciplined, well-oiled machine and process that skillfully engages with prospects to nurture and track the evolving status of a lead. While organizations might nurture leads generated from specific campaigns, the effort is typically shut down once the campaign ends. Hence, sustaining the human effort required to nurture leads rarely occurs as an enterprise activity, or is spotty at best. Both lead to out-of-date prospect information. Most organizations lack lead qualification criteria, let alone a disciplined engine to find, store and track the value of leads. And processes for passing leads to the sales organization is usually inconsistent. 4
5 Reforming lead Organizations are not management is one of staffed up to realistically the best ways to generate solve the problem. The upside revenue. problem described above is not one that marketing is always skilled to do, since tracking a lead s status and pulling it through the sales funnel requires interim stages of pure selling. And sales isn t staffed or typically interested in nurturing leads from sources that aren t ready to buy in the current quarter. The Case for Outsourcing While automation lends benefits to the lead management process, it is not a panacea. Managing lead data is absolutely critical, but the investment produces far lower returns without consistent contact with buyers to track a lead s changing status. Outsourcing the generation of leads that have been qualified with human contact yields several benefits: Increase Customer Face Time. While many executives argue that direct sales people should be responsible for cold calling and qualifying leads over the telephone, this generally robs sales people of the time they need to close new business a situation corrected by outsourcing. In one study, sales people identified more face time with qualified buyers as the number one way to improve their performance. (Sales Effectiveness: Helping Sales Sell, Aberdeen Group, June 2004.) Boost Marketing and Sales ROI. Chasms between marketing and sales cost the organization money and the source of this division overwhelmingly points back to lead generation. Sales organizations generally believe marketers don t provide leads that represent valid business opportunities. There is no better way to improve the marketing/sales rift than to equip sales people with valid leads they can act on and convert to new business. Turn Sales People into Trusted Advisors. Today s well-paid direct sales person needs time to build confidence and trust with target buyers. In a study of more than 23,000 businesses, Susan Mulcahy found that trusted advisors are 70 percent more likely to walk away with a deal. (Evaluating the Cost of Sales Calls, Susan Mulcahy, Cahners Research, January 2002.) Ted Elston, VP of Marketing for FACTOR, a software provider that targets petroleum and convenience store operators, agrees. A client of Televerde, he says, The primary benefit of outsourcing lead generation is the time it frees up for our inside and outside sales reps to manage the sales process and build trust. By outsourcing lead generation, sales time is better allocated to meeting the needs of qualified prospects. To date, we ve seen an ROI of 750 percent on our outsourced lead generation investment. Elston is a big believer in leveraging the entire marketing mix and manages new prospect lead generation in conjunction with other marketing efforts such as trade shows, print and online advertising, and public relations. For the most part we use Televerde for ongoing lead generation of new business, but have in the past had success in using them for other campaigns, he says. Where Technology Helps Chief Technology Officers are the first to point out IT s constraints in managing leads. Says Murray Lisook, VP of IT 5
6 Well-run Lead Management Programs: Get marketing and sales collaborating on common goals. Add enormous insight into buying behavior even if leads don t convert to deals. Can easily boost revenue percent. Are often outsourced to third parties since in-house organizations are rarely equipped to commit the necessary resources to fully deliver. Strategies for Televerde: Gathering and recording the changes that happen throughout a lead s life cycle can t be totally automated. News of a merger or acquisition, a new executive hire, or a company s experience with a recent SAP deployment all require human judgment to assess their impact on a lead. But technology can improve ROI with: Well designed databases and interfaces. While this sounds like a nobrainer, many organizations don t update their data points as sales qualifiers change. If your hottest prospects are now new CIOs, have you accounted for this? On the flip side, are you including prospect data that no one really needs? And even the best companies often forget to convert a prospect s status to customer once the deal is signed, something that is a terrible bruise to the brand, Lisook reminds us. Flexibility. Many prospect databases don t allow for critical informal comments and observations. In one instance, a large J2EE-based prospect was thrown out of the prospect pool since the provider only sells Microsoft-based solutions. The disappointed account executive later found that the J2EE standard didn t preclude purchases of Dot Net solutions, an oversight that prevented her from competing in a multimillion opportunity. Lead distribution. IT plays an important role in distributing lead information to people at points in the sales cycle where it is the most useful. And keep in mind that leads are not just for sales people. Marketing, sales management, even CFOs and manufacturing managers all have a vested interest in understanding the sales pipeline. Companies waste huge amounts of time quantifying the organization s sales pipeline for multiple business purposes. Accommodating the needs of all the business functions that use pipeline information to make decisions is a best practice worth implementing. Mobility. Over the past decade sales people have become road warriors; they work from home, they travel constantly and their communication medium includes a Blackberry and other mobile devices. Data about the target buyers you re pursuing needs to be available in the form they need it, when they need it. Data integrity. Few (if any) organizations dedicate resources to keeping prospect data up-to-date. Avoiding this single best practice costs companies millions. But even if you re covered here, keep in mind, prospects are not always honest when vendors call to update prospect data. An independent research organization has a better chance at eliciting the truth about a prospect s buying intentions. An SAP rep once forecasted a $5 million deal at 75 percent probability of closing, when in fact the deal had already gone to a competitor. Summary and Recommendations While automated systems are absolutely necessary in managing all of the information and knowledge you need to qualify prospects, they are no substitute for the variable that unequivocally has the most impact on sales performance: human contact. Improved lead management is a growth strategy managers often overlook. While growth sources from new markets and an innovative product pipeline will absolutely drive new revenue, reforming lead 6
7 Outsourcing lead generation gives account executives more face time with customers and prospects. Sources: Lead Generation for the Complex Sale, Brian Carroll, McGraw-Hill, A Banker s $500,000 CRM Lesson, Baseline Magazine, February Return on Marketing Investment, RPI Press, February Evaluating the Cost of Sales Calls, Susan Mulcahy, Cahners Research, January management can boost revenue percent. Enterprise CRM or SFA solutions are often an awkward fit for lead management, especially for smaller to midsize companies whose processes aren t quite as bureaucratic as the large firm. Even when packaged solutions fit well, companies fail to commit resources to fully keep prospect information up-to-date, reducing the ROI of these solutions. Organizations overwhelmingly underestimate what it takes to staff lead management programs. Moreover, the qualifying data that adds the most value to a lead is often undefined and is rarely kept up-to-date. Outsourcing lead management to a third party provides a solution. Sales Effectiveness: Helping Sales Sell, Aberdeen Group, June For more information, contact Televerde at info@televerde.com or at Visit us online at 7
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