2013 Lead Management Optimization Key Trends Analysis Lead Management Optimization Study Key Trends Analysis.

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1 2013 Lead Management Optimization Study Key Trends Analysis Compliments of:

2 Copyright 2013 CSO Insights All s Reserved. Terms and Conditions Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be produced or distributed in any form or by any means, or stored in a database or retrieval systems, without the prior written permission of the publisher. For additional information, contact CSO Insights, 4524 Northfield Court, Boulder, CO 80301, Phone: (303) , jim.dickie@csoinsights.com. The reader understands that the information and data used in preparation of this report were as accurate as possible at the time of preparation by the publisher. The publisher assumes no responsibility to update the information or publication. The publisher assumes that the readers will use the information contained in this publication for the purpose of informing themselves on the matters which form the subject of this publication. It is sold with the understanding that neither the authors nor those individuals interviewed are engaged in rendering legal, accounting, or other professional service. If legal or other expert advice is required, the services of a competent professional person should be sought. The publisher assumes no responsibility for any use to which the purchaser puts this information. All views expressed in this report are those of the individuals interviewed and do not necessarily reflect those of the companies or organizations they may be affiliated with, CSO Insights, Insight Technology Group, or Sales Mastery. All trademarks are trademarks of their respective companies.

3 Acknowledgments We would like to thank all of the sales executives who annually share the data related to their lead generation and marketing efforts and the best practices they employ to optimize how they create demand for their products and services. Without their support and insights, the development of the research knowledge base used in the creation of the 2013 Lead Management Optimization study would not be possible. Next, we would like to thank the following marketing effectiveness companies for their partnership and thought leadership support for this project: ConnectAndSell, LeadLife, and The SAVO Group. We owe a debt of gratitude to many colleagues, mentors, and advisors whose help made this project possible. To list them all would be impossible, but a couple deserve special mention: 3FORWARD and The Pedowitz Group. Finally, we would like to thank our editing team whose hard work, diligence, and endless hours made this project possible. Thanks to Dr. Diane Hodges, Andy Jesmok, and Kim Cameron.

4 Table of Contents 2013 Lead Management Optimization Study Introduction... 1 Lead Generation 2013: Doing More versus Better... 2 Alignment Assessment... 5 Prospects Assessment... 7 Messaging Assessment... 9 Campaigns Assessment Technology Assessment Scoring Assessment Conversion Assessment Nurturing Assessment Engagement Assessment Evolution Assessment Going Forward Recommendations... 25

5 2013 Lead Management Optimization Study Introduction In February 2013, we published the results of CSO Insights 19 th annual Sales Performance Optimization study, in which we noted that 92% of the 1,100+ firms surveyed had increased revenue targets when compared to Higher sales goals are a fact of life in business, as growth is expected if not demanded by investors. But, as companies raise the revenue bar, sales and marketing leaders need to ask themselves, What is going to be different to allow our teams to hit these higher targets? The 2013 Sales Performance Optimization study focused on what sales teams can do to increase their efficiency and effectiveness. We followed this report with the 2013 Sales Management Optimization study, which highlighted what the people leading our sales teams can do differently to increase sales performance. Now, it is time to turn our attention to what marketing s role could/should be in helping sales achieve their revenue goals. In the following 2013 Lead Management Optimization Key Trends Analysis we share the input received from our 9 th annual study. We focus on what marketing is seeking to accomplish in relationship to creating demand for their companies products and services, and how effectively they are supporting the efforts of sales to turn interest into revenue. The Lead Management Optimization research initiative gathered input on over 100 metrics from 600+ firms. Data for the study were collected using a web-based survey tool designed to be completed in minutes. Participants had the option to sign-off from the site and continue where they left off if they needed to gather more information or had a time constraint. Not Applicable and Do Not Know were offered as acceptable choices for many of the questions related to their company s lead generation efforts. We sought participation from multiple industries. Technology firms (software, hardware, and telecom) represented the largest group of participants, followed by services-related firms (financial services, high tech, general business, advertising/pr, etc.). Traditional manufacturing firms and other (non-profits, education, distribution, automotive, pharmaceutical, healthcare, travel, retail, etc.) also contributed to the study results. Regarding geographic coverage, 65.8% of the participating firms were based in the United States, while the remaining 34.2% were international companies. An analysis of the data by industry or company size is available to Advisory Services clients by contacting their CSO Insights analyst. Anyone wishing to obtain these analyses or is interested in benchmark information for their firm should Laura Andrus. Also, you can Kim Cameron for a complete list of the survey questions. CSO Insights 1

6 Lead Generation 2013: Doing More versus Better Through our sales and marketing excellence benchmarking efforts this past year, we saw numerous cases where marketing was clearly committed to improving the level of support delivered to sales. In interviewing CMOs on how they intend to turn that desire into reality, we heard a mix of strategies which either focused on doing more, better, or both. Based on this, assessing the potential for marketing to increase the volume of their lead generation efforts was an area of focus in the 2013 Lead Management Optimization research. To begin this analysis, we asked study participants to compare their 2012 and 2013 marketing budgets. Figure 1 summarizes their responses. Figure 1: Few Marketing Budgets Increased in 2013 The percentages of firms that froze or reduced their marketing spend for the year increased from 31.7% in 2012 to 42.5% this year. On the other end of the spectrum, the percentage of firms that received a budget increase of >10% dropped during the past year from 33.1% to 19.1%. Based on these findings, relying on more is not an option for many marketing organizations. With this in mind, what can marketing do better to deliver a higher level of services and support to sales teams? We conducted an analysis of best-in-class lead generation programs. Ten key factors surfaced that increase the performance of lead generation efforts and hinder them when absent. In discussing these findings with our Advisory Board, the image of a process cycle emerged which provided a useful framework for presenting the key findings from the 2013 Lead Management Optimization study. Figure 2 introduces these lead management optimization attributes. CSO Insights 2

7 Lead Management Optimization Life Cycle Alignment Evolution Prospects Engagement Messaging Nurturing Campaigns Conversion Technology Scoring Figure 2: Process Steps in an Optimal Lead Management Life Cycle Alignment: The cycle starts with marketing and sales aligned with the objectives that need to be accomplished, what needs to be done to achieve them, and who has ownership for each task. Prospects: Marketing prioritizes which types of existing and potential customers to engage that support their objectives and ensures they have access to accurate information that will allow them to actually connect with these individuals. Messaging: Realizing that multiple stakeholders often need to be engaged to motivate the start of a buy cycle, marketing develops targeted messaging to generate interest with each of the different types of prospects. CSO Insights 3

8 Campaigns: To deliver these messages, marketing executes campaigns using the most effective combination of traditional, web-based, and social media lead generation programs to reach their target audiences. Technology: Marketing leverages technology to effectively execute the lead generation campaigns and actively manages the leads generated. Scoring: As prospects respond to these campaigns, marketing assesses which leads are marketing qualified and sales qualified. Each lead type is handled appropriately. Conversion: Marketing and sales are responsible for converting leads into initial discussions and providing prospects access to the right collateral and tools to motivate them to begin a buy cycle. Nurturing: When a qualified prospect is unable to commit to starting a buy cycle, marketing initiates a formalized lead nurturing program to keep the solution provider (your company) top-of-mind with the prospect and regularly assesses their interest level. Engagement: Sales accesses the right collateral, tools, and support needed to navigate qualified prospects efficiently and effectively through all of the steps in the sales process and provides marketing feedback on the effectiveness of the marketing generated services. Evolution: With the right systems in place, marketing tracks the disposition of leads through the sales process and generates metrics to make knowledge-based decisions on how to optimize future lead generation efforts. On the following pages, we explore each of the attributes of the Lead Management Optimization Life Cycle in more detail. As we do, we encourage you to assess your organization s performance in each of these areas. Since doing things better is the path to success for many companies, this self-exploration can help you see where attention and resources need to be focused within your company to optimize lead generation efforts this year and into the future. Once you have completed that assessment, Advisory Services members should contact their CSO Insights analyst to schedule a briefing call on the best practices other marketing teams have implemented to address similar issues you are facing today. Questions or comments on the findings from this study can be directed to: Jim Dickie Barry Trailer Managing Partner Managing Partner CSO Insights CSO Insights (303) (916) jim.dickie@csoinsights.com barry.trailer@csoinsights.com CSO Insights 4

9 2013 Lead Management Optimization Key Trends Analysis Alignment Assessment Key Findings New customer acquisition is a shared top objective. Both marketing and sales are focused on expanding the existing base. Macro-level objectives are not always aligned with micro-level programs. Commentary For all the talk about improving sales and marketing alignment, we were interested to see how the findings from the 2013 Lead Management Optimization study would compare to the 2013 Sales Performance Optimization study. At the highest level, we found the two organizations are on the same page. The chart above shows the summary of responses from 2013 Lead Management Optimization study participants on their top three objectives for this year. The figures associated with the red bars are the top objectives for sales organizations, as found in the 2013 Sales Performance Optimization study. Topping the list for both marketing and sales is increasing new customer acquisitions. In analyzing the 2013 Sales Performance Optimization study data, 92% of the firms stated they were increasing their revenue goals for this year. Of that number, over 40% of sales organizations were looking at revenue increases of more than 15%. The Sales Performance Optimization findings clearly show that sales is looking to expand market share as a critical success factor for hitting their goals. The 2013 Lead Management Optimization study data show that marketing shares this objective. Marketing wants to support sales in maintaining/expanding walletshare as well. They plan to focus on multiple lead generation CSO Insights 5

10 efforts designed to renew and sell more products and services to existing customers. But, as with all good intentions, the devil is in the details. We added a new question to the 2013 Lead Management Optimization. We asked marketing to rate their ability to align their lead generation campaigns to specific sales objectives. The chart below shows that few companies consider this to be marketing s core competency. On the following pages we review a number of factors impacting marketing s efforts at this aspect of lead generation. These include data quality (page 7); the ability to develop effective/targeted messages (page 9); the ability to provide sales with the tools they need throughout the sales process (page 20); and the ability to get feedback on which marketing programs are working/not working (page 23). Notes: CSO Insights 6

11 2013 Lead Management Optimization Key Trends Analysis Prospects Assessment Key Findings Commentary New and existing customer revenue goals are at risk due to continuing data quality challenges. Data accuracy is aligned to the success that marketing has in generating leads for sales. Use of Sales Intelligence services is higher, user reviews are mixed. If companies cannot get their messages to stakeholders, then lead generation efforts are doomed before they start. In the chart above, we see the seemingly never-ending challenge to ensure that marketing continues to have accurate data on customers and prospects. In fact, when comparing the 2013 findings to the 2012 Lead Management Optimization survey, performance in this area is actually getting worse. For example, there is a 5% decrease in the number of firms reporting customer data accuracy of >90%. On the prospect data side, the number of firms with accuracy of 50% increased by 8% on a year-over-year basis. We did a deeper analysis of marketing s ability to generate leads for sales and saw a clear trend line. The higher the level of customer and prospect data accuracy, the higher the volume of leads marketing is able to generate for sales. The question then becomes, How do you get there? The 2013 Lead Management Optimization study found that 69.8% of the firms are utilizing Sales Intelligence services to help increase the quantity and quality of customer and prospect data. Of these companies, 78.3% subscribe to two or more services. But a word of caution: not all services are viewed as equal. CSO Insights 7

12 The following chart shows the responses from the 2013 Sales Performance Optimization study when survey participants were asked if they would recommend their primary Sales Intelligence provider to their peers. As we have noted in the past, Somewhat Likely ratings are often a polite way of saying Unlikely. Advisory Services clients who want a full ratings review on various Sales Intelligence service providers should contact their CSO Insights analyst to schedule a briefing. Notes: CSO Insights 8

13 2013 Lead Management Optimization Key Trends Analysis Messaging Assessment Key Findings Messaging to the marketplace is an issue for many firms. Increase in the number of stakeholders makes messaging more challenging. Analytics are useful in optimizing messaging effectiveness. Commentary Everyone is bombarded by marketing campaigns from a variety of sources. As you will see in the next analysis, messaging matters if you want people to pay attention to what you have to say. In the chart above, we see that developing an effective message is a challenge for many companies. One factor that the 2013 Sales Performance Optimization study surfaced is that messaging cannot come in just one flavor. The chart on the following page shows a summary of the responses to the question of how many decision makers are involved in a typical deal. The average is 4.5 individuals involved in the final buying decision. This puts a burden on marketing to craft individualized messages for each of the stakeholders who might be able to start a sales opportunity for a rep. CSO Insights 9

14 One factor that can positively impact messaging effectiveness when leveraged correctly is analytics also known as Big Data. There is a growing number of marketing teams analyzing both structured and unstructured potential prospect data and leveraging insights uncovered to more effectively develop targeted messages. The table below shows that as proficiency at leveraging analytics increases, messaging effectiveness also improves. Ability to Leverage Analytics as Related to Messaging Effectiveness Messaging: Meets Expectations Messaging: Exceeds Expectations Analytics Usage: Excellent 46.2% 35.9% Analytics Usage: Above Average 54.7% 15.1% Analytics Usage: Average 46.5% 4.5% Analytics Usage: Poor 28.7% 4.3% Notes: CSO Insights 10

15 2013 Lead 2013 Management Lead Management Optimization Key Key Trends Trends Analysis Analysis Morgan Creek's Quarterly Update Conference Calls Campaigns Assessment Key Findings It is not an issue of the right method, but rather the right mix of methods. Several program types are declining in ratings, one is on the rise. Shifts in lead generation investments show marketing embracing newer alternatives. Commentary CSO Insights has been tracking the paradigm shift in the types of campaigns that marketing turns to in order to generate leads. The chart above is a summary of the 2013 Lead Management Optimization study data on the top three most effective marketing campaign programs this past year. The first thing that is clear is that marketers have a lot of things they could do, and they are placing different bets on what they then should do. To give a historical perspective when viewing the chart above, let s revisit some numbers from the 2010 Lead Management Optimization study. We found noticeable downward shifts in the frequency ratings of many marketing campaigns: Marketing rating: 61.5% Website Registration rating: 32.6% Webinar rating: 31.1% SEO, Paid Search, Google AdWords rating: 27.2% Of the remaining campaign types cited in the chart above, the data showed minor differences in ratings from 2010 to today, with one exception: Social Media. The frequency rating rose from 12.3% to 21.8% in the past three years. However, 70.6% of the CSO Insights 11

16 firms stated they need to improve their social media lead generation efforts. We asked the study participants a follow-on question to the one above: Based on the results you have achieved, how will your investments change going forward? The following chart summarizes their responses. Web Design and Content and Social Media will be the biggest beneficiaries of budget reallocations, whereas Paid Search, SEO, Google AdWords, Telemarketing, Online Advertising, and Direct Mail will see the biggest budget hits. Notes: CSO Insights 12

17 2013 Lead Generation Optimization Key Trends Analysis 2013 Lead Management Optimization Key Trends Analysis 0 Technology Assessment Key Findings By the end of 2013, firms using Lead Generation Management systems will be in the majority. Many lead generation teams are still in the early adoption period. Commentary Marketing s adoption of technology continues to increase as companies realize they need new tools and processes to not just develop and execute campaigns, but to track and measure the ROI as well. By year end, we expect to see adoption rates topping at least 50%, if not 60%. This being said, the following chart shows the stages in the adoption cycle where many companies reside, and we see that 56.8% have been in operation for less than two years. Having the tools doesn t mean they are optimally used. CSO Insights 13

18 In addition to helping companies design, execute, and more effectively manage lead generation campaigns, survey results reveal three added trends driving commercial Lead Generation Management systems adoption. Social Media Campaign Management: Lead Generation Management systems have the functionality to help manage a company s marketing efforts on Twitter, Facebook, LinkedIn, and more. Lead-to-Revenue Metrics: The analytics in Lead Generation Management systems can provide marketing with greater visibility into which campaigns are moving the revenue dial. The number of metrics identified by companies to determine lead generation ROI is on page 23. Big Data Support: Lead Generation Management systems are increasingly utilizing Big Data to track the digital body language of prospects, which helps to better assess which leads are sales-ready, which opportunities are worth adding to the forecast, which should be dropped, and more. While CSO Insights is becoming increasingly bullish about the power of Lead Generation Management systems, let us share a dose of reality. Years ago, Jessica Keyes shared the following observation in her book, InfoTrends: Technology does not beget a competitive advantage any more than paint and canvas begat a Van Gogh. A Lead Generation Management system alone does not improve lead generation performance it is how the system is used. With this in mind, when evaluating Lead Generation Management solutions, look beyond the product. Look for the expertise that the solution provider brings to the table, find out about their partners, and determine if they offer services to help you learn about concepts such as lead scoring, lead nurturing, sales-ready leads, leveraging Big Data, etc. Our view is that the value-add services that solution providers offer marketing teams is equal to, if not more important than, the technology platform they provide. Notes: CSO Insights 14

19 2013 Lead Management Optimization Key Trends Analysis Scoring Assessment Key Findings Commentary Only one in four firms uses a formal lead scoring process. Effective scoring reduces the number of leads sent to sales and dramatically increases close rates. Lead scoring is one area of Lead Generation Management where increases in the number of firms are attempting to bring more science than art to their demand generation efforts. Lead scoring is the method by which marketing measures prospect buying interest and intent. As the chart above illustrates, 35.8% of companies have not yet jumped on this bandwagon, as opposed to 64.2% that have. When looking at firms that have adopted a lead scoring process, there is a split between the formalities of that process. A deeper analysis of the data was conducted to see what, if any, impact lead scoring had on marketing and sales performance. The results showed that when companies went from no scoring to informal scoring, or from informal to formal scoring, marketing and sales performance improved as shown in this list. Use of Lead Generation Management systems is tied The number of leads marketing sends to sales decreases. to adoption of While this may sound bad, sales subsequent follow-up lead scoring. rate went up. The conversion rate of leads to first meetings is also higher for the formal scoring group, but the data shown below are the real litmus tests. CSO Insights 15

20 The table below shows the close rates for marketing-generated leads accepted and followed up by sales. Informal lead scoring companies ultimately closed more deals than companies with no formal lead scoring in place, whereas firms with a formal scoring method ultimately closed more deals than both of their counterparts. Lead Scoring as Related to Percentage of Marketing- Generated Leads Ultimately Closing Lead Scoring: Formal Lead Scoring: Informal Lead Scoring: None Ultimate Close Rate >40% 15.5% 14.8% 9.1% Ultimate Close Rate 26% 40% 33.6% 24.3% 8.4% So, how do you make lead scoring work for your firm? The right tools can help. The table below shows that companies that implement a Lead Generation Management system are far more likely to utilize lead scoring in their demand generation cycles than those that do not have/use these applications. Lead Scoring Process as Related to Lead Generation Management Usage Leveraging Lead Generation Management Not Using Lead Generation Management Lead Scoring: Formal Lead Scoring: Informal Lead Scoring: None 44.7% 36.6% 20.7% 11.4% 44.5% 44.1% Full details of this analysis are available. Contact your CSO Insights analyst to receive your copy. Notes: CSO Insights 16

21 Lead Management Generation Optimization Key Trends Analysis 2013 Lead Management Optimization Key Trends Analysis Which of the following best describes Conversion how Assessment your company handles lead scoring? Key Findings Not all leads given to sales are followed-up. Noticeable increase seen in the percentage of leads that sales converts to a first call. Commentary The 2013 Lead Management Optimization study data show that, on average, 47.1% of leads generated by marketing are turned over to sales. The chart above shows the percentage of marketing-generated leads actively pursued by sales. It also reveals that many leads fall through the cracks. So, what happens to the leads sales does go after? The following chart shows the conversion rate of leads pursued by sales that turn into a first call. Some marketing teams are responding well to changes in dynamics of seller/buyer conversations. CSO Insights 17

22 The figures above show a significant improvement over the 2012 Lead Management Optimization study results. Last year, a conversion rate of more than 75% was reported by only 13.9% of the firms surveyed. This year, the percentage is 18.5%. Conversely, at the low-end of performance, the 2012 study found that 33.1% of companies had a first discussion conversion rate of less than 25%, compared to 22.5% this year. The study surfaced one factor that can improve conversion rates: the effectiveness of the content and tools that sales receives from marketing to help convince prospects that they should agree to talk further with a sales rep. Over the past couple of years, we have written on how the Internet is changing buying; prospects can get a wealth of product information before talking with a rep, gain competitive insights, and more. Because of this, companies need to arm reps with new knowledge and insights that the potential buyer has not seen. The table below shows that when marketing accomplishes this, salespeople can convince more prospects to move to the next step in the sales cycle the first needs analysis/discussion. Conversion Rate to First Discussion as Related to Marketing s Ability to Provide Tools and Content Marketing Tools and Content Exceeds Expectations Marketing Tools and Content Meets Expectations Marketing Tools and Content Needs Improvement Conversion Rate: Lead to First Discussion >75% 42.8% 32.7% 11.1% Notes: CSO Insights 18

23 2013 Lead Management Optimization Key Trends Analysis Nurturing Assessment Key Findings A variety of options is available for lead nurturing. Additional lead to opportunity conversions occur most often when sales and marketing are both involved. Reengagement response time is key to success. Commentary So, what about the sales-ready leads that do not turn into opportunities? The chart above shows that the vast majority of companies are conducting some form of lead nurturing. However, who owns the task differs widely. Does ownership matter? The following table sheds some light on this question. Impact of Nurturing on Lead Conversion as Related to Ownership of the Task Nurturing: Sales Owns Nurturing: Blended Ownership Nurturing: Marketing Owns Significant Increase 15.0% 39.6% 23.5% Increase 55.1% 49.5% 46.4% Minimal Impact 18.7% 8.8% 12.6% Do Not Know 11.2% 2.2% 17.5% The table above reveals that lead nurturing generally can have a positive impact on the number of leads that turn into sales opportunities. As noted in the introduction, the majority of companies do not have significantly more money to spend on lead generation campaigns; therefore, anything that can increase the ROI of the campaigns companies are running is of value. In this regard, lead nurturing should be given a fair amount of attention. CSO Insights 19

24 The table above shows that the best approach to generating the greatest results is where nurturing is co-managed by sales and marketing. Often in this blended process sales and marketing utilize their various CRM and Lead Generation Management tools to track prospect behavior. When the Lead Generation Management system detects that a prospect in the nurturing program has returned to the website to view information or to the microsite to view a demo, the appropriate salesperson is automatically notified that it is time to reengage. Our benchmarking has shown this timely response is key to maximizing the impact of lead nurturing. A best practice is not continually calling or ing a prospect to ask if anything has changed, but rather using technology in an effective way to monitor buyer behavior. When prospects start their reeducation process online, you know it is time to reconnect. Notes: CSO Insights 20

25 2013 Lead Management Optimization Key Trends Analysis Engagement Assessment Key Findings New Metric: Improvement frequently is needed in the materials and tools used during the sales process. One barrier is lack of visibility into what tools are/are not working. CRM 2.0 Sales Knowledge Management offers ways to get feedback from sales. Commentary As mentioned in the introduction, our Advisory Board requested that we expand our thinking on the lead management process to include assessing how effective marketing is at providing the support services that sales need to execute all of the steps in the sales process. To accomplish this, we added several new questions to the 2013 Lead Management Optimization survey. These questions focused on marketing s creation of sales tools and collateral, the use of these tools by sales, and the type of feedback loop (if any) to help marketing understand what is and is not being used and what is and is not effective. The chart above shows that few marketing teams give themselves an A grade, while Needs Improvement ratings are fairly common. This reinforces what our Advisory Board said: The generation of qualified leads and the ability to convert them into first discussions is part of the equation, but not all of it. If sales doesn t have the tools to navigate the client through the entire sales cycle, then deals may go to competitors or end up as no decisions. CSO Insights 21