THE EXECUTIVES GUIDE TO BUILDING A LEAD GENERATION ENGINE

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1 THE EXECUTIVES GUIDE TO BUILDING A LEAD GENERATION ENGINE 1

2 This guide is for you if your business is suffering from any of the following symptoms: You have sales process that feels broken, with bookings that are less than you hoped for. You need to grow bookings fast, but you don t have a repeatable or scalable process. It is costing you more in sales and marketing to acquire your customers than you make from each sale. Sales is unhappy with marketing and wants more leads. Marketing is doing a lot of things, but they don t seem to be clearly leading towards a sale. Marketing is unable to show the ROI on their programs. 2

3 Contents Introduction 4 Step 1: Building the Engine Identify Your Buyers Understand and Develop What Steps You Will Take to Address Customers Buying Processes Diagram Your Customers Buying Processes Examine Linkages between Actions Defining Qualification Criteria Examine the Customer s Motivations For Each Action Define the Organizational Resources Responsible For Each Step Define the Underlying Technology and Software 9 Step 2: Fine Tuning the Engine What Metrics Matter Spotting A Shortfall Well In Advance Measuring the Effectiveness of Actions 11 Step 3: Remove Any Blockage Points Identifying Blockage Points Solving Blockage Points 12 Step 4: Continuous Improvement 13 Conclusion 14 3

4 Introduction During the recent recession, most organizations responded to the spending slowdown by investing more in their sales infrastructure. The thinking, at the time, was that investments in sales force automation tools would result in more accurate forecasting and a more efficient sales team. By fine-tuning their sales engine, these companies believed they would enjoy consistent and sustainable revenue growth. Many of those same companies realized their sales engine needed fuel in order to keep the engine running. To feed their sales engine, they invested in lead generation programs (such as cold calling, marketing, direct mail, online search marketing) to THE EXECUTIVES GUIDE TO BUILDING A LEAD GENERATION ENGINE Studies show most 70% of the qualified leads that hit your website will buy from you or one of your competitors within 12 months. feed new prospects into their sales pipeline -with executives believing those new leads would magically funnel down into closed deals. The problem with most of these revenue engines is that they are designed around how companies want to sell and not around how their customers actually buy. There has been a fundamental power shift from a sales-driven process to a buyer-driven process. This has resulted in companies needing to develop a new revenue engine: one that keeps pace with the evolution of today s buyers. For those cutting-edge companies that have been ahead of the curve in building a new revenue engine, the results have been demonstrable across both top line and bottom line metrics, including: Lower customer acquisition costs The result of more effective marketing programs and more efficient sales efforts. Reduced wasteful spending Cold calling, direct mail pieces and other high cost lead generation tactics -which companies often turn to at the end of a quarter when they realize they aren t going to hit quota - are eliminated. More predictability in sales forecasts The focus on lead qualification results in repeatable, predictable processes and a steady stream of sales-ready prospects, higher close rates, and more consistent growth. Greater pipeline stability Sales teams are able to avoid the feast or famine routine of 100 deals closing in one quarter, while only closing 10 during the next. 4

5 Building a new revenue engine starts with designing and reviewing who your customers are and how they buy. Although this is obvious, it turns out to be radically different compared to the way most companies have designed their processes, which is based on what they want to happen. Most of the time, company-centric processes will not work as well as hoped - largely because they failed to take into consideration the customers concerns and motivations. This methodology will help you grow sales by: Ensuring your process is Customer-Centric (as opposed to company-centric) Designing a process that is scalable, optimized and efficient Providing you with clear instrumentation showing what is working, and what is not Providing you with a clear understanding of what levers you can pull to grow sales Identifying bottlenecks, and show you how to resolve them Lowering the cost of customer acquisition Ensuring that Marketing is correctly aligned with Sales, and directly helping to close business Growing lead flow using the latest web marketing techniques In the following sections, we will take you through the steps to build such an engine. Step 1: Building the Engine Building a revenue engine that maps to your customers buying process requires developing an inbound sales pipeline. This involves the following steps: 1. Identify your buyers 2. Understand and develop what steps you will take to address their buying processes 3. Diagram the Actions you will take to move prospects through the processes 4. Examine the linkages between Actions to make sure the next steps are obvious 5. Define the qualification criteria 6. Examine the customers motivations for each Action 7. Define the organizational resources responsible for each step 8. Define the technology/software you will use to automate the process 5

6 1.1 Identify Your Buyers Lead generation engines should always start with the who? - Who will you target? Who has a need for your product or service? No one can optimize lead generation without specifically defining the right audience to approach. Targeting can encompass many dimensions: The types of business, typically defined by Industry or Standard Industrial Codes (SICs) The geographical location of the business The size of the business by revenue, number of employees or both The people within the business typically defined by function code or job title Specific events that have happened in the business The core of any business development strategy is based on a thorough understanding of, and focus on, your customers. Without a clear understanding of who your customers are, you are destined to fail. By understanding not just the industry, size or geography to target but the roles and trigger events, you can greatly decrease your sales cycle and increase your ROI. 1.2 Understand and Develop What Steps You Will Take to Address Customers Buying Processes Before an organization can adjust its marketing and sales process and build a lead generation engine, it must first understand how the buying process has changed. The accessibility and speed of the Web greatly eases the discovery and consideration processes that buyers go through. Buyers now have more control than ever over their buying processes. Bridging Sales and Marketing in order to match this new buying process, is now more important than ever. This is especially true for typical B2B products and services involving a buying committee or defined decision-making processes, where most of a buyers research and evaluation incorporates the Web. This shift means that much of the time that was previously spent with salespeople is now spent reviewing online resources. For this reason, it s imperative to be found in the places where your prospects are looking. Your company must be recognized as the source for relevant knowledge that pulls prospects into the sales pipeline. Well-executed content will play a bigger role in building trusted relationships that result in salespeople being invited into the process more efficiently. 6

7 1.3 Diagram Your Customers Buying Processes Taking each of the targeted buyers that you identified earlier, we recommend diagramming the buying process for each individual/persona. Only when you are armed with this information can you properly design your own sales and marketing engine. This includes understanding where they spend their time, their status quo, and the process they go through to research and ultimately make a purchase decision. Diagram the Actions you will take to move prospects through the process This next stage involves adding the steps that you can take to address the concerns and needs of the prospect that you identified earlier. These include the following: Thought Leadership Around Prospects problems These can be videos on YouTube, articles on authoritative sites where your prospect spend their time or blog posts on your corporate site. Lead Capture Educational webinars, guides, videos, and whitepapers are also great opportunities for lead capture forms. Lead Nurturing By leveraging the power of webinars, whitepapers, data Sheets, analysts Reports and trend reports, you are not only educate your prospect, but also help build your customer s ultimate solution requirements. Value Building By providing feature guides, video demos and brand messaging after you have helped build context and the ultimate solution requirements, you are able to position your company as the solution of choice. Validation Once your prospect is entering the final stages of their purchase decision, you can start to share case studies, ROI calculators and customer testimonials to help validate their purchase decision. 1.4 Examine Linkages between Actions The next step is check that there are clearly defined linkages between every action on the diagram. A very common problem is marketing activities with no clear call-to-action - or no clear step to process the leads after the action is completed. No one can afford to do any kind of marketing activities that doesn t directly contribute to the process of moving a prospect through to a closed deal. 7

8 1.5 Defining Qualification Criteria Another common problem is the lack of integration between sales and marketing. Sales complain that marketing doesn t provide them with enough leads. On the other hand, marketing complains because they gave sales a ton of leads, and sales won t call them. This happens because there wasn t a discussion between sales and marketing where they mutually agreed on a clear definition of what represents a Qualified Lead that is acceptable to Sales (SQL). Getting the lead to that next level of qualification where it can be passed onto sales (often referred to as a Marketing Qualified Lead or MQL) is the responsibility of the marketing department. To help with qualification, a set of questions are defined. In many cases these are the standard BANT questions (Budget, Authority, Need and Timing). It may also be valuable to ask additional questions that are important to your particular company to make sure they are in your target market. For example, are they a mid-sized company? Are they B2B or B2C? Are they in a particular vertical? etc. A lead can become an MQL when certain number of these are answered positively. 1.6 Examine the Customer s Motivations For Each Action This step represents one of the most important and powerful aspects of this process. If you started off by looking carefully at your customer s buying process, you are already beginning to think the right way. But this step takes things further. To complete it effectively, you will need to get inside your customer s head, and learn to think the way they do. For each Action that you want your customer to complete in your sales process, ask the following questions: 1. What concerns are they likely to have that will make them not want to take this action? 2. What motivations might they have that will make them want to take this action? The most common reason why a sales process isn t Maslow s hierarchy of needs working well is your customer is not adequately motivated to take a step that you want them to do. To resolve this, you will need to get inside your customer s head and understand their concerns and motivations - and brainstorm a way to provide additional incentive to motivate them to take the next step. 8

9 1.7 Define the Organizational Resources Responsible For Each Step This step is simple: for each action in your sales process, make sure that there is a clear organizational resource that is focused on that step - make sure they are measured and paid based on the number of leads they produce as well document their conversion rates. 1.8 Define the Underlying Technology and Software It is desirable that the sales process be scalable; therefore the way information flows between steps needs to be automated. This requires software or software provided as a service (SaaS). CRM software is a well understood category with Salesforce.com as the dominant vendor that we see in startups. However marketing automation is an emerging and dynamic area. As of today, there is no one vendor that provides all the tools you will want to use, so you will need to combine several products/services. Interesting areas for marketing products include Inbound Marketing; Social Network monitoring and management; Lead Nurturing and Scoring; marketing; and Web analytics. (This list is not exhaustive, as this field is rapidly evolving with new ideas constantly emerging.) Step 2: Fine Tuning the Engine In the same way that we need instruments to understand how our car is running, we also need instrumentation to understand how well our Sales and Marketing Engine is running. Without measurement, there can be no improvement. The goal of instrumentation is to show us what is working and what isn t so we can make adjustments to fine tune the process. A machine also has levers that we can pull to adjust how it is running. Think of a car: these are the accelerator pedal, brakes, and steering wheel. For our Sales and Marketing Engine, these might be our spend on SEM (Search Engine Marketing) to create lead flow, the number of sales reps we hire, etc. We will also want to use the instrumentation to understand the effect of changing these levers, so the settings can be optimized. 9

10 2.1 What Metrics Matter Before we start, we need to know a few things about your current lead generation engine. Here are some points of interest: We need to identify any shortfalls in bookings far enough in advance to be able to take action and rectify the problem. This requires you to work backwards from the steps that lead up to a closed deal. We need to check that the number of prospects during those stages and the Conversion Rates between stages are both as expected. We need to know the adjustments needed to hit growth targets for the following quarter/year. e.g. if you want to double revenue, what needs to happen to leads numbers, sales hiring, etc. We need to understand the cost of the entire sales and marketing process, and its various constituents. We need to know lead sources have the highest ROI. To do that, we must know the cost per lead and the conversion rates to closed deals for each different lead source. Looking at that data combined with the average deal size will allow us to determine the return on investment for each different lead source. We need to know the effectiveness of the various Actions that we are taking to move prospects along the sales cycle. For example, if we are doing Webinars, how effective are those at getting attendees to sign up for a trial? Or, if we are spending money on Pay-per-Click Google Adwords, how well are visitors to the site converting into registered users on the site (where they have given their contact information)? 2.2 Spotting A Shortfall Well In Advance Rather than applying instrumentation randomly to various points in the process, you should try to determine which parameters really matter. To do this, we recommend you think back to the model you use to forecast sales. What do you believe are the key drivers of sales growth? Is it the number of opportunities entered into your CRM vs. number of website visitors? Web traffic will not point out shortfalls, a shortage of Marketing Qualified Leads (MQL) will. We have found that the best way to understand how the model works and determine instrumentation you need is to work backwards from Sales Qualified Leads (SQL). SQL can be determined by looking at the number of opportunity forecasts entered into your CRM. Now we need to go back a step, and look at what constitutes a SQL. To fill out the complete set of instrumentation, keep going back one step until you have reached the starting point. For each stage, you will want to track the Conversion Rate. e.g. how many Marketing Qualified Leads (MQLs) turn into Opportunities. 10

11 2.3 Measuring the Effectiveness of Actions As described previously, the key building blocks or your lead generation engine are Actions that we take to move the prospect through the sales process. For each Action, it is useful to know: The cost of that Action per lead The number of Actions that you completed. For example, How many visitors go to your site? How many attendees attended to your webinar? How many trials took place? How many proof of concepts were completed? The Conversion Rate that you obtained by taking that Action. The conversion rate will always be a percentage that reflects the proportion of leads that moved to the next step because of taking this Action. For instance, the percentage of prospects who visited your website converted into registered visitors; the percentage of webinar attendees signed up for a trial, the percentage of trials converted to a closed deal; etc. These are best shown with trend lines showing how they move over time. Step 3: Remove Any Blockage Points Whether you are Cisco, Oracle, Microsoft or Google, there will be blockage points in your revenue engine. As soon as you fix one area, another roadblock will arise elsewhere. This section will help you identify where your blockage points are and provide a powerful methodology for solving them. 3.1 Identifying Blockage Points Most sales and marketing executives will have an intuitive grasp of the areas where their sales process bogs down. However if you are not sure of these, an easy way to identify your major blockage points is to ask yourself the following questions: Where in our process do we have conversion rates that are lower than we would like? If you had to quadruple sales in the next six months, what would stop you from accomplishing that? The second question will make it clear where your process has scaling problems. It is likely that you will hear things like there are not enough leads to feed the process. Identifying these is the easy part. Now comes the harder part. 11

12 3.2 Solving Blockage Points Most blockage points arise because the customer is not interested or motivated to do what you want them to do as the next step in your sales cycle. This comes from designing a process from your point of view instead of from the customer s. The solution to these blockage points comes by building a sales process that is truly customer-centric. This can be done by simply studying your customers concerns and motivations at each stage in the sales cycles, and making sure that your sales process addresses their concerns and ensures that there is a good alignment between what motivates them and what you are wanting them to do next in the sales cycle. Sounds simple, and the good news is that it actually is. To help you with this stage, take a look at each phase in the cycle where you have a problem, and follow these four steps: 1. List their concerns 2. List their motivations 3. List the tools that you could use to solve their concerns and align your process with their motivations. 4. Experiment with different motivational tools, and track the different conversion results The best way to give you a feeling for this is to provide an example. Let s take the problem of how to get visitors to your web site to register and give you their contact information: Concerns Don t want to be on yet another spam mailing list Don t want to be bothered by sales people following up Motivations Interested in education around this particular space Interested in learning more about your product/service Tools available to address concerns and motivations Offer something of considerable value to them after they have registered. The value of what you offer has to provide motivation that considerably outweighs their concerns. Consider not asking them for their registration information until very much later in the process when they are more committed, or when you have already proven value to them. For example, let them download a free trial to your product, and after they have downloaded it, ask them for their contact information to activate the trial. A/B Testing and experimentation With something as important as visitor registration, it is very important to optimize the conversion rate. You are likely to find that you will trade off between more customers registering, but fewer overall trials if you place registration as an early requirement. Or you could opt to get more trials, but fewer customers registering because you placed registration later and/or made it more optional. To find out which of these trade-offs results in more overall conversions to the next stage after trials, we recommend using A/B testing, where you try both options out in parallel, dividing half the site visitors to go through on path, and the other half through the second route. 12

13 We also recommend similar types of experimentation with different motivational elements for other parts of your sales cycle, and then tracking conversion rates to find the ones that work best. Step 4: Continuous Improvement It would be a mistake to think that once the process has been designed and implemented that it will not need further attention: As soon as you fix one part of the process, you will (inevitably) move the blockage point to somewhere else in the process. You may need to double revenue next year, and want to understand how the process can scale to achieve that. You may be wanting to get a better yield out of the process Like most things in business, this process needs regular attention and management. In this section, we will give you some ideas on how to structure a regular brainstorming process. This meeting should not be thought of as the usual weekly pipeline review. Instead it should be structured as a brainstorming session, where the goal is to conjure the maximum amount of creative thinking. We recommend holding a quarterly meeting that brings together the CEO, VP of Marketing, VP of Sales and any other interested constituents. The following topics should provide you with the key questions to stimulate the creative process: Blockage Points - Where are our blockage points? Brainstorm possible solutions using methodology in Solving Blockage Points described above Conversion Rates - Review the metrics, starting at the end (Bookings), and working backwards. Look at each step, and review conversion rates. Brainstorm to see if there are creative ways to improve conversion rates. Throughput - Ask the question Why can t we quadruple the overall throughput (number of prospects at each stage)? Cost of Customer Acquisition - Look at the overall cost of acquiring a customer, and ask whether there are cheaper ways to perform each step. For example, can we replace some of the outside sales function with cheaper inside sales people? Duration - Look at how long it is taking to complete the whole sales cycle, and ask if there are creative ways to shorten any of the individual phases. As preparation for the meeting, it is useful to have the following documents: The original diagrams that show the customer-centric Buying Cycle, and the company-centric Sales Cycle. These ensure that you have an easy way for all participants to see the overall process and remind them of where the issues are. Metrics and reports that show the throughput and conversion rates for each stage and the trend lines. 13

14 Conclusion By building a lead generation engine that is systematically designed to take suspects and convert them to customers, you are able to decrease the marketing and sales as a cost of sale while increase the overall profitability of your company. It provides the following attributes: Scalable, so it can be cranked up when needed Automated where possible, so that it requires minimal manual intervention Instrumented with a Dashboard that provides Key Performance Indicators Levers that can be pulled to grow sales which are well understood There is a clear understanding of costs and returns Marketing is tightly aligned with sales Every step has a clear purpose of moving the prospect further down the process, and leads directly to a subsequent step The companies that will emerge on the fastest growing companies list over the next decade are those that can quickly and intelligently map the sales process to reflect the new way their customers buy. While inside relationships and sales expertise differentiated companies in the past, the web 2.0 world dictates that leading edge companies need to have a unified lead generation engine that crosses and aligns marketing and sales. With an engine that combines the power of both disciplines, sales and marketing will fire on all cylinders and use automation tools to gather intelligence about prospects and then bring relevant conversation that accelerates them through the buying process. Companies with this new revenue engine will run more efficiently because their sales team will be focused on prospects that have been pre-qualified and are ready for sales engagement. Conversely, companies with sales and marketing operating as separate silos will have their reps wasting more time on prospecting rather than closing deals. The new revenue engine will also drive a clearer ROI picture from the money these companies invest in marketing and lead generation. Not only will they be able to develop a profile of prospects based on web activity, they will also have the ability to nurture new prospects by automating follow-up with relevant content at the time when their prospect is wanting it and establish triggers that determine when a prospect is ready for hand-off to sales. Finally, these companies will emerge as more attractive options to investors and shareholders because they will have more predictive pipelines. The ability to identify behavioral patterns of buyers, combined with automation tools that systematically manage the handling and care of all leads, will help these firms deliver consistent growth rather than sporadic spikes on a quarterly basis. 14

15 What Is Inbound Sales? Inbound Sales focuses on aligning the steps in the sales and marketing cycles with those in the buying cycle. This is accomplished by leveraging technology, process improvement, and knowledge to effectively and efficiently collaborate with the most appropriate individuals both internally and externally. In traditional sales and marketing (i.e. outbound) systems, companies focus on finding customers. They use techniques that are poorly targeted and that interrupt people; these include cold-calling, print advertising, T. V. advertising, junk mail, spam and trade shows. Inbound Sales involves marketing focused on becoming found by desired customers. By leveraging the web 2.0 and sales 2.0 tools, Inbound Sales results in increased communication and collaboration between sellers and buyers, and within selling teams. The new Inbound Sales environment is heavily dependent upon technology (including Web 2.0 offerings) to do everything from routine contact and account management to increasingly sophisticated opportunity management and prospect collaboration. Inbound Sales has changed the way sales people sell and consumers/buyers buy through the proactive and visible integration of both the knowledge and the measurement of the buying cycle into the sales cycle - all done via technology-enabled communication and collaboration (between the two cycles). With proactive and visible integration of the buying cycle into the sales cycle,these two dimensions of technology-enabled collaboration and buyer behaviour integration change the way salespeople sell and consumers buy. By implementing this Inbound Sales process, companies are able to align the sales and customer buying processes, and in doing so, increase sales productivity by up 50%. Who We Are Inbound Sales Network, based in Toronto, Ontario, merges leading sales and marketing expertise into a single practice. We bring these two often conflicting perspectives together to create integrated strategies and tactics around winning new customers and expanding current customer successes for our clients. We help Business to Business and Business to Consumer businesses generate leads, integrate sales and marketing efforts and increase revenue. We work for companies in different capacities depending on their unique needs. For some, we act as an extension to the team of small to mid-sized companies that have products to market and sell but are in the process of staffing up and getting their marketing infrastructure in place. Others may not be quite ready to staff a full-time marketing resource, yet have lots of marketing heavy lifting to do in the meantime. And in many cases, some simply need a partner they can trust to fill in when necessary. Our approach adds up to executive-level service, tailored solutions that work, and simplified internal communications. This agency model is the best approach for ensuring marketing and sales ROI. 15

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