The Cost of Not Nurturing Leads

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1 The Cst f Nt Nurturing Leads The Cst f Nt Nurturing Leads The legacy yu are stuck in and the steps essential t change it Lisa Cramer President LeadLife Slutins, Inc Cpyright. LeadLife Slutins, Inc. 1

2 The Cst f Nt Nurturing Leads It s a challenging time mre s than I can remember frm a sales and marketing perspective. Buyers have changed their prcess when buying prducts and services. The leverage in the equatin between sellers and buyers has changed. The sales prcess has changed. Many in charge f sales haven t acknwledged it, r are afraid t pull back frm ld ways. Nt t lng ag, it culd be said that salespeple drve leads thrugh the sales cycle. Tday it seems that this has becme harder and harder t d. Nt t mentin that the cst f selling is much mre expensive than befre. Buyers are nw the pwer brkers in the sales cycle/buy cycle equatin. Due t the Internet, they nw have the ability t thrughly research the subject matter, including each and every prduct r service that meets their needs. As part f this, they can als nw get all the gd and bad infrmatin psted nline abut the prduct r service, and abut the cmpany and its perfrmance e.g., hw they treat their custmers. It shuld be n surprise then that the sales cycle has als changed, r that the buy cycle nw determines the verall prcess. S, what d cmpanies need t d in rder t change as well and meet this new selling prcess accrdingly? Mre imprtant, what legacy exists within yur current marketing/sales prcess and what is that legacy csting yu? Hw d yu change t take advantage f the new apprach and increase sales and revenue? We talk t s many cmpanies that have a current sales and marketing prcess that has evlved ver the years. This prcess has wrked just fine in the past, but with the ecnmic times as they are and with the lwered effectiveness f sales and marketing, it s becming apparent t them that smething must change. Althugh every cmpany has its wn unique spin n the prcess, the legacy we mst ften see ges smething like this: EXAMPLE: Leads are generated thrugh campaigns r tradeshws (r ther types f marketing prgrams). The leads are immediately (smetimes manually, smetimes autmatically) put int a CRM system r series f spreadsheets. They are then distributed t the sales reps accrding t distributin rules ften based n territry r vertical. Next, sales reps fllw up n the leads (accrding t industry statistics, reps are really nly fllwing up with 20% f the leads they re given we ll discuss why later in this paper). "An estimated 70-90% f leads generated by marketing are never fllwed-up with by sales." - Marketing Sherpa 2009 Cpyright. LeadLife Slutins, Inc. 2

3 The Cst f Nt Nurturing Leads The sales rep makes a few calls t his r her chsen leads and then mves n. Sme reps will als wrk n generating and surcing their wn leads. Sme cmpanies require it; sme reps just feel better ding it since they trust their wn leads ver thse prvided by marketing. Sme small percentage let s say that less than 15% becme qualified leads. Of the qualified leads, 80% becme frecastable pprtunities. Then 20% f thse leads clse. Meanwhile, marketing tries t gain visibility int where the leads they generated went where in the sales cycle mst ften with n success. Accrding t CSO Insights' 2008 Sales Perfrmance Optimizatin study, ver 50% f sales executives surveyed reprted that their sales team needs imprvement at nurturing their wn leads. Marketing is asked t keep generating mre leads because the sales reps say they dn t have enugh t wrk n. Yet marketing s lead generatin budget is cut because n ROI can be fund. At the same time, the cnsensus is that the cmpany is nt selling enugh, s new sales reps are hired they need mre feet n the street. This legacy prcess f ding business is extremely cstly. Outside f the enrmus inefficiencies listed abve, the huge csts seem t be the amunt f mney spent n new lead generatin, the cst f lsing r leaking leads thrughut the sales prcess, and finally the cnsiderable cst f hiring and training mre sales reps. Let s analyze each f these elements and then we ll lk at what t d differently that allws a cmpany t get away frm the legacy prcesses that have evlved and drive mre sales with less. As part f this example, we ll apply sme basic csts alng the way. Of curse, csts are different fr every cmpany based n their market, what they sell, hw they sell, etc. But we ll fllw a very simplistic scenari. EXAMPLE: Leads are generated thrugh campaigns r tradeshws (r ther types f marketing prgrams). Let s say cst per lead (i.e., smene wh registered t get smething whitepaper, etc.) is $45 and the cmpany generated 100 leads in this campaign ttal cst f ne campaign - $4,500. The leads are immediately (manually r autmatically) put int a CRM system. They are then distributed t the sales reps accrding t distributin rules ften based n territry r vertical Cpyright. LeadLife Slutins, Inc. 3

4 The Cst f Nt Nurturing Leads Next, sales reps fllw up n the leads (remember that accrding t industry statistics, reps are really nly fllwing up with 20% f the leads passed t them). 20% f 100 leads = 20 leads being wrked by the sales reps 80% f 100 leads = 80 leads are nt being wrked (cst - $3,600 f marketing's lead generatin dllars are ptentially being wasted) The sales rep makes a few calls t his r her chsen leads and mves n. Sme reps will als wrk n generating and surcing their wn leads, since they trust them ver the nes prvided by marketing. Average cst per sales rep = $100,000 a year Training time per sales rep - n average it takes six mnths r less ramp-up time fr a new sales rep = $42,000 (using 5 mnths) in training yur reps and getting feet n the street t start selling yur prduct r service. Plus 5 mnths f pprtunity csts nt selling prducts r services. Time spent surcing their wn leads = 1.5 hurs per 8-hur day equals almst 20% f each sales rep s day (accrding t the 2008 Sales Perfrmance Optimizatin Survey frm CSO Insights) Let s say each sales rep wrks 50 weeks ut f the year: 5 days per week = 250 days per year, assume $400 per day per rep Cst f surcing wn leads - $80 per rep per day, ttal cst f rep surcing wn leads = $20,000/year Cst f nt selling unknwn nly 58.8% f sales reps are making their quta (accrding t the 2009 Sales Perfrmance Optimizatin Survey frm CSO Insights) which is dwn cmpared t the 61.2 percent f sales reps that were making their quta back in A small percentage f leads less than 15% becme qualified leads. 20 leads wrked, 15% becme qualified leads = 3 Of the qualified leads, 80% becme frecastable pprtunities. 3 qualified leads, 80% pprtunities = 2.4 pprtunities Then 20% f the frecastable pprtunities clse. 20% f 2.4 pprtunities =.48 sales clse Assume $20,000 per sale = $9,600 in sales clsed 2009 Cpyright. LeadLife Slutins, Inc. 4

5 The Cst f Nt Nurturing Leads Marketing tries t gain visibility int which leads they generated went where in the sales cycle mst ften with n success. Marketing is asked t keep generating mre leads because the sales reps say they dn t have enugh t wrk n. Marketing s lead generatin budget is cut because n ROI can be fund. The cmpany is nt selling enugh, resulting in new sales reps being hired f curse, they need mre feet n the street. Cst $100,000 per rep, per year Is this truly the best use f yur sales and marketing resurces? Is this the best way t generate revenue? The numbers are astunding. The sales and marketing legacy prcess is cstly and nt effective r efficient. Clearly, the prcess must change fr cmpanies t survive and thrive in tday's challenging ecnmy. But ne thing is a cnstant - the bjective is always t sell mre. Hw d we sell mre with less? The answer seems bvius - we must change ur sales and marketing prcess t imprve efficiencies and stp the leakage. Belw is an utline f steps that can be taken t change the prcess. Step 1: Marketing s respnsibility must evlve t delivering sales ready leads. Here is where cmpanies say, kay lead quality is what we are after. After all, perceived pr lead quality is why sales reps bypass s many marketing-generated leads in the first place. Marketing must nw assume it will be measured nt n the quantity f leads but n the quality f leads passed t sales. Marketing and sales will als get tgether and define fr their cmpany, what determines a sales ready lead. With this apprach, marketing will nw take mre respnsibility fr the lead lifecycle meaning that its jb des nt stp with just the initial inquiry. Nw, a tracking, scring, and nurturing prcess must be defined. With such a system in place, Marketing nw has an pprtunity t gain visibility int the leads generated. Mst imprtantly, marketing als has the pprtunity t salvage sme percentage f the 80% f leads and lead generatin dllars left t die. T identify a sales ready lead, marketing must ensure that it can effectively track each lead and frm where it came, as well as what behavir, demgraphics, survey answers, etc. can be tracked and scred. Imprtantly, marketing must als determine specifically when a lead is sales ready and what happens when it is nt. Certainly, technlgy cupled with simplistic prcesses will help every marketing department get started. Althugh it can becme a cmplicated and granular prcess ver time, we advise that cmpanies start small with ne campaign. Mst likely, after a few 2009 Cpyright. LeadLife Slutins, Inc. 5

6 The Cst f Nt Nurturing Leads mnths, things will be tweaked. Scres will be realigned, imprtance changed, views int the data revised, nurturing tuned and mre. Step 2: Sales reps will receive fewer, but better quality leads At this step, sales will need t understand that they might receive less leads, but they will be f better quality. In thery, if Step 1 wrks as it shuld, sales reps will receive leads that have already entered the buy cycle. Previusly, sales reps had t d sme wrk t even see hw many f the leads passed t them frm marketing actually were in the buy cycle, and f thse in the buy cycle, hw many had the ptential t becme a frecastable pprtunity. If a lead exhibits behavir and has met the crrespnding criteria t make it sales ready (with the criteria having been defined by sales and marketing), then in thery it shuld be farther alng in the sales cycle, smething that will minimize sales cycle duratin. If the lead is nt yet "sales ready" sales shuld tss the lead back int the "nurture" bucket fr further cmmunicatin frm that cmpany t stay tp f mind with the prspect. Certainly, we are nt saying that every lead sent frm marketing t sales will buy, but we are saying that sales shuld be able t fcus n selling versus early lead generatin/qualificatin with each lead. Utilizing a sale s reps skill set t sell rather than splice that time with lead generatin and pre qualificatin, shuld increase the number f deals clsed and revenue gained. Step 3: Leads that are nt ready shuld stay in the nurture bucket. The majrity f leads really suspects that start interacting with a cmpany typically either at a tradeshw r nline will nt be a sales ready lead. Accrding t DemandGen Reprt, 80% f un-wrked leads will buy frm smene ver the next 24 mnths, meaning that they are wrth cntinuing t interact with even if they are nt yet ready t sign n the dtted line. Thse leads need t cntinue t be nurtured s that they stay aware f yur cmpany's prducts and services, s that yur cmpany remains "first in mind" when they are finally ready t buy. The Aberdeen Grup reprted in its 2008 Lead Nurturing: The Secrets t Successful Lead Generatin Analysis reprt that 56% f all respndents indicated that they currently lack a frmal lead nurturing prgram t supprt and nurture lng-term pprtunities Cpyright. LeadLife Slutins, Inc. 6

7 The Cst f Nt Nurturing Leads T effectively nurture, marketing must have a plan in place. They must have materials f interest t share with their leads and they must cme up with reasns t stay in tuch. It is imprtant t think f different ways t interact in rder t increase the verall effectiveness f yur nurturing prgram. The key t successful nurturing is keeping yur cmpany s name, expertise, and prducts and services "frnt and center" with yur leads. Sme effective types f nurturing culd include: Drip marketing s (infrmatin pushed ut ver perids f time) linking back t whitepapers r articles. Peridic e-newsletters highlighting new prducts r advances. Market research questins t understand mre abut the marketplace s needs. Phne interactins t ask questins abut interests and needs. Direct-mail pieces driving leads t persnalized landing pages. Step 4: Greater revenue is generated and that is the ultimate gal. What else is there t say? It s all abut revenue. But with tday s ecnmy it s als abut generating mre revenue with less that is everyne s reality. Imprving the efficiency and effectiveness f sales and marketing prcesses is nt magic, nr is it academic r theretical. And it is within every cmpany s reach. We just have t learn t adjust the legacy sales and marketing prcess that n lnger applies t Abut LeadLife LeadLife Slutins is a prvider f n-demand lead management sftware that generates, scres and nurtures leads fr B2B marketers. LeadLife ffers flexible and easy-t-use marketing sftware that enables marketers t autmatically track, scre, priritize and nurture leads, thereby increasing the value f lead generatin dllars (nline and ffline). LeadLife enables rganizatins t wrk smarter, nt lnger, increasing marketing ROI while maximizing sales resurces. Fr mre infrmatin n LeadLife Slutins, visit r call Cpyright. LeadLife Slutins, Inc. 7

The Cost of Not Nurturing Leads

The Cost of Not Nurturing Leads The Cost of Not The legacy you are stuck in and the steps essential to change it. Lisa Cramer Co-Founder & President LeadLife Solutions lcramer@leadlife.com 770.670.6702 It s a challenging time more so

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