Lead Recycling : 5 Steps to Increasing Return from B2B Demand Generation Programs A Connect Direct White Paper Sponsored By:
Background Modern corporations have long been accused of focusing on the short-term, to their detriment. Nowhere is this tendency more acute than with technology companies. High-tech organizations have short-term horizons for a number of reasons: Many are private and depend on short-term results to prove viability and therefore ensure their ongoing funding Many are competing in early-stage markets and need to get in front of their competitors quickly before consolidation and attrition occur in the marketplace Technology changes rapidly, and tech companies often have windows of opportunity to realize revenue from products or services before they become obsolete. This short-term outlook is inevitably reflected in a company's demand generation strategy. Many tech marketers don't feel they have the luxury to build a customer base over the long term, so instead of cultivating and nurturing prospects, they focus instead on sales-driven, tactical marketing programs designed to seek out "hot leads". The hidden cost of short-term marketing A myriad of challenges and problems can occur when a company focuses its demand generation activity solely on driving short-term sales activity: It's difficult if not impossible to target a message exclusively to those prospects who are ready to buy. Direct mail lists, e-mail lists, Web sites and other media enable a company to focus on specific job titles, industries, even demographic and psychographic criteria, but "budgeted to buy (insert your product or service here)" isn't among them. Many high-tech products are first-of-breed solutions and/or of a complexity that demands a more long-term, consultative selling process. Prospects may simply not be ready to buy a solution because either 1) they don't know such a solution exists, or 2) they may not even be aware they have the problem in the first place. Focusing on only the most qualified prospects leaves many potential (albeit, more long-term) deals on the table. A potential customer might have precisely the problem that a particular product or service solves and are anxious to solve that problem, yet may not feel as though they're ready to buy and so fail to respond to the campaign. Similarly, even if less qualified prospects do respond to the campaign, they'll likely be ignored by sales reps focused exclusively on meeting a monthly or quarterly quota and who therefore don't want to spend the time cultivating more long-term opportunities. reproduced, or republished without express written permission of Connect Direct. 2
Generating hot leads is expensive. A typical cost per lead for B2B high-tech products can range from $50 to $200. Because hot leads comprise only a small percentage of the raw inquiries from any campaign, an effective "cost per hot lead" can be well over $1,000. In addition, response rates from tactical campaigns are likely to be lower for the reasons outlined above so companies need to spend more money to generate relatively few opportunities. Lastly, because the campaigns weed out all but those prospects in active-purchase mode, it leaves the sales pipeline empty once those deals have been either closed or eliminated. This requires a constant re-loading of the sales funnel with new, expensive leads. Generating more leads at a lower cost An effective demand generation strategy is one that not only captures hot leads but also maximizes the value of more long-term prospects that otherwise would be ignored by the sales force. We call this approach Lead Recycling. Lead recycling requires the following changes in strategy: Casting a wider net to include those prospects not actively in purchase mode Building a marketing database of both short- and long-term prospects that at minimum have the specific problem that a company's product or service can solve, or meet specific demographic criteria that suggest that the problem could occur in the future Focusing campaigns and resources on both generating new leads and nurturing existing prospects Note that this doesn't require re-educating or re-focusing the sales force. Sales reps are driven by quotas, and no argument short of financial incentive will convince them to focus on anything but those activities that drive short-term deals. No matter. With lead recycling in place, sales reps can be fed a constant diet of short-term, "sales ready" prospects at the same time marketing is generating both short- and long-term opportunities at a much lower cost per sale. Furthermore, lead recycling can increase sales productivity by eliminating the need for salespeople to waste valuable time weeding through unqualified leads. Properly implemented, lead recycling can dramatically improve demand generation ROI by: Increasing response rates Lowering the cost per sale Decreasing the scale and cost of outbound demand generation campaigns Converting more raw leads to qualified opportunities Eliminating missed opportunities due to lack of timely follow-up Reducing the constant demand from the sales force for new leads reproduced, or republished without express written permission of Connect Direct. 3
5 steps to increasing return from B2B demand generation programs The following outlines 5 key steps to implementing an effective lead recycling program: 1. Establish a formal lead qualification infrastructure Historically, lead qualification has been the province of a telesales department (as small as one person) whose sole objective is to score, qualify, and requalify incoming and existing prospects, and thereby generate new, qualified opportunities for the sales force. Telesales still has a role to play, but relying 100% on telesales for lead scoring and qualification has its limitations: No matter how proficient your inside sales reps, some prospects will be impossible to reach via phone or e-mail in the 2-3 attempts that most companies afford a new lead Timeliness of response will be inconsistent. If a major new marketing initiative dumps a pile of new leads on a telesales group, chances are that any kind of follow-up to those leads will drag out accordingly. Telesales is expensive and difficult to scale. If demand generation should ramp up significantly, scaling telesales bandwidth to match lead volume - hiring and training new reps - can be costly and cumbersome. Fortunately, the emergence of new marketing automation technology makes it possible to score and qualify leads automatically (see Page 8). These systems - most of which integrate seamlessly with CRM and SFA solutions - can complement existing telesales groups and enable marketers to: establish standardized, rules-based criteria for scoring leads ensure that all inquiries are qualified and responded to immediately, regardless of lead volume, and send only "sales ready" leads to the sales force, increasing productivity. The additional strategies outlined below are pointless without first putting a standardized lead qualification process and infrastructure in place. Without it, you'll be generating hundreds of unqualified leads that will be roundly ignored by the sales force, wasting valuable marketing resources by creating sales leads nobody wants. 2. Use offers that educate rather than sell Examples of offers that sell include: free demos, free trials, and purchase discounts. The only reason a prospect will respond to one of these offers is if he or she recognizes the problem, wants to solve it immediately and is interested in the solution. That's asking a lot from your campaign. Inevitably, the result will be an extremely low response rate from all but a small group of very highly-qualified prospects. Examples of offers that educate include: white papers, case studies, analyst reports, and podcasts. An effective, educational offer says, "Here's how to solve a problem" vs. "Here's why you should buy our product." reproduced, or republished without express written permission of Connect Direct. 4
Presented with an educational offer, prospects who are ready to buy will respond anyway, but in the meantime, you'll also generate leads from companies or individuals who at minimum have the right problem (the one your product or service can solve) and want to do something about it. 3. Cast a wider net Typical of tactical, sales-driven campaigns are "target account" programs that involve building a list from scratch and sending dimensional mailers, complete with noise chips, golf balls, headsets, and other attention-getting devices to key executives at a handful of select companies. Response rates from these campaigns can be quite high; cost per lead is usually astronomical. A more cost-effective approach is to blend more targeted, "push" campaigns such as direct mail and e-mail with broader, "pull" campaigns such as paid search (SEM), content syndication, and online advertising. These broader campaigns will net a wider range of prospects at a lower cost, and also help establish enough of an online presence so that any prospect researching or evaluating a particular product category (or business problem) is more likely to engage with your company, no matter when that search occurs. Hot Leads (Ready to Buy) Interested, Not Budgeted Not Aware of Solution Don't Recognize the Problem Fig. 1. Hot leads represent only one small subset of the total lead universe. Offers that educate, rather than sell, can serve to attract the much larger subset of prospects that have the problem your solution solves, but just may not be aware of either the issue or that your solution exists. Content syndication (posting white papers, case studies, and similar content on third-party sites and online networks) is an example of a program that can drive a consistent stream of low-cost leads. Sales reps may not be fans of such programs because most prospects who download white papers aren't expressing an explicit interest in a product, but content syndication is an excellent way to build your marketing database, engage with prospects in the early stages of research, and generate a pool of contacts that can be nurtured until qualified enough to pass on to sales. reproduced, or republished without express written permission of Connect Direct. 5
4. Establish a regular dialogue with existing prospects Few quota-carrying sales reps will spend any amount of time nurturing long-term leads. Telesales can play this role with periodic phone calls, but their impact is limited (see above). Here again, technology comes to the rescue. Today's marketing automation platforms make it possible to automate the lead nurturing process, by setting up an automated stream of e-mail and other communication to each and every prospect - communication that can be customized based on an individual prospect's interest area, response history, job function, where he or she is in the sales cycle, or any other rules-based criteria. These follow-up e-mails should be designed to: keep your company "top of mind" for when the prospect is ready to buy advance the prospect along the sales cycle collect more and more information about each individual prospect (a process known as "progressive profiling") E-mail newsletters serve this function very well, though they can be resource-intensive. Blogs (utilizing an e-mail subscription feature) can serve the same function with less hassle and without being tied to a regular publishing schedule. Qualified Opportunity Telesales Follow-up Blog or Newsletter Webinars Raw Inquiry Lead Scoring & Qualification Promotions Fig. 2. Following initial lead qualification, an effective lead recycling program (including blogs, newsletters, Webinars, special offers, telesales follow-up) can serve to uncover new sales opportunities without the expense of generating new leads. 5. Create "next step" offers that requalify existing leads Promotional events like Webinars, if used for lead generation, can tend to over-qualify leads by limiting response to only those prospects interested enough to dedicate the time required of such an event. As offers made to existing prospects, however, they can serve an important role reproduced, or republished without express written permission of Connect Direct. 6
as motivators for prospects who responded initially to information offers and now feel ready to take the next step. Similarly, offers like free trials, consultations, audits and the like would scare off all but the most qualified prospects in a lead generation campaign, but as part of a lead recycling strategy, can be effective in helping to flag pending decisions within your existing database. Keep in mind, however, that it's not imperative for every successive offer made as part of a lead nurturing effort be one that requires increased commitment from the prospect. Educational offers such as white papers or podcasts can work just as well. Simply by getting existing prospects to re-engage with your company over time gives you the opportunity to collect more profile information and spot opportunities when they arise. A long-term approach for long-term success Lead recycling requires a fundamental change in marketing philosophy, from a short-term, tactical approach to one that takes a more long-term, strategic view. Ironically, taking a more long-term approach to marketing, rather than extending the sales cycle, tends to create a greater number of short-term sales opportunities. This is because it doesn't rely on the ability of prospects to self-qualify, to determine that your product or service is a good fit solely on the basis of your marketing message and their perceived needs. Effective marketing strategies that don't focus solely on generating hot leads typically end up capturing not only those same opportunities, but also other prospects who don't perceive an immediate need but might well become short-term opportunities given the benefit of a conversation with a company's sales force. Taking the long-term approach is less expensive. It lowers the cost per lead by generating more inquiries for the same or fewer dollars, and it decreases the demand for new, expensive campaigns. In addition, opportunities are being generated from existing leads, rather than relying solely on a constant stream of new inquiries. Lastly, a long-term approach is more effective. Given the complex nature of most technology solutions, few campaigns are successful in selling products or in identifying prospects who are ready to buy. The most efficient use of lead generation programs is to simply identify prospects with the problem or issue that your product or service can solve, and then use other resources (telesales, lead nurturing) to educate and sell those individuals over time. reproduced, or republished without express written permission of Connect Direct. 7
About Connect Direct Named one of the "Top 100 Agencies for 2007" by BtoB Magazine, Connect Direct (CDI) is a full-service agency that specializes in turnkey, integrated demand generation strategies for high-technology companies. Founded in 1990, the company serves a wide range of high-tech and other B2B clients from its offices in Silicon Valley and Seattle. CDI's Lead Recycling solution is a turnkey, managed lead nurturing and marketing automation system that automates and standardizes lead scoring, qualification, and follow-up. Powered by the Marketo marketing automation platform, Lead Recycling is a completely customized, rules-based lead nurturing system that automatically scores, qualifies, and nurtures raw leads, forwarding only "sales ready" prospects to a sales force so they can focus on the most productive and qualified opportunities. All other leads are retained in the system for automated, ongoing e-mail nurturing (perhaps in combination with telesales follow-up) until they meet the criteria a company defines for forwarding to a sales force or to channel partners. For a free consultation on your lead nurturing or demand generation objectives, contact CDI via phone or e-mail at either of the addresses shown below. About Marketo Marketo is the leading provider of sophisticated yet easy on-demand marketing software that helps enterprise and mid-market B2B marketing professionals drive revenue and improve marketing accountability. Marketo's demand generation solutions automate and measure lead management activities - including email marketing, lead nurturing, lead scoring and landing page optimization - to help marketers generate and qualify sales leads, shorten sales cycles and demonstrate results. For more information on Marketo, visit www.marketo.com or call 650-655-4830. Connect Direct Inc. 805 Veterans Blvd., Suite 316 175 Parfitt Way SW, Suite N240 Redwood City, CA 94063 Bainbridge Island, WA 98110 650-306-9060 206-780-0836 650-306-9013 Fax 206-780-0630 Fax www.connectdirect.com info@connectdirect.com Blog: http://connectdirect.wordpress.com/ reproduced, or republished without express written permission of Connect Direct. 8