Improving Lead Quality for Optimization of Sales Performance
“Efficiency is doing things right. Effectiveness is doing the right thing.” Peter F. Drucker.
In many business-to-business sales organizations, the marketing team is charged with generating leads and starting the sales process, then nurturing the leads until the appropriate time for a hand off to the sales team to close the transaction. Effective collaboration between marketing and sales is crucial to maximize success. Marketing departments are often incentivized directly or indirectly to capture the greatest number of leads. There is some logic to the idea that the wider the lead generation net is thrown, the greater the increase in ultimate sales production. This may not always be the case. Organizations generally have finite resources and are subject to opportunity costs: resources allocated to one set of efforts or activities are not available for other potential opportunities.
A marketing lead generation process may be quite efficient at generating sheer volume of leads; but it may not be effective if it results in a large number of leads that have no need for the product or service, or no intent or ability to buy, and yet require significant marketing or sales resources.
A Harvard Business Review article highlighted the difference in sales efficiency and sales optimization (effectiveness) using an analogy to an automobile – sales efficiency initiatives improve the engine’s horsepower while sales optimization decisions define the direction the automobile will travel. More horsepower is not particularly useful if the automobile is going in the wrong direction. The article cites a consulting study as showing that sales optimization practices have three times more impact on revenue growth than sales efficiency ones.
A lead generating process may be efficient in generating a large number of contacts; but if converting those contacts to actual sales is improbable, the process may not be very effective. These optimization concepts may be applied to an enterprise’s process to improve lead quality by refining the target audience; defining directed content; and rigorous scoring throughout the marketing and sales process.
Refine the Target Audience
Although it may seem counter-intuitive, a sales organization may be able to optimize results by refining and limiting the target audience of its marketing processes.
A Harvard Business Review article relates that a financial services company selling credit products to small businesses used data analytics and testing of it sales processes in order to refine the market targeted by the outbound sales team. The company was able to optimize its processes and achieve the following results:
• Increase profits by 16 percent by reducing the number of industries targeted by marketing and sales in half, emphasizing industries with higher conversion rates;
• Triple the likelihood of a sale conversion and increase profits by 20 percent by changing the time of day of the sales calls; and
• Increase performance across the sales team by implementing specific techniques used by the high achievers.
Defined, Directed Content
Sales organizations can also improve the quality of leads by using well defined and constructed content marketing, using the content can help draw a very targeted audience. Although the content might be promoted widely, the content is generally gated; that is, a potential buyer that responds must provide contact and other required information in order to access the download or participate in the event. Those that respond have an obvious interest in the topic or information, and do so with the understanding and expectation of future contact from the marketing team. Those that have no, or only marginal interest are not likely to respond. In this way, the content can serve to more effectively generate strong, quality leads and filter out others.
Another method of optimization is to use rigorous lead scoring to distinguish high quality leads and filter out those that are improbable sales. The process of lead scoring is dynamic as a lead moves nearer to, or further away from, a purchase decision. Marketing automation and sales acceleration technologies can provide sophisticated lead scoring models that use analytics and data science to track prospects’ behaviors; and score activities such as website browsing (such as the frequency of visits, what pages are visited, the length of time, any downloads, or registration for a seminar or webinar); email engagement (such as when an email is opened, forwarded or replied to); or a variety of other specific actions. These tools can provide the data and the model for a sales organization to assess the strongest prospects and allocate resources accordingly for maximum effectiveness.
Many years ago, Peter Drucker wrote of the distinction between efficiency and effectiveness. Sales organizations are subject to opportunity costs across most activities. Lead generation has a pivotal role in the sales process. Organizations can optimize this process, making it more effective, by incorporating techniques to improve lead quality and thereby increase success.