The Truth About Leads
Chapter 4: Reaping the Value of Long-Term Leads
Too often companies focus primarily (or exclusively) on trying to quickly close short-term leads, not taking the time or effort for appropriate sales lead management. Adopting a method for prospect development and lead nurturing will yield greater dividends than trying to churn through short-term leads.
Table of Contents
- The importance of long-term sales lead management
- A new approach to sales lead generation, management, and nurturing
- Nurturing a long-term lead with CRM strategies
In 1885, William Lever of Lever Bros. said, “Half of the marketing money you spend is wasted—trouble is you don’t know which half.” Unfortunately, there is a good chance that substantially more than half of your marketing investments are being squandered.
Many leads are not followed up by sales, for legitimate and non-intuitive reasons. The legitimate reasons for no follow-up are that the leads are obviously low-end and unfiltered. They may be companies from the wrong verticals, too small to be in the market, or they may be students/consultants who responded to an offer. Non-intuitive reasons include the “I called three times and didn’t get a call back.” Basically, if the lead is hard to work, it is often dismissed. As few as five percent of leads are followed up by sales.
- Long-term leads are mostly ignored by sales as they are not seen as helpful in impacting the current period’s quota.
- Companies that are qualified without immediate interest are ignored by sales and marketing—a huge waste as the expense to identify those that are qualified versus those that are not is often duplicated and the potential benefit lost.
It has always been my contention that time frame on leads should be virtually ignored and that long-term leads are actually more valuable than short-term leads. Let’s review some important considerations about both short- and long-term leads:
- About one-third of short-term leads are actually hot leads. In many cases, these hot lead opportunities are already baked, meaning that these buying companies have already been sold by another vendor. They seem hot initially because they have indicated that they have a short buying cycle, and they are eager to talk. But what these buyers are likely doing is validating a decision already made, or looking to you for what is frequently called column fodder—price comparison after the fact to justify an already-chosen vendor. If your company fairs well late in an evaluation, hot leads can be valuable. However, due to the nature of entering an evaluation late, it’s always wise to carefully pick your battles when it comes to investing cycles in hot leads.
- Short-term leads that are not hot are actually better. These are defined as leads that are within a one or two sales cycle time frame of closing. They require immediate attention, are not working under an RFI or an RFP, and no decision has yet been made.
- Long-term leads provide the opportunity to define, if not manage, the buying process. With these opportunities, the worst case is that you have a great chance at being short-listed, and in the best case you are invited to design the RFP and bake the process in favor of your company and against a late entrant.
Take a look at the models represented in the following tables for an example of the value of best practices in handling short- and long-term leads:
1) Our experience is that inside sales resources (within companies) and their sales forces miss opportunities due to either lack of market identification and/or lack of lead follow-through.
2) Once filtered, the percentage of long-term leads that close should actually be higher.
3) Note the efficiency of nurturing longer-term leads on an incremental cost basis before being turned over to sales (two cycles of contact).
Sales were comparatively easy to find during the salad days of the late ’90s and to some extent even in the mid-2000s. One client I work with kidded that just a few years ago any sales representative who responded to an RFP made plan, and they made club if they spell-checked the response. Since then, the following changes have occurred:
- The market has moved from a buying model based on vision creation—an idealistic approach that works with unjaded prospects—to one requiring proof and value.
- Short-term lead rates have held while long-term leads have dropped dramatically.
- No Decision outcomes have increased dramatically.
In many cases there is not much a sales executive can do about a sales process that ends in No Decision by the target company. The fact that there are more of them today is explained by the following:
- A shift away from user-oriented approval processes to higher level and more committee-oriented decision-making.
- Disenchantment with ROI on past purchases.
- Battening down of the hatches in the face of an up-and-down economy.
In light of these changes, it’s more important than ever that smart companies ensure follow-up on every lead, and infuse within the company the value of long-term leads. Capitalizing on long-term leads is probably the best way to secure the future of your organization, not to mention to reap more return on marketing investment. Short-sighted companies will not fare well; those with aggressive sales and marketing approaches will.
Read the full text of Chapter 4, "Reaping the Value of Long-Term Leads."