What is Effective Lead Generation?
Effective lead generation is the successful achievement of
objectives for quantity, quality, and cost of new business leads delivered
to the sales force for follow-up and closing.
Note that all three objectives for lead gen must be met in order to
consider the effort to have been effective.
Further, we recommend that these objectives be mutually
agreed upon between the marketing organization and the sales organization. Too often we see organizations where the
marketing group says “We did our part” only to have the sales team say “We
aren’t getting enough good leads”.
Most sales organizations use a common vernacular for
describing their pipeline or “funnel”.
Typical labels describing phases or level of quality of leads would be:
- Contact =>
Interest => Evaluation =>
Qualified => Win/Lose
- Suspect =>
Prospect => Qualified Prospect =>
Close/Lose
- Contact =>
Interested Lead => Pre-qualified =>
Qualified =>
Close/Lose
For the purposes of this illustration, let’s use the last
nomenclature, along with the following details.
“Contacts” are known entities that may or may not be within the target market. Examples would be badge swipes or business cards from trade shows or contacts from individuals’ previous jobs or perhaps purchased contact names. “Interested” leads are people from within the target segment(s) who assertively demonstrate an explicit interest in learning more about the company’s products/services/industry, but haven’t yet necessarily shown interest in a purchase. Examples would be people who attend a webcast on the company’s area of expertise and are from the target segment. “Pre-qualified” is typically defined as “Interested plus is a decision maker or strong influencer plus expresses direct interest in the company’s product (possibly through an evaluation or demonstration) plus agrees to take an in-person sales appointment.” “Qualified prospects” are decision makers with authority to purchase plus the budget in place to purchase plus a demonstrated need for the product/service plus an explicit agreement to make the purchase within a reasonable (usually no more than 90 days) timeframe.
Most business-to-business, large-ticket technology companies
(i.e. those with individual transactions of $25,000 to $500,000) should expect
ratios approximately like those in Figure 1 (below).
Figure 1
In other words, to make one technology sale of $25,000 to
$500,000, the sales organization should expect to win three out of every five qualified prospects, convert one out of
every three prequalified prospects into
qualified prospects, and get fifteen pre-qualified prospects out of every 100 interested
leads. The net is that it takes 33.3 interested
leads to create a single sale.
(Obviously, each ratio can be either better or worse at each individual
organization, but this diagram serves to illustrate the orders of magnitude of
funnel economics.) We've seen wide-ranging results from our clients, spanning from 30:1 to 150:1. Factors affecting the funnel-nomics ratios include type of product being sold, organization of sales force (inside vs. outside), effectiveness of sales in follow-ups, and even seasonality.
Since we earlier defined effective lead generation as
the successful achievement of objectives for quantity, quality, and cost, we can determine the mutual
objectives for marketing and sales in the next post.
_________________________________________________________________
Want to learn more? Get the full-length white paper, Defining Success in Online Lead Generation -- Using Content Marketing to Grow Sales Pipelines at http://www.wingreenmarketing.net/Pages/WPDefiningSuccessinOnlineLeadGeneration1.aspx.
