In our last post, we provided an overview of how to define success in lead generation programs. Today, we'll go into more detail on the three areas on which to focus: quantity, quality, and cost.
Quantity
If an organization has five sales people, each of whom is expected to close a $100,000 sale each month, the lead generation activities need to deliver 33 to 100 interested leads per rep into the top of the funnel each month. Therefore the total objective is 500 interested leads each month.
It is impossible to overstate the importance of having the sales and marketing leaders work together to agree on objectives. Furthermore, we recommend a wide-open approach that involves all constituents in defining what a “quality” lead is, setting objectives, and agreeing to all aspects of the lead generation function. Invite field sales, inside sales, marketing management, copywriters, and anyone else who contributes to the process to work together, communicate openly, and understand deeply what the numbers mean and what the quantity expectations are.
Quality
We chose to use the nomenclature
“Contacts/Interested/Pre-qualified/Qualified/Closed” for our example. Sales and marketing must mutually agree to
the definitions of what constitutes a lead or prospect at each level of the
funnel. The best target type of lead for
marketing lead generation activity is to deliver interested leads.
Contacts – or “suspects” -- are not sufficiently interested and will
waste salespeople’s time. At the same
time, in our experience, using marketing or an outside firm to deliver live
appointments or qualified prospects is too expensive, and often yields
questionable results, as the people tasked with qualifying/disqualifying from
interested leads have no vested interest in the final sale, and often “throw
the prospect over the wall” to the sales organization while claiming
success. We recommend that sales and
marketing mutually agree to define the quality objective as “leads who have
self-identified and have expressed direct interest in what our products can do
for them… or better.”
Again, the importance of mutual definition of “quality”
cannot be exaggerated. Even the tiniest
disagreement or misunderstanding can grow into a canyon between sales and
marketing when quota and revenue pressures mount. It’s critical for sales and marketing
leadership and employees to get together, discuss objectives and definitions
openly, and commit to regular reviews of both their results and their
assumptions.
Cost
Traditional marketing methods – direct mail, trade shows, and
cold calling – will typically deliver interested leads for around $675
per lead. Online marketing methods, when executed by experienced digital
marketers, can generate interested leads for between $50 and $100 per lead. Therefore, the final objective to be agreed
between sales, marketing, and (now) the budget gatekeepers, is to deliver
quality, interested leads, at less
than $100 per lead.
From the WinGreen Marketing Systems white paper, 21st Century Marketing for Effective Lead Generation:
The marketer of 1995 might conduct a
direct mail campaign to a list of 50,000 people at a cost of $0.75 per name and
address, $2.50 per color printed promo letter, $2.00 per insert, $1.00 for
postage, and $0.50 per mailing house drop -- $337,500 for the campaign (without
the telephone follow-up, if outsourced) – and get a 1% response rate (500
responses). That’s $675.00 per
“interested lead”.
The 21st Century marketer
prepares PDF versions of collateral, builds interactive, informative,
drill-down web pages, creates professional quality video and audio, and adds
21st century marketing assets like white papers, podcasts, webcasts, and online
surveys. Thousands of interested potential
leads opt in to more communications.
Thousands more are offered marketing assets in email campaigns and
subsequently self-identify. Digital
marketing assets are passed along by recipients, leading to more opt-ins. The typical 21st century use of digital
marketing assets allows the marketer to conduct a campaign to thousands of
contacts, deliver them an invitation to download a marketing asset of interest,
and receive perhaps 500 interested lead responses for about $50,000.
Setting an objective of $100 per interested lead is a
reasonable goal for most organizations in technology businesses. As we showed in the above example,
organizations that run in-house campaigns very efficiently can deliver
interested leads for a cost within the range of $80 to $150 per lead.
In our example of five sales people, each of whom is expected to close a $100,000 sale each month, the economics of online lead generation are quite compelling. We noted in the example that it would take an average of 100 interested leads (at a cost of $100 per lead) to yield one closed sale (at $100,000). Therefore the value of each interested lead is 100,000/100 = $1000. Since marketing costs are already factored into the financials and income statements, it’s fair to say that the incremental cost of $100 per lead yields incremental revenue of $1000, for a return on investment of 900%.
Economically, then, online marketing methods like content marketing, inbound marketing, and email marketing are far superior to old-school physical-world methods like direct mail, events, and mass media. The exact numbers, ratios, and dollars may vary quite a bit, but the logic is inarguable. Online marketing reaches your target buyers more efficiently, more effectively, and more affordably than traditional marketing.
Economically, then, online marketing methods like content marketing, inbound marketing, and email marketing are far superior to old-school physical-world methods like direct mail, events, and mass media. The exact numbers, ratios, and dollars may vary quite a bit, but the logic is inarguable. Online marketing reaches your target buyers more efficiently, more effectively, and more affordably than traditional marketing.
