Are Your Leads Being Followed Up?

The respected Aberdeen Group released the results of an informative survey of 226 B2B organizations in November of 2008 entitled Lead Nurturing: The Secret to Successful Lead Generation that included this disappointing statistic:

“… upwards of 60 percent to 70 percent of leads are never followed up by sales.”

Are you spending a significant amount of money to generate your leads only to have them be ignored by salesmakers?   In the opinion of Ian Michiels, Practice Leader-Customer Management Technology Group at Aberdeen Group,  The most effective way to combat this fact is to focus on and implement a Lead Nurturing program.

Here is how Michiels defines Lead Nurturing:

“Lead nurturing is a relationship-building approach utilizing multiple media (e-mail, whitepapers, telecommunication, seminars, webinars, blogs, collateral, speaking engagements, third-party articles) to support the prospects buying cycle with relevant information and engage in an ongoing dialog until qualified prospects are deemed “sales-ready”  A “sales-ready” lead is ultimately defined by the unique definition of a qualified lead within the organization.  Sales-ready prospects are educated, informed and prepared to make a decision; thus they need to be actively engaged with sales or engaged by call to action marketing messages.  The goal of a lead nurturing program is to support and nurture long-term opportunities with the hope that these prospects may represent future sales.  Ultimately, this requires marketing to take ownership and accountability for nurturing prospects that are not ready to purchase, but may have a defined need, authority, budget or a long-term timeline.”

I have found very few organizations where marketing is accountable for the nurturing of prospects, while only the “sales-ready” leads are fed to the salesmakers.  It is typically, “here are 100 prospect names, go sell them something.”

Do you segment your Leads into “sales-ready” and prospects?  Do you have different processes built for each?  Have do you handle this in your company?

  • Great topic, also covered by CSO Insights and the CMO Council. We blogged about this recently as well.:

    http://www.genius.com/marketinggeniusblog/56/the-gap-more-evidence.html

    Lead nurturing is definitely key and marketing must take ownership until the lead is “ready”. However, without agreement between Sales and Marketing about what data and behaviors lead to which lead rating or score (“readiness”), companies can fall into a trap of “setting and forgetting” their nurturing programs and over automating without appropriate sales intervention with the prospect at the time when the prospect is ready. Lots of systems do a good job of sending and scheduling nurturing emails, but few can provide real-time actionable information to sales so that they interact with the prospect armed with the right information at the right time to make the sale.

  • Actually, the quote above “… upwards of 60 percent to 70 percent of leads are never followed up by sales.” was taken out of context. This statistic came from a 2005 Aberdeen survey and current 2008 research is actually showing that all organizations are reporting significant improvement in lead management practices and performance metrics. This represents a major shift in lead management trends.

    “Respondents indicated that on average, 28% of marketing qualified leads are not followed up on by sales. This is significantly lower than 2005 Aberdeen research that suggested that upwards of 60% to 70% of leads are never followed up by sales. It’s increasingly apparent that the margin of error for weathering an economic downturn is getting increasingly slimmer. The past two years have showed dramatic improvements in lead management practices across all organizations. Companies simply cannot afford to let 60% to 70% of the leads they generate go to waste.”

    The research suggests that improvements over the past 3 years can largely be attributed to growth in lead management automation tools and best practices that stem from a process oriented approach to lead management. I recently wrote an article for CRM Buyer that discuss this in more detail “Is the Ship Really Sinking? B2B Budgeting for Post-Slump Growth” (http://www.crmbuyer.com/story/65547.html).

  • Miles Austin

    Ian, Thanks for the clarification. The improvement you are seeing is indeed encouraging and reflective of both the focus on the importance of leads in this economic downturn and the lead management web tools available. Your referenced article in CRMBuyer provides excellent information on current trends. A key point from your article explaining why this improvement is occuring is :

    “…companies are starting to shift away from using CRM as a pipeline management tool and toward using CRM as a sales enablement and effectiveness tool. What? CRM that’s useful to sales reps?”

    Thanks for the comments and the research you are doing. I look forward to your continued input.

  • Miles, I completely agree that marketing should be accountable for nurturing leads. A lot of leads which are not sales-ready and passed on to sales end up being rejected or wasted when their should go back into a nurturing process till they are ready.

  • A good secret is actually lead management software. It can help you determine if your sales team is really doing something to your leads, such as tracking them. The good thing about them is that they can be customized according to the needs of your business, so you can work from debt leads to insurance leads.

  • Steve Kaye

    First, this is a great topic and has been for years. Leads are one of THE most important (or could be) sources for revenue. Now, trade show leads are tough, especially when notes are limitted. Other lead sources? How many pan out? The answer is that it does not matter because sales (which has a quota) and marketing (which does not have a quota) need to work together on this. If the rep cannot “find the pain” by the end of the call, move on. Richard Erschik article below is terrific. It was sent to me by one of the best sales people that I know a few months back and I have actually quoted from it. Hope that it sheds some light.

    Software Does Not Follow Up Sales Leads, People Do
    ( 08/27/08: Free ) By Richard Erschik

    When it comes to trade show lead follow-up today, the word “ACT” should be considered a VERB. But too many marketing and sales people are treating it like a NOUN and distraction from the daunting task of personal sales lead follow-up.

    The Center for Exhibition Industry Research has identified the #1 objective of trade show exhibitors (and marketers) today to be lead generation. And, their #1 problem is lead follow-up. That’s quite a paradox.

    At the beginning of all of the trade show exhibitor education seminars I conduct for individual companies and trade show organizers across the country, I continually validate the CEIR research by asking the same questions of audiences. When I ask their objective, they reply “leads!” When I ask their problem, they say “follow-up!”

    I know that every marketer and seller reading this has heard, read, or lives in the statistics that continually scream that less than 20% of sales leads ever get followed-up. However, everyone must be thinking that it’s someone else’s problem, when in fact it’s the 800 pound Gorilla in the living room that everyone seems to ignore.

    Why anyone (or everyone) is not doing something about the lack of follow-up in their companies today is beyond me. Unless, it’s for a reason that I hate to admit is true, but becoming more obvious from having made more than 1,000 sales calls on BtoB marketers in small, medium and large companies over the past 2 decades.

    Could it be that the problem of poor lead follow-up simply permits marketing to hit the ball over the net and blame sales for poor follow-up? Then sales lobs the ball back over the net and blames marketing for poor quality leads?

    If that is the reason today, I shouldn’t have to mention who’s winning that blame-game. Just look at the thickness of industry trade publications today. And look at the increasing number of visitor rest areas on trade show floors where exhibitor booths used to be, and you’ll begin to formulate the answer for yourself as to who’s’ really winning or losing. Marketing is losing – BIG!

    How many sales budges have you seen getting cut, due to the lack of ROI? I bet not many. How many marketing budgets? There. I rest my case.

    Instant gratification, that has become normal expectation today, makes one ask for the answer or a quick-fix to the lead follow-up problem that I’ll first allude to with the word CHANGE. Then I’ll be more specific in where the answer lies with reference to the following statement made recently in an eye-opening luncheon presentation by the American Marketing Association (AMA.)

    Overworked marketers might not like to hear it, but they better start warming up to the reality of the following, because it’s as real as 9/11.

    “The sales and marketing disconnect has reached a day of reckoning. Executive management is demanding that sales forces become more effective and that marketing departments help them get there. No more blame-game… No more finger pointing. We are all on the same team, with the same objective: Sell more stuff profitably.”

    If you’re in marketing today and you missed the part in the above about “marketing departments help them get there”, I’d suggest you read the above statement again. Because like it or not, I’m hearing it from every upper management person I talk to in companies today. They expect their marketing department to make it easier for their sales force to follow-up leads, by determining which ones are worthy of the sales force’s time. And marketers that don’t do that, are on a slippery slope today.

    What marketing doesn’t seem to understand is that people buy from people, and that true lead follow-up requires personal contact. The “act” of people talking to people is what establishes a true relationship. And finding the people that want to talk to your salespeople is not only critical, it is the only real answer to the pervasive problem of poor lead follow-up.

    What marketing may also fail to understand, is that while today’s communication technology makes it easier for people to talk to each other (once a relationship has been established), it actually makes it harder for sales people to make the initial contact necessary for them to establish the relationship to follow-up leads.

    By that I mean today’s technology of automated switchboards, voice-mail, new fax laws and junk e-mail actually discourage sales people from trying to contact people (or leads) they don’t know, and with whom they don’t already have a good relationship. So they are being forced to spend their time trying to squeeze more business out of their existing customers with whom they already have a relationship, and ignore the new business opportunities that exist in 80% of leads (from the aforementioned follow-up statistic) that aren’t being followed up. Another paradox?

    Marketing needs to stop blaming sales for the problem, and start empathizing with the barriers to success and the sales force’s inability to follow-up raw leads today.

    The following 3 statistics are derived from Reed Business Information Systems statistics.
    – The cost of a personal sales call is $329.00
    – The number of personal sales calls necessary to close an order is 5.2
    – The number of sales people the average buyer sees in a week is 1.8

    Do the math here. Considering the above, 100 raw leads actually requires…
    – $32,900 of personal follow-up cost.
    – More than 500 personal sales calls.
    – Years to get in front of the buyers.

    While the title of this article says it all “Software Doesn’t Follow-Up Leads. People Do”, it’s both humorous and sad that I see marketing people actually hiding from the real solution to the problem of poor lead follow-up, or trying to disguise it with incredibly expensive CRM and Contact Management software solutions that are doing nothing but getting raw sales leads to their sales people faster… so they can do nothing with them sooner. All while orders are being lost.

    If you laughed at that anecdotal comment, it’s no laughing matter that the “C” suite in companies today is beginning to question why expensive marketing leads aren’t leading anywhere.

    Pro-marketers need to take another look at that 800# Gorilla in their living room and at least begin to admit it’s there. And, that planning to take the family to an Orlando during a trade show to see Mickey Mouse, or sneaking off to Las Vegas to gamble, is no longer considered acceptable trade show venue selection criteria.

    I may have angered every marketing person reading this, but it’s time to forget the roller coasters and roulette tables, because upper management is beginning to “get it.”

    In my previous work life I personally walked in the shoes of a marketing and sales manager. And I’ll admit (now) that not only did my family see both Mickey and Minnie, what happened in Vegas stayed in Vegas. Today, however, proof of marketing expense ROI has agenda priority.

    Times have changed, again. Generating leads in marketing and throwing them over the fence to sales no longer works. So CHANGE the process.

    Earl Nightingale’s comment that” It’s a human nature tendency to think that whatever people are doing in large numbers must be right, because so many are doing it” is no longer something that marketers can hide behind, just because everyone is “doing it.”

    Marketing needs to get over the important fact that everyone that responds to their creative messages is not a prospect. So, all their names shouldn’t be given to their sales people to sort out and try to follow-up.

    Those that admit or realize that fact, and assume the task of eliminating those that are not worthy of immediate sales contact before they are turned over to sales, are going to win BIG, long before the blame-game that they are obviously losing involves them.

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