Here are two sobering statistics. Firstly, on average, 30 per cent of all B2B product/service inquiries translate into a sale within 18-24 months on the inquiry (this statistic applies to complex and high-value sales and not commodities). Secondly, the best conversion rate documented from inquiry to sale is five per cent for any one company.
What happened to the other 25 per cent of inquires that converted to sale received by companies? The simple answer is that they bought from another supplier, but the real question is why?
Of all the marketing communication money spent by B2B companies, studies have indicated that 90 per cent is spent for the primary purpose of generating leads for sales (inside, field and business partners). No one disagrees with that, and some would even say it’s 100 per cent. The problem is that most of this money is spent to generate an inquiry: that is where the process breaks down, after the inquiry. We don’t need more inquiries, but rather to convert a higher percentage of inquires to sales; so how do we do this?
Steps to increase conversion rates
Inquiry screening and resource allocation. Frequently, inquiries are chased as though they are all the same. This is not only illogical, but wastes valuable resources as well. Firstly, establish a profile of the customer desired by industry classification and size. Then simply look up the inquiry using a public database of companies (don’t forget your own database of prospects and customers) and score it as to how well it matches the profile.
Once scored, then assign the appropriate follow-up resource (email, mail and/or telemarketing) based on the rating. This will no t only preserve budget, but also places focus on the best potential inquiries. Don’t forget that speed-of-response has proven to be a significant lever to sales conversion, so don’t slow down the lead process for inquiry screening.
Improve lead-qualification criteria Most companies do not have lead qualification criteria that also meet sales acceptance. While there are other qualification criteria, let’s use the infamous budget, authority, need and timing (BANT) as a template for our example. For each product or service being marketed, there will be a different definition of what constitutes a ‘qualified lead’, once all this criteria is considered.
The lack of a common lead definition is usually the biggest gap between marketing and sales and is at the root of the lead-process problems. Frankly, unless sales feels that the lead is good, they will either file or drop it: one of the big reasons companies lose 25 per cent of potential sales revenue to competition.
Try this: assemble a representative group of sales people together and have them define BANT. There will be many definitions and the exercise will also be frustrating, but in the end very worthwhile. This session and resulting output will go a long way to establish a common and accepted definition of a lead. It will also improve overall communication with sales; something that helps when sales is asked for feedback.
Link qualification to buying process Next, outline the buying process for the targeted market. This is different than your sales-cycle. Once defined, link the lead qualification criteria developed in step two into the buying process. Logically, not all the qualification criteria can be determined at the beginning of the buying process; we know this, but forget it as we want to shorten the sales-cycle. One of the reasons sales are lost is that we try to qualify the inquiry too quickly and drop it if it doesn’t instantly qualify. Give the qualification process more time to identify sales opportunities, as buyers are not on your schedule, but their own!
Create a lead development system
The biggest reason that sales are lost in the lead system is that companies do not have a lead development process in place. Not all inquiries are ready to be handed to sales; they need to be developed over time until they are ready for a sales call.
Remember, the statistic quoted at the beginning of this article was ’18-24 months for purchase’. If the lead is handed-off to sales people too quickly and the purchase is still in the distant future, the sales person will almost always drop it and go on to other near-term opportunities. The lead development process is a critical aspect of any robust lead process and if carried out well will double or triple the number of sales from the same number of inquiries.
Allow sales to ‘hand-back’ the lead Lead systems are almost always one-way streets. Make them two-way. If a lead is handed-off to the sales group and is not within their timeframe for sale, allow them to hand it back so that the lead continues to be worked. If the sales people are not allowed to give the lead back, they will drop it and provide some rationalisation as to why the lead was no good. Much time and money has been spent at this point – don’t lose the opportunity foolishly.
There is much more to developing a high-yield lead process, but by implementing one or all of these five steps, conversion from inquiry to sales will improve closer to the ultimate 30 per cent over the 18-24 month period. These steps are solid, logical and best practices for B2B marketing.
