Know Your Cost of Leads
Do you know how much it costs your company to generate profitable sales leads? The emphasis here is on profitable - because not all sales leads are profitable. Nor do they each cost the same. However, they represent good money you’ve spent to buy more sales opportunities for your sales force.
Of course not all sales leads are born equal. They come in many shapes and sizes. From advertising, trade shows, seminars, direct mail, email promotions, teleprospecting and other promotions. Each lead costs you, and someone in your organization is comparing cost with revenue generated.
Effective Lead Qualification Essential
Generating an inquiry is of course the first step. The purpose of lead qualification is to turn them into prospects. And prospects into customers – hopefully lifelong customers.
All leads (at some point) must be qualified whether we like it or not. The sooner the better! More often than not the most effective way is to outsource to an experienced sales support agency with a history of sales qualification success. Why? Because it’s unlikely you will develop an in house resource staffed with a dedicated and professional Business Development Team of the highest caliber that are focused entirely on the lead qualification process. If you have (or create) an in-house resource to do this then your actual operational costs will be higher and profitability therefore will be lower.
Some companies believe they can avoid the cost of qualification by turning the leads over to individual salespersons (or in some cases to the salespeople of their Channel Partners). A more effective solution is to pre-qualify and only have a salesperson engage once the potential exists for a sale. The salesperson - whose time is far more costly - can then focus his or her time entirely on the job of selling.
Impact on sales force sales productivity can be as high as 400% when a salesforce is focused entirely on pre-qualified leads!
Leverage your CRM - Require feedback from your Salesforce
While many opportunities require immediate follow through (and the sooner the better!) others require multiple follow ups over an extended period of time before they mature. Salespersons without the support structure (i.e. a functioning and workable CRM) to manage and control future sales appointments may permit many of these qualified opportunities to gather dust and die. On the other hand few companies who have CRM’s actually leverage them to maximize sales force productivity (a subject covered in other articles and blogs on the ETI site)!
Are you in control?
- Do you know exactly, at any time, what happened to each sales lead you distributed ? To every salesperson or salesforce, VAR, channel partner, distributor? To every office in the U.S.? Worldwide? Last month? Last quarter? Last Year? Year before?
- Do you know exactly how much each sales lead cost?
- Per ad source?
- Per VAR?
- Per distributor?
- Per salesperson?
- Per area?
- Do you know exactly how much sales volume each sales lead or source produced?
- Which source generated the greatest number of sales? Per ad? Per month, season, period? Highest to lowest?
- How much you profited?
- Do you know which VAR, distributor, salesperson, is most efficient in terms of number of sales leads converted? Over any period? Highest to lowest?
Feedback, Feedback, Feedback
Feedback is the crucial element to successful lead management and tracking. Yet there are many salespersons, both in your direct and indirect sales forces who don’t understand the importance of disciplined feedback. As a result, they don’t provide the necessary status or progress reports on each sales lead for which they are responsible.
The consequence of this is that no CRM or equivalent will work for you. An exceedingly high price for a company to bear. Leads are the lifeblood of business. And since you’ve already incurred the high cost of generating and qualifying the leads, it is intolerable to lose the immediate and future business they represent. And you lose the rewards of lifetime sales. Worse, you aid the competition.