B2B companies spend a lot of money generating leads for their sales teams. A $100 million company may spend 2% to 5% of its revenue on marketing. That can be up to $5 million .
The good news is that this investment can generate lots of leads. The bad news is that only about 2% of leads convert to sales.
As the graphic below shows, companies pay for leads from many sources: Internet, social media, tradeshows, advertising, direct mail, PR, etc.
Generating leads is the easy part. The problem is that too often sales reps don’t nurture these leads.
Consider these statistics from a forbes.com article by Ken Krogue of insidesales.com
- The typical sales rep makes only 1.3 attempts to reach a lead.
- Only 27% of leads are actually contacted (sales rep speaks to the lead).
- 35% to 64% of leads never get called at all.
- 87% of leads are abandoned.
- 79% of marketing-generated leads don’t result in sales.
Rather depressing, huh? A majority of leads (between 45% and 63%) buy eventually — from someone. But they may not buy from the company that generated and paid for the lead.
So why don’t more leads convert to sales? Two reasons: 1) Sales reps don’t contact the leads fast enough and (2) Reps don’t stay in touch. They give up too easily.
According to Ken Krogue, in the forbes.com article, if you call within 5 minutes versus 30 minutes, the results are dramatically much better:
- The odds of contacting a lead are 100 times higher.
- The odds of qualifying a lead are 21 times higher.
An immediate response is effective for three reasons:
- The prospect is probably still at her desk and is easily reachable. Wait 10 minutes and she may be off to a meeting or on the phone.
- Your company is top of mind. You won’t be two days later. That’s when the typical rep responds to the lead.
- The prospect is impressed that your rep responded so promptly. Ken calls this the “Wow” factor.
Ken cites an example of a sales team that reduced its response time to 1 day from 6 days. They more than doubled their close rates to 7.5% from 3.2%
Qualified sales leads are like plants. They need cultivation. Even if your sales reps respond promptly to leads and are able to qualify effectively, that’s just the beginning of the process.
After a lead becomes a prospect, she may not be ready to buy. In fact, she may not expect to make a purchasing decision for several months.
Now your challenge is to stay on her radar screen. You want to be her first choice when she’s ready to buy. You don’t want her to forget about you.
This is where many sales reps fall down. They don’t follow up.
Here is a hypothetical sequence of communications that a sales rep could use to stay in touch with a prospect. Note that it takes almost 6 months for the prospect to be “sales ready.”
- Day 1: Make introductory phone call and send follow-up email
- Day 28: Send e-newsletter with voicemail alert that it’s there
- Day 42: E-mail recent customer success story, in a related industry if possible
- Day 60: Send personal invitation to forthcoming seminar and follow up with a phone call
- Day 80: Mail case study and personalized letter of transmittal
- Day 100: E-mail recent article of interest on Internet
- Day 120: Phone call to answer questions, if any
- Day 140: Mail follow-up letter with free report
- Day 160: Answer prospect’s call. She’s ready to buy!
Your marketing department needs to be able to provide sales reps with the tools to make this process very easy. A rep should not be trying to create newsletters, emails, case studies, etc. All of these materials should be readily available.
For a modest amount of money and a modest amount of follow up, the ROI on your lead generation budget can increase dramatically.
You’ve already spent a lot to get those leads. Why not spend a little more (time and money) and actually get what you paid for — new customers.