Best Practices to Decrease Lead Leakage and Increase Lead Conversions
In my prior blog post I shared my sales lead scoring framework. Just as accurate lead scoring is a prerequisite to delivering sales-ready leads to the sales force, sales transfer and follow-through is the process that both gets sales-ready leads to the sales person and validates whether the lead scoring is working or not. However, the sales lead transfer process creates a blind spot, requires sales and marketing alignment to work and as most CMOs and marketing automation consultants will attest represents the single greatest breakdown point in the lead generation process.
"It is the hand-off process between marketing and sales where many revenue opportunities are lost and prospects' perceptions of the organization are damaged."
—Michael Gerard, Research VP, IDC
The mechanics of assigning leads pursuant to a lead score to sales people are simple. However, lead assignment in the absence of accompanying processes does little to ensure that leads are followed through or combat the perennial problem of lead leakage. The biggest surprise for most business development leaders when defining the optimal lead transfer procedure is understanding the prerequisites which must be in place long before leads are forwarded from marketing to sales. Consider these sales lead distribution best practices when designing your lead transfer process.
Lead Distribution Best Practices
- Align Sales and Marketing. While many companies talk about sales and marketing alignment, fewer actually integrate their sales and marketing planning and implement the disciplined processes needed to deliver predictable results. I personally recommend starting with shared objectives. Nothing unites colleagues and encourages cooperation like shared financial incentives. If sales is held accountable to revenues, but marketing hides behind activity and vanity metrics, you won’t achieve true sales and marketing alignment. If you expect to get sales and marketing contributing to the same revenue-based performance objectives, you’re best advised to align their compensation plans and incentives. I personally favor measuring marketing performance based on four factors, being the volume and growth of MQLs, the volume and growth of SALs, marketing’s contribution to the sales forecast and marketing’s contribution to closed/won business.
- Dedicate Resourcing. According to an Aberdeen Group report titled, Crossing the Chasm: with Automated Lead Management, top performing companies were 50% more likely than lower performing counterparts to have a lead administrator communicate between sales and marketing for pipeline, forecast and closure data. The report goes on to state that companies without the assigned staff to mine marketing program results "are paying for it with dramatically lower results from their marketing programs." This resource should facilitate and monitor sales and marketing lead management responsibilities, identify non-conformance and implement remediation actions for variances. This role should also constantly be on the lookout for operational disconnects.
- Define Lead Stages. Defining a sales-ready lead is a key step in the lead scoring process. The lead distribution process must also consider definitions for each of the revenue cycle stages that will be tracked and measured once the lead is distributed to sales. While the names of revenue stages vary, common terms and definitions will include MQL (Marketing Qualified Lead), SAL (Sales Accepted Lead) and SQL (Sales Qualified Lead).
- Define Lead Routing. Common lead routing techniques include i) random assignment, ii) round robin assignment, iii) assignment by territory, product or salesperson and iv) queuing leads for a first come, first serve distribution.
- Define Lead Response Timing & Persistency. Hot leads get cold fast so when a lead is ready to talk with a sales person, it’s important to be one of the first sales people to engage. This can be very impactful, as evidenced by an MIT Lead Response Management research study which illustrated that a delay from 5 minutes to 10 minutes in reaching out to an online lead response decreases the probability of actually contacting the lead by 400 percent. Waiting 30 minutes before following up with the lead decreases your chances by 21 times. Similar research by InsideSales.com found that a sales person is 100x more likely to make contact with a new lead, and 21x more likely to advance that lead into the sales pipeline, if live contact is made within the first five minutes of a lead being submitted. With hot leads, time is of the essence. Another lead response study by InsideSales.com revealed that persistency pays off. The research found that most sales people make two or fewer attempts to contact a new lead before giving up. However, those sales people that made two or more attempts via email or calls fell into the 75th percentile of success.
- Use Inside Sales Verification. Deciphering exactly when a buyer is ready to buy based on demographic attributes and online behaviors is a difficult process. Having inside sales or an equivalent role perform an outbound qualification upon reaching a lead score threshold, but before distributing the lead to the salesforce, will add human intelligence to the lead profile, deliver more qualified leads to the sales force and improve the SAL rate significantly.
- Include Lead Intelligence. According to a CMO Council report titled, Closing the Gap: The Sales & Marketing Alignment Imperative, only 12% of sales and marketing professionals say they have access to a well-integrated, real-time view of customer interactions. This compliments IDC research which shares that approximately 25% of sales’ time is spent on unproductive prospecting. Marketers shouldn’t just send lead records from the marketing automation system to the CRM system and hope for the best. Sales people want content and context that will spur opening conversations and help them engage with new prospects. Be sure to include the lead score(s), activities and behaviors with lead transfers so that sales reps can see what content the lead consumed over what channels and periods. While marketing automation systems vary in their integration approaches to CRM systems, they pretty much all support a seamless, bi-directional transfer of lead data, correspondence and KPIs.
- Setup Alerts and Notifications. You will want to define the actions and methods to alert sales people of new leads or changes in lead behaviors. When a new lead is assigned to a sales person in the CRM system, it’s a good idea to also send an email notification. This is standard functionality in most marketing automation systems. Additionally, marketers will continue to monitor lead behaviors and should alert sales if any of their prospects' interactions suggest an indicative action. This may include the prospect downloading a white paper, reviewing the website pricing page or requesting a demo. Several marketing software systems deliver daily digest emails which highlight each salesperson’s most active prospects and the activities they’ve performed in the last 24 hours. Other marketing systems create Hot Lists of the most active or highly scoring prospects for each sales person. This type of information shows what prospects are active in their buying process at any given time and allows sales reps to strike while the irons hot.
- Create an SLA. Sales and Marketing Service Level Agreements (SLA) codify each group’s objectives, responsibilities and performance measures. Typically, marketing agrees to deliver a fixed number of SALs and sales agrees to respond to each and every lead pursuant to agreed upon processes – which should include the timing, persistence, messaging and measured progress applied to distributed leads. For example, I often find it helpful to require each distributed lead be accepted or rejected within 12 hours (or it automatically reverts back to marketing for continued nurturing or redistribution) and be advanced to an SQL within 3 days (or again, it reverts back to marketing). Sales should also commit to returning stalled leads to marketing for continued nurturing (more on this in the lead recycling step). It’s critical that if either side doesn’t meet their SLA objectives, a meeting ensues and a remediation plan is quickly implemented.
- Lead Response Collaboration. Sales people should be the eyes and ears for lead behavioral responses and a process should exist to funnel this information back to marketing. Lead reactions will reveal what points of differentiation resonate and what messaging falls flat. Sales reps should invite marketers to listen in on prospect discussions and experience firsthand the trials and tribulations of winning business if they expect marketing to aid their sales pursuits. In an Aberdeen research report titled Sales and Marketing Alignment, the firm found that two-thirds of top performing sales organizations have a formal process which brings marketing staff into active prospect selling situations. This participation is influential in helping marketing understand what customers want and how they can better assist their sales colleagues. The same report shares that top performing companies are 29% more likely for sales and marketing to jointly perform win/loss reviews. Don’t let lost sale opportunities go to waste. It’s been my experience nothing changes people and processes faster than the loss of a heart-felt and significant sale opportunity.
- Lead Recycling. IDC research shared in the report, Coordinating Marketing and Sales Across the Entire Revenue Cycle, that 60-70% of sales people ignore marketing leads. No surprise, I think we all knew that. Lead scoring helps fix this problem, but is not enough by itself. Lead recycling is a mandatory process to reduce lead leakage and ensure that no lead gets left behind. Sometimes hot leads get cold during the sales cycle. Management turnover, budget changes or competing projects may suddenly stop a buyer’s purchase process until a later day. When leads transferred from marketing to sales stall, there must be a technology-supported process that identifies those leads and allows sales or marketing people to return them to marketing for continued nurturing. Stalled leads can be identified by lack of movement or advancement over a prescribed number of days. The below diagram illustrates the revenue cycle lead evolution and identifies where leads are generally returned for recycling.
- Business Intelligence. You won’t win the game if you don’t know the score. Bringing real-time visibility of lead management Key Performance Indicators (KPIs) into dashboards is a best practice. A closed loop reporting process is also essential to measure what’s working and not working. Marketing and sales must have visibility to every lead from inception to closure. According to Marketing Profs, B-to-B Lead Generation: Marketing ROI & Performance report, businesses in which marketers report alignment with sales allowing them to jointly review win-loss drivers, measure ROI on lead generation campaigns, and provide closed-loop tracking of lead performance are about three times more likely to outgrow their competitors. From my experience, I’d highly recommend designing the information reporting that detects stalled leads and lead leakage. Small improvements in these two areas result in big improvements to top line revenues.
Implementing sales lead distribution best practices and embedding disciplined processes around the lead transfer process, as opposed to simply throwing leads over the fence to the salesforce, is a lot of work for sure. However, the positive impact to top line revenues is without question.
In a Forrester research report titled, CMOs Need to Institute Marketing-Sales Collaboration, the analyst firm found that businesses with mature lead management processes see sales acting on more leads, a decrease in follow-up time for sales leads, higher close rates for marketing generated leads and revenue growth 4 to 5 times larger than companies with no marketing automation or with software automation but without disciplined processes.
Our research found that highly aligned marketing and sales companies grow 19% faster and are 15% more profitable.
- Phil Harrell, VP, Sr Research Director, Forrester