You might know what percentage of your sales leads convert into business. But which leads will convert? How long will they take? And exactly how much business will they generate? There is, believe it or not, a lot that the appliance of science can do to provide accurate answers for you to base your business projections on. And, above all, just like science, successful sales is about learning from failure.
Part 1. Sales leads? Pah… waste of time.
A sales person has a sales lead. Do they follow it up? If so, how hard? How much time should they spend on it? Indeed, why should they follow it up at all?
Disturbingly, 70% of all leads and sales opportunities are never even acted on according to Gartner. The reasons attributed to this are slow, inefficient lead management processes and an attitude from sales people that leads “have little value, and they act on them only when time permits”.
And you thought that leads were what fuelled sales people. Turns out, many are seen as a waste of time.
Should you worry about what happens to your leads?
I’m sure your stats are much, much better than that. But do you have a handle on how many leads do… and don’t… get acted on thoroughly? And should you worry?
Let’s all agree on one thing: not all leads do have the same chance of success. But a mechanical approach to sales – that at least a percentage of all opportunities will end in a sale and that percentage of opportunities must lead to a dead end - is no basis for a sales operation.
More informed sales people will follow an opportunity because they KNOW that in similar situations in the past they have been successful.
How do they know? They will probably tell you “gut instinct”. And that will be based on years of experience based on how they “qualify” a lead.
Qualifying leads: whose responsibility?
And herein lies the danger for any business relying on a sales operation. If you can throw enough leads at enough good sales people, maybe you’ll reach your targets. But life isn’t like that – so you need a far more scientific approach.
Qualifying a lead or opportunity is a set of tests and requirements that - if carried out correctly - gives solid information on where the opportunity lies in the sales process. In theory, sales and marketing both have a large role to play in qualifying leads… but all too often, neither takes on the role with particular vigour.
When sales and marketing aren’t on the same page
In fact Aberdeen Research in 2008 stated that: “77% of survey respondents had alignment issues between sales and marketing.”
How unaligned? While 73% of “successful companies” shared the same qualification definitions between sales and marketing, in contrast, just 38% of other companies did. In other words, they weren’t talking the same language.
And there’s another problem. Qualification is not a one-off activity, part of the handover process from marketing to sales. It should be ongoing. Circumstances change, so qualification is a tool that should continue to help the salesman in making the decisions to further the opportunity potential until it closes.
But Gartner research showed that even companies who participate in lead management “are typically unable to track leads to closure. This problem is evident with direct sales channels, but leads passed on to distribution channels are most vulnerable to poor tracking.”
What ROI do YOU get from sales and marketing?
Rigorous processes of qualification are not only a step in understanding how important a particular opportunity is. They can also lead to other important areas of business understanding.
In a three dimensional sense, if you recorded all events to their natural conclusion you would have an audit of where your business is originating from and what sales and marketing efforts are having the most effect.
Before we move onto just how qualifying leads can give you all that magical sounding data about your business, here’s something to consider:
“Enterprises routinely spend 10 percent to 30 percent of their revenue on marketing and sales activities, without being able to demonstrate a positive return on investment from those investments.”
Still think you’ve got your sales operation nailed down?