When Leads Lie

by Jim Berkowitz on August 17, 2009

Here are just a few excerpts from an article by David Tabor, When Leads Lie:

Why do leads lie? Leads lie because we think they’re saying something that they aren’t. A lead is not ready to buy. They’re typically not even ready to talk with one of your sales reps. A lead is merely somebody who indicated “tell me a little more,” by clicking on a link, responding to an email, or registering on a site.

Marketing wants to look good, so they market the value of leads. Easy to measure, straightforward to buy. Declare victory.

Unfortunately, Sales wants to make money this quarter-and they optimistically jump at the idea of 100 new prospects a day. But they quickly find that those 100 leads don’t want to take a meeting, and the inevitable frustration with marketing starts to set in.

If you think of the revenue business process as a refinery, it takes in low-grade ore and purifies it to gold. Leads are the low-grade ore, often with conversion rates of 1 percent or less, ready for refining but not for final use. Until the leads are cultivated, nurtured, qualified, and converted to contacts, there is no sales cycle.

In many B2B and B2C businesses, the unqualified leads that are in the nurturing cycle may be numbered in the millions. Industry statistics show that up to 40 percent of leads may make their first purchase after having been in the “remarketing database” for 18 months or longer. Even though the exact statistics depend on your industry and target market, this principle applies equally to B2B and B2C markets. This is the whole purpose of marketing automation systems that integrate with your CRM system.

Leads start to get meaningful when you include measurements of lead quality, such as conversion ratios, scores, and frequency of activity. They get more and more significant as the leads pass through qualification and conversion steps. But understanding and assessing all the subtleties takes way too much time for most users: they just want to see a number that’s meaningful.

And the meaningful number, both for Sales and the overall business process, is the number of sales cycles started in a period. The number will be much lower than what the execs like to throw around-and it’s throttled by the speed and skill of the sales reps. But by focusing attention on the number of sales cycles started, it forces the marketing, pre-sales, and sales teams to work together. They have to think about what it takes to create and execute a first customer meeting, and figure out how to do that more repeatably.

The bottom line: by focusing on sales-cycle starts (opportunity-creates) rather than leads (visibility events), you’ll be able to measure something that’s meaningful to the business and provide a solid basis for collaboration among marketing, pre-sales, and sales teams. And that’s the whole point of CRM.

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