One of the biggest misconceptions in the industry is the need for more leads. Don’t get it twisted though as leads are great. The misconception lies in that more leads = the answer.
It’s never made sense to me why one would want to continue spending money on either purchasing leads from a 3rd party or expanding your marketing budget to drive in more leads but don’t invest in converting what’s already available to you. This phenomenon that has plagued the industry for years really comes down to sales process or lack thereof.
I’m going to leave growing sales from existing accounts for another day and instead focus on leads that are generated through either your marketing efforts, purchasing 3rd party leads, leads given to you by a manufacturer or a good ole fashioned walk in customer.
The number of leads generated from the sum of all these efforts is quantifiable typically through your marketing automation program and more importantly, your CRM. I’m going to call them marketing qualified leads or MQL’s.
The idea is to continue moving that lead through the sales funnel by having your saleswoman qualify that lead (SQL) and place it in the appropriate stage in their pipeline so they can continue to move it through the sales funnel until one day they close the deal. From a management point of view, by capturing all the leads coming through your door instead of just the prospects that have taken out a sample, scheduled a measure or say “Hey, I’m ready to buy today” it allows key decision makers to actually put a hard number on what the return on the marketing investment truly is.
Think about it like this. Every company’s number will be different but for arguments sake each customer that comes through the door has $200 over their head. If you don’t have a system, CRM or otherwise, statistically I know close to five out of ten people will never be captured or followed up with. Right off the bat I can flush $1,000 down the toilet because I have no idea that prospect even existed. The industry avg. close rate is right around 35% but go ahead and plug your own number in here. There’s five prospects left so that means 1.75 prospects will become your customer. The avg. deal size in the industry is right around $3,000. With that in mind, I just spent $2,000 to generate $5,250 in revenue. That’s not good. If you captured all ten prospects you’re looking at three customers and $10,000 in revenue. That almost doubles your revenue off the same marketing spend simply because you captured every available lead at your fingertips.
If you haven’t adopted a CRM yet, stop shooting yourself in the foot and get one today!
Source: National Sales Executive Association