No one starts a lead generation program expecting it to fail. On the contrary, most marketers expect campaigns to succeed. But when goals are not based on historic data, campaigns can fall apart.
As Thomas Jefferson famously stated, "I like the dreams of the future better than the history of the past."
There's nothing wrong with having high expectations for lead generation campaigns. However, basing success metrics on historic data can provide valuable insight that can help marketers structure campaigns so they can meet lofty goals.
Terra Staffing Group is a good example. The Pacific Northwest staffing firm recently opened a new office in Portland, Ore. Starting from scratch in the new location, executives were tasked with simultaneously building its clientele and talent database. Since time spent selling their services to companies was time not spent building a talent pool, Terra Staffing outsourced its lead generation to help relieve the pressure on the launch team. Since Terra Staffing's average deal size is relatively small to support heavy investment in lead generation, it needed a way to ensure the campaign would deliver a reasonable ROI.
By benchmarking against historic data from other campaigns, it was determined that in order to achieve ROI goals, the campaign needed to deliver a slightly higher than average response rate combined with a higher percentage close rate, and the campaign needed to achieve quick results.
The same analysis strategy will work with any lead generation effort. Marketers should look at several key benchmarking metrics to determine what will make a successful lead generation program:
- Average deal size. This is an important factor because generally the smaller the deal size, the harder it is to achieve a return on investment. In other words, you have to convert a lot of opportunities to cover the cost of the lead generation program. Understanding this in advance allows marketers to make smart decisions about developing a database of prospects and how many call attempts should be made. When calculating ROI, it's important to also factor in customer lifetime value, which can add significantly to ROI and make investing in lead generation campaigns for lower value deals very attractive.
- Average sales cycle. Looking at the timeframe to close helps marketers project ROI and future pipeline activity. The pilot program duration needs to be adjusted accordingly to get an accurate picture of ROI. For example, a product with a six-month time to close probably won't show a strong ROI during a 90-day pilot program despite being off to a strong start.
- Complexity of the sale. The complexity of the message and number of decision makers needs to be considered when benchmarking. Both can impact the number of call attempts as well as the number of contacts per account for callers. Generally, more complex sales have a much larger value per deal and can justify a lower response rate and a smaller conversion to close.
- Quality of the data. It's no surprise that database quality can have a large impact on the success of lead generation efforts. Sales reps can spend a significant amount of time tracking down contacts and correcting lists that haven't been qualified in advance. It's important to factor this into any benchmarks.
Once marketers understand these factors, a historical comparison to similar efforts will provide an accurate view into expected results and will reveal how to structure the lead generation program to achieve the fastest revenue.