B-to-B: Lead Generation Is Broken
Ah, Saturday, and the fragrant promise of that choice T-bone you've been waiting to grill. You saunter out to the gas grill, turn the knob and get … nothing. The bolt specially designed to control the gas line has vanished. You vaguely recall tossing the extra one into a box of miscellaneous fasteners in the basement, along with at least 158 shiny, seemingly identical bolts—but only one will work. Your chargrilled beef is buried under 158 indistinguishable bits of metal that aren't quite right.
Now you know how the sales team feels.
The best of your company's salespeople are unwaveringly focused on the results. They hunger to sink their teeth into as big a bite of that steak/sale as they possibly can, but they're missing the one piece to make it happen: a bolt/lead that fits. If you give them one bolt, or even three or four, they'll test them, turn them and find the one that works. If you give them 158, they'll throw out the box and start looking for another way to cook.
This is exactly what happens with typical lead generation. About 95 percent of generated leads are not effectively pursued by the sales team because marketing, often rewarded for generating a mountain of leads, delivers large numbers of unfiltered suspects. Real leads are lost simply because there is no process to separate them from the tire-kickers and prioritize and nurture everything in between. At the core, the problem is lead management.
It's helpful to set the stage by looking at terminology and a lead progression framework. SiriusDecisions, a provider of sales and marketing advisory services, uses its "demand waterfall" to define the stages through which prospects progress:
Marketing Qualified Lead (MQL): A lead delivered by marketing.
Sales Accepted Lead (SAL): A lead reviewed and accepted by sales as a lead.
Sales Qualified Lead (SQL): A lead contacted and further qualified by sales.
If you put 1,000 inquiries and/or targeted suspects into the top of that sales funnel, in a normal scenario, this is how those stages would look (see the first chart in the media player to the right).
According to SiriusDecisions, the two areas of "purgatory" where lead leakage occurs can be defined as:
• Marketing lead purgatory occurs between MQL and SQL, with marketing throwing leads over the fence and sales never accepting them. Approximately 70 percent of all leads are rejected by sales—either actively or by inaction.
• Sales lead purgatory occurs between SAL and SQL, with sales accepting leads but subsequently losing contact or interest. Another 20 percent of leads are ineffectively worked for mostly non-intuitive reasons (i.e., a sales rep reports, "I called the prospect three times. He didn't get back to me, so he must not have been interested.")
With a lack of accountability in both marketing and sales lead purgatory, leads are lost and ultimately reappear as wins for the competition.
There is another significant problem with this model: It's incredibly inefficient.
Plugging the Leaks
Lead leakage occurs primarily because leads are turned over to sales too early. When correct lead qualification and lead nurturing processes are performed by skilled professionals, MQL should meet the SQL threshold. Let's revisit the framework when results are based on deployment of a dedicated group of skilled professionals. We can attribute a higher close rate because the leads are more fully qualified. (See the mediaplayer to the right for an example of qualified leads in the sales funnel)
Closing 10 deals at $120,000 each results in a $1.2 million return; a very efficient model from an ROI standpoint when, for example, investing $60,000 in a lead qualification and lead nurturing initiative.
In the press to close more new business, many companies—caught up in "we need leads" fervor—turn to marketing automation to deliver more leads, citing a lower cost per lead than outbound initiatives. I have several concerns about this approach.
When I have conversations about marketing automation, many executives acknowledge they don't factor the cost of generating inquiries into the equation. And we continually hear from clients that deals originating from marketing automation tend to be smaller than deals that come from outbound lead generation programs.
But by far, my main concern is marketing automation is driving larger volumes of so-called leads that are not fully qualified, and yet are still prematurely passed to sales.
The reasons why the basic B-to-B process of lead generation is broken are:
1. No standardized lead definitions between marketing and sales;
2. Not improving lead quality and follow-up;
3. Focusing on quantity over quality;
4. Not measuring what matters; and
5. Not allowing sales to pass leads back to marketing for additional nurturing.
All of these issues create poor results; including most sales executives missing quotas. In fact, quota attainment has dropped every year since 2006—when 65 percent of all reps made quota—to a projected all time low of fewer than half of all sales reps making quota in 2010.
How can businesses best address the lead management problem and its root causes? Here are two key steps to take.
1. Create a dedicated lead qualification and nurturing group. Fill the gap between marketing and sales with a dedicated group—either internal or external. This provides the resources needed to take existing market curiosity, sharpen it by exposing underlying pressure points, whet interest with repeated contact, file away unqualified prospects and point sales toward only the most potent opportunities.
2. Charge that group with a proven B-to-B lead generation process. At the heart of every successful lead generation and lead nurturing program is a proven process that addresses three key areas: market, media and offer.