Live From DMA2010: How to Double Conversion Rates With Effective Lead Nurturing
Five is the magic number for Palo Alto, Calif.-based HP Software, says Rod Lehman, the company's senior director of Americas marketing. That's how many touches consumers may require before converting, he told an intimate group of DMA2010 attendees during the session, "Effective Lead Nurturing: The Key to Doubling Conversion Rates."
During the lunchtime gathering, about a dozen marketers listened to Lehman's reasoning behind the "law of diminishing returns" of customer touches. With most converting on the first touch, from there his department determines how best to nurture leads to turn them into sales.
While inbound leads, which are all opt-in, bring in a smaller percentage of revenue than the customers who, for instance, directly call sales representatives to make larger purchases, Lehman says the new leads can turn into significant sales given the right nurturing. He says leads nurtured with marketing insight are more likely to buy. "For marketing-touched opportunities, the close rate is 50 percent higher in my division."
It's best, he says, to nurture the leads companies already have rather than to keep adding to the top of the funnel without insight. One of the most important clues to how consumers will behave is to employ lead scoring, which HP Software is already doing—to show sales its value—and which will have more teeth behind it around Nov. 1, Lehman says. That's the date when he expects to chop off the bottom 20 percent of incoming leads—at the moment 98 percent go directly to sales—and allow marketing to nurture those leads until they're able to mature. "[That's] so we can do fewer, but more qualified, leads."
Session attendee Dave Spector, senior vice president of global marketing for Swiss-based IT automation software provider Kaseya, agrees that lead scoring is a great help in allowing his company to have the right conversation at the right time with the right customer.
For HP Software, Lehman says, early in the sales cycle consumers are still looking around and doing research on several vendors. That's why the company puts information about the software on third-party sites.
When consumers opt-in on the HP Software site or call the company—his department sees tens of thousands of leads each quarter—that counts as the first touch. The next touch will be of another ilk—a webinar, for instance. Then, spaced about two weeks apart, leads receive a white paper promotion, then an outside research piece and, finally, a call. The idea is to give leads what they need at each level of the sales cycle in a channel that works best for them, he says. Without lead scoring, he says, "it's almost like you're not listening to people" and companies are just creating spam.
For HP Software, non-responsive leads become "dead" after 24 months—the usual amount of time a customer takes to upgrade or buy new products. At that point, even though the lead opted in, HP Software stops contacting them.
Maintaining engagement is key and response rates depend on understanding leads. "You really have to think about your target audience and what it is you want them to do." So it's usually two to three touches, yielding positive responses, before marketing forwards leads to sales, Lehman says.