The New B-to-B Fundamentals (1,907 words)
1. Quantitatively benchmark the existing sales and marketing process. Determine the following basic metrics:
* cost of inquiries (from each outbound media)
* conversion rate of inquiries to qualified leads (from each media)
* cost of a qualified lead (by media)
* number of leads required for one sale
* average number of sales calls per day/week/month
* type of sales calls made by percentage (prospecting, closing, service, etc.)
* cost of a sales call (include sales management expense)
* number of calls required to close a sale
* cost of a sale (include sales management expense)
* win rate of proposals to sales
* customer decay rate
* percent of revenue devoted to sales and marketing
While there may be other criteria appropriate to a specific company's market situation, these will be a great starting point. Few, if any, companies know many of these basic measurements.
2. Establish gaps between the current benchmarks, best practices and company goals.
Once the basic sales and marketing benchmarks are established, the areas that need improvement quickly will become apparent. In addition, best practices in B-to-B should be known and coupled with any industry measurements specific to the company's business segment. In the end, the gaps set the priorities for developing the new sales coverage model.
For example, marketing frequently measures the cost of an inquiry as its benchmark for success. A cost of $70 to $80 is not unusual. But, when the measurement is extended to measure the cost of a qualified lead, a dramatic gap usually appears. As a baseline in B-to-B—given solid response advertising or direct mail and reasonable lead criteria—one out of 10 inquiries converts to a qualified lead. So the average cost of a sales lead should be between $700 and $800 using this ratio. Unfortunately, when actually measured, this lead cost can soar well above this. I've seen lead costs in the $2,000 to $3,000 range. Frequently this is a result of an offer that is too personal.