Posts filed under Lead Generation

Don't Make These Mistakes In Small Business Lead Generation

Generation 

Duct Tape Marketing specializes in helping small businesses do a better job of marketing Lead Generation Barriers themselves.  I found their advice relevant to large businesses as well. 

 A recent series of posts provides excellent sales lead and conversion advice in blog posts written by guest contributors in How Do I Get More sales leads in the Top Funnel.

Here are a few select quotes worth noting.

Unless you're a new business without a very short track record, getting new leads is really not your problem at all.  Your real problem is churn.  Attrition.

Oh so true. If you lose 20% of your customers a year, then that growth of 10% you needed to keep your business growing requires adding 30%. So make sure you plug up the dike while your generating leads and adding new customers.  Otherwise, you are on a treadmill that never progresses.

The irony is, that is exactly what many small businesses are doing with their marketing by placing ads in locations that are unlikely to be acted on, following ill-advised trends or advice to create social media graveyards (which never see the light of any attention or conversation), and assuming that just offering a good product or service will spread.

This is a good advice. Make sure that you are reaching the right audience.

A superb message combined a great product directed to the wrong audience gets you nowhere.  And marketing efforts that are not accountable or suck up money and time without proven results is not a luxury any business can afford today.

Do you want to stand out from the crowd?  Then follow up.

  The fact is, most people don't follow up very well, if at all.  Good follow-up alone elevates you above 95 percent of your peers.

How many times have you responded to a survey or complained about a service as a customer only to be ignored.  Such inattention not only costs you customers, but ill will as well.

 Requiring an email address (and other personal information) prior to your prospects being permitted to download content.  With a gate, each person downloading becomes a valuable sales lead.  This is a very typical yet flawed approach.

I can't tell you how many times I wanted to download a white paper or other information only to not respond because I refused to get even more spam.  Give your audience a chance to get to know you better before putting up a requirement that only turns prospects off.   Better to ask them to subscribe or sign up within the downloaded document after you've had a chance to sell them on taking the risk of asking them for their private information.

In the end, the best way to approach this issue is to test it.  

Don't force yourself to use the least effective method. Test into it.  Internet testing is much less cumbersome and more immediate than other channles.  

Let your customers determine the best approach and test, test, test.  There is always room for improving your return on investment in lead generation or any marketing endeavor. 

 

Posted on May 19, 2011 and filed under Lead Generation, Online Marketing.

Bad Idea -- Hiring "Heavy Hitters" for Agency Sales

The heavy hitter's primary toolMy network friend and I were discussing the status of advertising agency hiring in the US these days and how things have changed for both the good and the bad. We think this problem applies to any B-to-B sales involving high level corporate services.

Prompted by these discussions, he sent an email with a new B-to-B sales job. Here's what he wrote.

Ted,

 Thought you would get a kick out this completely vacuous ad…no industry experience needed, no street credibility needed, just leave your successful job (which you can prove by submitting your w2’s), and join our company.  The world has gone mad!

Here's the advertisement for reference.

"Looking for an aggressive hunter who is ambitious, knows how to overcome obstacles and is driven to succeed. Must have an outstanding track record of selling products or services to sophisticated clients.

Our client is a well known 87B global firm and is more interested in your knowing how to build a business than your particular industry experience since extensive training is provided. 

Experience from any industry that requires a high degree of face-to-face presentations and relationship management is preferred. 

Must be an exceptional salesperson with a minimum of 12 year’s business experience (no maximum) and have consistently been a top earner in your industry.  

MUST have a college degree.  

No travel – outstanding benefits!"

There are several ways to interpret this advertisement and the motivations behind it. But I suspect that the hiring manager or the HR person who wrote this is looking for "Heavy Hitters" and all that it implies. 

Furthermore, I see an effort to attract discontented producers whose territories were cut or who were somehow wounded by their companies.


It's attraction with the negative.

Personally, if I were looking for a sales position, I would shy away from companies driven by prima donna sales people concepts. I am more interested in companies that are looking for sales leaders who know how to build and manage smooth running new business machines. When properly designed, these machines will survive the ups and downs presented by today's highly volatile business environments.

The "Heavy Hitter" mentality revolves around stars instead of the company. And accounts that are brought in this way can quickly fall in and out of love.

A client relationship must go well beyond a single individual to the many individuals available within the supplier company. It is actually a melding of purpose and vision between two partner organizations. Anything less will not produce a steady stream of profits for either the supplier or the client.

In what ways do you, the reader, see as misguided concepts about how successful new business programs work for B-to-B service companies? Any advice?

Posted on August 11, 2010 and filed under Lead Generation, New Business, Database Marketing.

How Much Should Pay for Each Insurance Lead?

 

An insurance agent asked this question several weeks ago and I thought you might benefit from my response.

This is what he asked.

A. Only direct lead-generation associated costs

B. Direct lead-generation associated costs + a burdened rate on the marketing side

C. Total marketing budget

Here was my response.

Hi John,

This may not handle your entire question, but any CPI (Cost Per Inquiry or CPL for Cost Per Lead) must first begin with an allowable CPS (Cost Per Sale).

The basic question you and the CFO must agree to is how much the average sale is worth to you and how much the company is willing to pay for a new contract or sale.

Ask this question: "Dear CFO. If I had 1000 new contracts I could sale to you, how much would you be willing to buy them for? Give me a good price. Because the more you can afford to pay for them, the greater number of contracts I will be able to sell to you beyond this initial 1000."

The ultimate number you need is exclusive of overhead, proposals, bad debt, commissions etc. So you need to take the CFOs answer and calculate your available budget for promotion only. That's the number marketers are looking for and is commonly referred to as the CPS.

Remember that paying commissions without the support of lead generation and advertising is the coward's way out for many companies.

What I mean by that is that many insurance companies let the distributors or straight commission sales people take all of the marketing risk and pay the agent after the sale is made. With lead generation, the company must now learn how to invest in the marketing piece by spending money before making the sale.

Some companies never manage to get beyond straight commission and end up with lower profits. They also abdicate their futures to sales people or distributors and loose control of their destiny.

Frankly, any company worth its salt should know what their allowable Cost Per Customer (CPC) is. That's an even more important number to agree upon than the CPS because the each customer represents the potential for multiple contracts or sales. But sadly, that is rarely the case. That's why marketing gets cut when times are rough. Company leaders sometimes do not see the marketing budget as a critical, long term investment.

The key to all of this is that you are quantifying success BEFORE you embark on any new business venture.

Now to the CPL. The CPL relies upon the allowable CPS and the projected conversion rate. For example, if you have an allowable CPS of $100 and your projected conversion rate is 10%, then your allowable CPL is $10 per lead. And so the formula goes. The trick is the balance the lead quality with the conversion rate.

If you get better quality leads that you can convert at 50%, then your allowable CPL increases to $50 per lead. But beware. It is possible to over qualify your leads by reducing your overall sales volume to come in below plan.

You would use a different allowable CPL for ALL media including the online, direct mail, Direct Response TV, outbound telemarketing and so forth. Why? Because the conversion rates vary dramatically from one medium to the next. The constant is the CPS and the CPC.

Bear in mind that you may not be able to convert a large number of your leads on the first pass. So plan repeat contact to maximize your conversion rate over a 12 month period (or longer/shorter depending upon the sales cycle for your product). You have paid $10 or more for each lead, so you need to get back your investment with a longer term contact strategy.

In BtoB, I have seen allowable CPL's of $1,500 or more. So instituting an effective CRM software program with ongoing training in its use will make a big difference in your program's success over the long term.

When you think about it, marketers should start all new business opportunities with this type of financial pro forma.

Once you know the CPL, CPS and or the CPC, then you can develop your marketing budget BEFORE even considering your offers or media strategy. If you need 5000 new contracts over the next 12 months, then your marketing budget should be 5000 X $100 CPS or $500,000. 

Hope this helps you.

Posted on July 12, 2010 and filed under Lead Generation.

How Much Should You Pay for a Lead?

There exists no marketing word more abused than the term "lead".

So let's agree up front that a "lead" is not a suspect, a telephone list of companies in a certain industry or any person who has not raised his hand and said: "I'm interested, tell me more."

This means that "leads" are generated in some way by any medium and have gone through some qualification process showing interest in the product or service offered.

Step 1 - Agree on the Cost Per Sale Allowable 

The first step is to establish the CPI (Cost Per Inquiry the same as CPL for Cost Per Lead). And before that step, the process must first begin with an allowable CPS (Cost Per Sale).

The marketer and the CFO must agree on how much the average sale is worth to the enterprise and how much the company is willing to pay for a new contract or sale.

I ask this question: "Dear CFO. If I had 1000 new contracts I could sale to you, how much would you be willing to buy them for? Give me a good price. Because the more you can afford to pay for them, the greater number of contracts beyond the 1,000 I will be able to sell to you."

The ultimate number you need is exclusive of overhead, product costs, refurbishments, bad debt, commissions etc. So it is now the CFOs responsibility to calculate the available budget for promotion only. This is the number marketers are looking for and is commonly referred to as the CPS (the Cost Per Sale).

Remember that paying commissions without the support of lead generation and advertising is the coward's way out for many companies.

What I mean by that is some companies let the distributors or straight commission sales people take all of the marketing risk and pay after the sale AFTER it is made.

But with lead generation, the company must now learn how to invest in the marketing piece by spending money PRIOR to making the sale. Some companies never manage to get beyond straight commission and end up with low market share, small sales volumes and lower profits.

They have essentially put their futures in the hands of a few sales people or distributors and end up loosing control of their destiny.

Frankly, any company worth its salt should know their allowable Cost Per Customer.

This CPS number is an even more important number to agree upon than the CPS. But sadly, that is rarely the case. That's why marketing gets cut when times are rough. Company leaders sometimes do not see the marketing budget as a critical, long term investment.

The key to all of this is that you are quantifying success BEFORE you embark on any new business venture.

Step 2 - Determine the Cost Per Lead Allowable

Now to the CPL. The CPL relies upon the allowable CPS and the projected conversion rate.

For example, if you have an allowable CPS of $100 and a projected conversion rate is 10%, then your allowable CPL is $10 per lead. And so the formula goes. The trick is the balance the lead quality with the conversion rate. 

If you get better quality leads that you can convert at 50%, then your allowable CPL increases to $50 per lead.

But beware. It is possible to over-qualify your leads thus reducing your overall sales volume. You risk coming in below plan.

You would use a different allowable CPL for ALL media including the online, direct mail, Direct Response TV, outbound telemarketing and so forth. Why? Because the conversion rates vary dramatically from one medium to the next. The constant is your Cost Per Sale.

Step 3 - Treat your leads like gold even if they don't convert on the first effort 

Bear in mind that you may not be able to convert a large number of your leads on the first pass. So plan repeat contact to maximize your conversion rate over a 12 month period (or longer/shorter depending upon the sales cycle for your product). In the above scenario, you paid $10 or more for each lead, so you need to get back your investment with a longterm contact strategy.

In BtoB, I have seen allowable CPL's of $1,500 or more. So installing an effective CRM (Customer Relationship Marketing) software program with ongoing training in its use will make a big difference in your program's success over time.

When you think about it, marketers should start all new business opportunities with this type of financial pro forma.

Step 4 - Use your new allowables to help in setting up your annual budget

Once you know the CPL, CPS and or the CPC (Cost Per Customer - subject of another post), then you can develop your marketing budget BEFORE even considering your offers or media strategy. If you need 5000 new contracts over the next 12 months, then your promotion budget should be 5000 X $100 CPS or $500,000.

Posted on May 13, 2010 and filed under Lead Generation.

Lead Conversion Rate Predictors

It amazes professional direct marketers that large numbers of companies still do not understand the back-end of sales. Both sales and marketing executives or their companies do not fully understand their customers and how they prefer to do business once leads are generated.

In direct marketing, we typically refer to this process as "fulfillment".

Here are what I believe are the most important predictors to response.

1. Response speed

In my opinion, nothing affects conversion rates negatively more than slow response times.

Poorly planned lead flow and lead scoring leave the sales force and inbound telemarketing groups unprepared for efficient and fast response times.

Research indicates a dramatic drop in the conversion rate when inquirers do not receive immediate confirmation of their request and prompt follow up.

2. Initial offer

Be aware that the way companies generate leads dramatically affects your conversion rate.

This includes the channel used such as trade shows, PPI off of the Internet, DRTV, mail and so forth. But the offer made defines the lead quality regardless of medium used.

Here are some effective offers that increase lead flow, but can also act to reduce the conversion rate.

- Valuable FREE gift for asking for additional information
- Chance to win in a sweepstakes for requesting information
- Deep discounts on products that are known for quality

On the other hand, listed below are some offers than improve lead quality and increase conversion rates at the probable expense of lower response rates.

- We will send the information to you with a quote if you will answer these 8 questions and send $30 to prepare your quote.
- Try our product FREE for 90 days by giving us your credit card information now
- Add your whole family to this club membership and get a 25% discount if you sign your contract in the next 15 days.

These offers are testable and should be evaluated on a cost per sale basis to determine which one(s) will maximize your return.

3. Lead qualification

The offer is not the only element that affects lead quality. The list or target market must match the product to the market's need. That is particularly the case with rifle shot targeting in the more costly expensive channels like direct mail and outbound telemarketing.

If the list does not pre-qualify your prospect properly, then response rates drop and any sales made tend to not hold. The merchandise returns are higher than expected and contracts are broken at  record levels.

4. Ordering process

Fulfillment materials and ordering processes are often managed by divisions within companies that are not customer advocates like marketing. So legal, purchasing and internal print shops perform the task based on what is convenient and easy for them, but cumbersome and strenuous for the customer.

Marketing must take ownership of the whole back end process to make sure the company is inconvenienced rather than the customer.

5. Inbound telemarketing

The internal marketing teams, though often experts on the company's products or services, tend to take on a customer service mentality rather than striving to maximize sales.

One effective solutions is to review your compensation structure making sure that it rewards performance and not just customer hand holding.

Another way to improve performance is to out source a test to an external inbound telemarketing service with direction to compete head-to-head against the company's internal inbound telemarketing group.

What other predictors to success would you add to this list. I also solicit your comments regarding any portion of this post.

Posted on August 20, 2009 and filed under Lead Generation.