Lead generation has always been important but never more so than now given a tough economy and limited resources

Richmark believes that business-to-business companies need to emphasize quality as well as quantity and thereby take the next step for lead generation

Read on for Richmark’s ideas on how to get better return for lead generation and turn your lead generation program into a real strategic asset…

Lead Generation Disconnect 
 

“Leads, leads!?  You call these leads!?,” cried Jack Lemmon playing a desperate real estate salesman in the movie Glengarry GlenRoss.  From Richmark’s experience that complaint has been uttered by real sales reps of all stripes, including factory reps as well as agents, resellers, dealers, and distributors.  And yet many business-to-business companies attend countless trade shows and counter days and spend hundreds of thousands of dollars on advertising, PR, and other promotional activities in part to generate leads.  Why all these complaints when companies are spending so much time and money to generate leads?  Why the disconnect?


Quantity AND Quality  

Most companies do something to generate leads, because their sales forces and channels demand them and they fear being at a disadvantage to competition  As mentioned these efforts may include advertising, trade shows, the Internet, and telemarketing.  Referrals are also a good, if sometimes uncertain, source of leads.

In nearly all cases companies focus on the quantity of leads and not the quality.  How often do you hear someone say “We got X number of leads at last week’s trade show or from a recent ad” without mentioning the quality of those leads.  Therein lies a large part of the lead generation disconnect. 

This emphasis on quantity over quality leads to 3 problems:

1.    Poor quality leads diminishes sales rep and indirect channel trust and interest in the program and ultimately their willingness to pursue leads 

•      Since little/nothing is being done to qualify leads sales reps or indirect channel partners end up chasing prospects for whom their product is a weak fit or who are not “ready” to buy 
 

2.   Too many leads are often a waste of resources

•      Dumping leads onto sales reps or indirect channel partners with little thought regarding the work required to pursue and convert a lead can mean leads go cold and are waste 

•      Companies should provide the number of leads that can be effectively managed or, if there are an unusually large number of leads, work with them to follow-up properly or expand sales capacity

3.  Good, well-qualified leads can be poorly distributed resulting in lost opportunities  

•      Many companies sell via multiple sales channels, each having unique capabilities and served market, but when distributing leads companies often resort to the old fashion rule of the larger channel partners get the most leads.

•      While this may seem sensible or be corporately correct, leads could be given to reps or indirect channel partners that do not best meet the prospect’s needs/expectations.  Thus the company (and its rep or partner) has a lower likelihood of “winning” and an opportunity is lost.

Despite the rhetoric companies generally see lead generation program as a tactical afterthought, but they should manage these programs like a strategic asset.  Not only do lead generation programs provide future sales opportunities, but they are also key elements of channel management and competitive strategies.  Lead generation has always been important, but it is even more so in today’s tough economy.  Richmark has worked with clients to develop effective lead generation programs using the Leads Funnel.  These programs deliver a high quantity of well-qualified leads that can then be distributed appropriately.
 

THE LEADS FUNNEL
 

To consistently generate high-quality leads Richmark has developed a model called the Leads Funnel.  The following graphic illustrates how this model works:

		The Leads Funnel

 

The First Cut 

For many companies there are a large (and overwhelming) number of prospects.  Thus the first step is to make a simple cut that identifies prospects that are believed to have sales potential.  This reduces the large universe of all prospects to a more manageable universe of potential prospects.

This first cut should be made using published or well-known criteria such as company size, industry, or geographic region.  Which specific criteria would depend upon a company’s specific situation, but it is usually determined via past experience, internal brainstorming, and/or market research and analysis.  These criteria would be used to direct promotional efforts, develop lists of potential prospects (for sales calls), and/or initially screen any prospects.  Thus it is important that these criteria are published or well-known so that a company can work with conventional sources for prospects, e.g., media buying guides, marketing databases, etc.

However, published or well-known criteria, while helpful as a first cut, are far from perfect.  There will still be a considerable number of low-quality leads (or outright duds) generated by just using these criteria.  Thus additional criteria or filter must be used to generate truly high-quality leads from the initial pool of potential prospects.

Prospect Qualification

Once identified potential prospects must be qualified to generate high-quality leads.  And effective qualification means getting the right answers to the following key issues:
 

•   What is the degree of fit for a company’s products (or services)?  In other words does the prospect actually need the company’s products?  If so, what is the magnitude of the prospect’s pain or problem?
 

•   If there is a fit then what is the likelihood the potential prospect will actually purchase a company’s product (or service)?  Believe it or not just because a company has a need does not mean it will buy, but we will explain later.

Obviously a potential prospect must actually have a need for a company’s product to be a lead.  But from Richmark’s experience prospect lists generated from conventional sources have a fair number of duds, i.e., companies that just do not have a need.  There is considerable leeway in how companies are classified using well-know criteria, and hence there is a lot of “noise” with lists from conventional sources.  Thus potential prospects must be qualified as to whether or not they actually need a company’s product.  

Assuming there is a need, then the question is how well or poorly a company’s product fit the prospect’s needs and expectations.  The degree of product fit is a critical issue for any manufacturer (or service provider), and one that Richmark has worked with numerous clients to address.  A product’s fit depends upon a prospect’s needs and expectations in terms of technical performance and price/ROI, and across many prospects in the market the degree of fit will in all likelihood vary.  In other words the product will have a strong fit (or provide high value or solve a major problem) for certain prospects, moderate fit for other prospects, and a weak/no fit for the remaining prospects.  Higher quality leads are those prospects for which your company’s product is a strong fit.   
 

Although there may be a strong fit that does not mean that a prospect is likely to purchase a particular product and brand.  There are several factors affecting likelihood to purchase, including…

•   The prospect’s awareness of the technology/product and need for education

•   The ROI and attractiveness of a company’s product vs. other options

•   The prospect’s channel and brand preferences 
 

Each of these factors can increase/decrease a prospect’s likelihood to purchase a company’s product and brand and when they will purchase.  The more favorable these factors are towards a company’s product and the company itself then the more likely a prospect will purchase in the short-term (which is what we want!).  Just because one or more of these factors are neutral/unfavorable does not mean a prospect will never purchase, but it does imply that the company needs to take action and the prospect is more long-term.

To get the “right” answers to these issues requires knowing the “right” questions to ask.  Unlike the first cut criteria these specific questions are typically unique to a company and its market, and thus they are not well-known.  They must be developed by having in-depth understanding of end-user needs/expectations and the marketplace and conducting thorough analysis. 

Furthermore these questions should be in the “5 simple questions” form so that they can be used consistently and reliability to qualify leads.  The “5 simple questions” can be used in various touch points with potential prospects, including outbound sales reps, customer service reps, company’s website, channel reps, and dedicated telemarketing campaigns.  Richmark has worked with many client to develop those “5 simple questions”, and we know it is hard
work.  However once done it is a powerful tool and a real competitive advantage.

Lead Management 
 

Now the potential prospects have been qualified and high-quality leads generated these leads must be effectively manage to realize a return on your company’s promotional investment.

Nearly all marketing professionals will stress the importance of tracking and monitoring the leads distributed.  And Richmark would certainly agree.  Many companies have a database, but the data is often out-of-date or only cursory.   The lack of a proper system or procedures and incentives is typically an issue, but too many, poor-quality leads only exacerbate the problem (i.e., more difficult to track a large volume of leads). 

For some companies there is another lead management issue: to which rep or channel partner should the lead be distributed?  This is relevant for companies who have multiple sales channels (or multiple channel partners in a territory) and, thus, have a choice about which channel partner gets the lead.  We believe that these companies
should distribute leads to support the companies channel strategy. This mean distributing leads to the partner most capable of converting the lead OR to a new but potentially large partners as a reward.  But that is not the way it is typically done.
 

Companies with multiple sales channels typically distribute leads based upon sales volume.  In other words the channel partners that sell the most get the most leads.  While there is a rationale for this distribution method, it does not use the lead effectively and strategically 

By failing to do so means that companies fail to leverage the benefits of a multi-channel strategy.  Companies develop multiple channels (or multiple channel members in a territory) to “see” and meet the needs of a heterogeneous market.  Distributing the leads based upon sales volume means that leads could be distributed to channel partners who cannot meet the prospect’s needs and expectations- while there is another channel partner that can!  One typical mistake is distributing leads requiring a system or solution sell to low value-add channel partners, who often represent high volumes, and ignoring the smaller partners who offer significant value-add and can deliver the required solution.

Using leads as a reward for new and promising channel partners is a great way to gain mindshare and push with the channel without having to make price concessions.  No channel partner worth their salt would turn down a good lead, and they usually remember where the leads came from.  On the flip side withholding leads sends a clear message to under-performing partners   

It sounds logical to distribute leads to the “right”, not the larger, channel partner, but why is it not done?  There are several hurdles:

•   The leads are not qualified to begin with, and so a company has no way to differentiate the leads. 

•   The served markets and capabilities of channel partners are not well-understood or profile, and so the company has no way to differentiate the partners. 

•   Even if the leads were qualified and channel partners profile distributing leads based upon volume makes good corporate sense.  This is understandable but it wastes leads, time, and money. 

All of these hurdles can be overcome.  The first two can be overcome with better information about potential prospects and channel partners so that the leads can be qualified and distributed appropriately.  The last hurdle is more of a political challenge.  To overcome this hurdle companies should consider high-volume channels other support that they may really need, e.g., more logistic support, online support for greater efficiency, co-op advertising.

POSSIBLE PITFALL

A prospect expresses interest in a company’s product.  The company qualifies the prospect using 5 simple questions and rates them hot.  The lead is distributed to the “right” channel partner and then… all hell breaks loose?!

What happened?

The lead was a good customer of another channel partner for the company, and thus the company just gave the lead to that partner’s competitor.  Ooops.

How to avoid this pitfall?  First the company can ask the prospect some questions:

•   Does the lead use/purchase the company’s products and brands?

•   Does the lead have an existing relationship with one of the company’s channel partners?

•   Is the lead satisfied with the current partner’s performance? 

While asking these questions is good, the company’s field sales force can be involved in lead distribution to help avoid this pitfall.  A field rep should know the key customers of their partners and thus provide value input about how to distribute such leads

Conclusions  

Every marketing professional and company executive knows that lead generation is important, and most business-to-business companies do something to generate leads.  But given all of the complaints there is room for improvement. 

It is time, in Richmark’s opinion, for companies to take lead generation to the next level.  In other words emphasize quality as well as quantity.  This can be done by developing and implementing a Leads Funnel for your company specifically. 

With a Leads Funnel your company can start a virtuous cycle: a higher conversion rate for leads and increased sales; then greater mindshare for your products and brands; and more support for your company’s marketing and sales initiatives.  In other words you can turn lead generation from a tactical afterthought to a strategic asset. 
 

 For additional information call Rainmakers at 847/251-3327