As we conclude our mini series on the state (or art) of lead conversion, we move into what many marketers dub “the get me hired or fired” stage: the results.
The stark reality is – whisper it very quietly now – most leads aren’t sales ready.
In fact, over the past few years various B2B industry reports indicate that as little as ⅓ of B2B leads generated, could truly be categorized as sales ready.
While this isn’t ideal, it also makes sense. When a lead arrives into your CRM, they have expressed *an* interest, but how big that interest is is still to be confirmed.
Here are three key considerations to help accelerate pipeline velocity:
- How ready is ready?
Marketers spend huge amounts of time, brain power and money looking at lead nurture and yet, when the lead arrives, rather than assess its readiness and signpost it accordingly, the temptation is to treat all leads as equals. Instead, an initial assessment should leave the marketer confident of the ‘intent’ of the lead, and ensure it is directed to the most appropriate next touch point.
It’s rather like arriving at a restaurant with a large party. We know everyone there wants to eat *something* but appetite levels vary. Some will want three courses, some will want one. Some will drink expensive wine, others won’t. A good restaurant will quickly assess the personalities within the party and identify opportunities to cross sell or upsell food or drink options.
Leads have differing ranges of sales cycles; those with longer cycles are looking for proof, or further information, to justify access to a share of their wallet. Those closer to purchase need fast access to specific, often bespoke, areas they believe your product or service will help them solve.
- Patience is a virtue
Post lead ‘readiness assessment’, nurturing or keeping the lead “warm” will ensure more revenue from lead generation efforts. According to a report from Annuitas, nurtured leads spend 47% more than non nurtured leads.
Best practice nurture frameworks will tell you to automate, personalize and serve content, or information, appropriately. The theory is great, however the practice can be very different. Most marketers are under significant pipeline pressure which often manifests in a simple mantra of ‘keep the sales team busy’.
While leads can be passed directly to sales, it is important to understand that the objective should not initially be to convert the lead into a sale as quickly as possible. Instead, the sales person taking the lead should aim to become a ‘trusted advisor,’ rather than a seller, and ask ‘how can I help you?’ rather than ‘what can I sell you?’ It’s something Agent3 feels strongly about because, if the sales team recognises that the concept behind lead nurturing is to build a long-lasting relationship with a prospect, this quickly results in leads moving to ‘sales ready’ status.
Nurture, ultimately, is intended to build brand loyalty as well as increase retention and average order value.
- When MQLs are the answer, but not the metric to manage
With the explosion of martech, demand gen marketeers’ efforts can be simply & transparently measured in real-time, providing the opportunity to swiftly adapt and optimize as data pours in. However outside of campaign optimization, many marketers struggle to define a clear return on their lead generation investment.
After all, what can’t be measured, can’t be managed.
There are two core metrics to measure when calculating your demand > lead generation ROI.
First, cost per lead (CPL), is the $ amount associated with the acquisition of a net new opportunity. This cost would encompass all channels or campaign management to generate a new lead. As a simple working example; if your budget is $10,000 (to include all activity, campaign management, digital media spend or telemarketing efforts) and you generate 250 leads, your CPL is $100.
The second (and most important) metric is lead value. Typically, in B2C marketing, this is average order valve (AOV), mainly due to most purchases being a single action or sales cycle. This can translate to B2B marketing on the basis that your product or service has a short sales cycle (sub 30 days) or a single purchase entry point.
The alternative, and usually better suited, monitor (and manage) is the customer lifetime value (CLV). As we have already established, leads arrive at different stages of ‘sales readiness’: while one lead might have a CLV of $10,000, another might be $100,000. The key is to establish the average across a suitable period (across B2B, best practice is to take the last 3 years customer sales and establish the CLV)
To calculate the ROI we know that if we spend $10,000, we generate 250 leads, this gives us a CPL of $100. Taking our conversion rate (net new lead to sale) as a % and our CLV as a $, we can calculate our ROI using the following calculation:
Example using 3 metrics
- Demand gen campaign spend: $10,000
- 10% of our leads convert
- CLV $25,000
ROI = (customer lifetime value – marketing investment) / leads generated
($25,000 – $10,000) / 250 = $60
In this example the marketing department is turning every $60 of demand generation campaign spend into $25,000 of revenue.
We hope you have found this three-part series on lead conversion useful. As we mentioned at the outset, nurturing a prospect through a buyer’s journey from an initial expression of interest to a point where a lead becomes a MQL and a sales conversion could occur is tough. And in today’s commercial environment, where there is really no such thing as a standard B2B buyer journey, more than ever, sales and marketing teams need to work together to consider next best steps or touchpoints for the differing stages of that journey.
Your efforts will be worth it. But remember to report your successes: what can’t be measured can’t be managed!
Need help or advice? Reach out to us: info@oneninefivedemand.com.