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Share your expertise with our global network in the CLOSE Community Forum...
Your insight is invaluable to your peers, so voice your thoughts and opinions in our online community. The forum is a great place to pose questions, solicit advice and get helpful feedback from others working in sales. Help your peers grow professionally and expand your own knowledge by participating. Check out the CLOSE Community today! |
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“Stepping over dollars to get to dimes.” This is one of my favorite statements. In fact, in our sister publication, Marketing Magnified, I used my favorite dime-line to discuss the very same topic I raise in this issue of the CLOSE eJournal: Retention and Loyalty Marketing programs. So again I ask, are we stepping over dollars to get to dimes? Both marketing and sales are often guilty of this. While both sales and marketing focus on bringing in new customers, few of us seem to be looking at how customer churn is affecting the bottom line.
The CMO Council recently released a report that focused on the need for companies to wake up and embrace the data. In Business Gain From How You Retain, 31 percent of companies surveyed had customer churn rates of more than 10 percent and 32 percent reported turnover of five to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than five percent. And, while churn is a big issue, nearly 67 percent of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships. So what does this all mean? Simply put: we all need to wake up and stop flying blind. It seems a shame that with the abundance of data we have at our disposal in this post-CRM era of business, organizations are not truly unlocking the potential of that data. We look at leads, closes and contacts, but are we looking at how our CRM tools and our data can unlock new streams of business and profit? In this day and age of on demand solutions, there is no reason both marketing and sales can’t collaborate and unify data resources and build a unified and comprehensive view of the customer. I will borrow some wisdom from Melissa Boxer, Vice President CRM Marketing & Loyalty Solutions for Oracle Corporation, a keynote speaker at one of our CLOSE workshops. In her presentation, Melissa said “Loyalty is not customer satisfaction. It goes beyond—loyalty is primarily the result of creating sustained moments of customer delight.” Having a clear, unified and fully collaborative and aggregated view of the customer is one of the only ways we as sales and marketing professionals can engage in these meaningful engagements to create this delight. We have the tools, and we certainly have the mandate to find solutions that optimize the sales and marketing process, now, its time to leverage these systems to really get the job done. If you are interested in learning more about reducing customer churn through retention programs, the CMO Council is extending an open invitation to the members of CLOSE to attend a 1-hour complimentary webcast on July 16, 2008 that will focus attention on best practices and practical examples of how companies like Iron Mountain and Gateway have executed successful retention marketing programs, leveraging their customer knowledge and insight to build deep and lasting relationships. Register for this webcast It is time to wake up and keep the dollars AND collect the dimes! Until next month… Liz Miller Vice President CMO Council lmiller@cmocouncil.org |
For CLOSE Members Only... Based on a Yankee Group survey of sales management, salespeople and IT practitioners at large organizations conducted late fall 2007, this Yankee Group Report studies the current business environment and use of technology to improve sales effectiveness.  Driving the Bottom Line From the Front Line Driving the Bottom Line from the Front Line is a new CMO Council thought-leadership initiative that addresses the challenges facing global companies in their quest to develop world-class go-to-market capabilities. The study represents a “scorecard” that highlights an alarming trend among multinational companies: marketing and sales leaders give themselves decidedly poor marks when assessing their own go-to-market effectiveness! Download report | ||||
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Squeezing Revenue From Tired Old Sales Leads New C-level executives today are unhappy with the return on their marketing campaign investments. Yet each quarter these same unhappy executives continue to pour billions more dollars collectively into the same lead-generation campaigns and produce the same mediocre ROI.
Stuck Between a Rock and a Hard Place
For every 100 qualified leads generated in a typical campaign, an average of two to five turn into revenue – a low rate of return, but considered acceptable among upper management as an unavoidable cost of doing business. At best, this number represents a miniscule 5 percent yield, which to put it in blunt manufacturing terms is worse than a 95 percent scrap rate! Not many other departments in an organization are allowed to provide a sub-5 percent process yield. Yet despite this low efficiency, many businesses are stuck between a rock and a hard place – unhappy, but unable to stop investing in lead generation campaigns because they are such an integral part of the revenue creation process.
Interestingly, the processes of lead-generation campaign execution have remained largely unchanged for many decades and so has their return. New channels have been added to the media mix, such as fax, email and the Internet, but the basic process of running a campaign has changed very little. Clearly a different approach is required in order to make the process more efficient. As Albert Einstein said, “Insanity is doing the same thing over and over again and expecting different results.”
Overcome the Hurdles and Improve
Improvements to lead-generation efficiency are inherently difficult to make because any proposed change must cross departmental boundaries; as leads are produced by the marketing group, they are consumed by the sales team. Marketing and sales are parts of the same whole, yet they are frequently at odds with each other as each operates with slightly divergent goals. Marketing is on a mission to produce more leads, and if a lead does not convert into a sale, marketing tends to attribute it to the “sales does not know how to sell” explanation.
The sales team wants only leads that they can convert, and if a lead does not convert, the team attributes it to the “marketing sent over poor leads” explanation. Having many sales leads that do not convert to revenue is infinitely worse for the sales team than having just a handful of leads that do convert, because each unproductive lead has to be processed and followed up on, and each lead consumes valuable resources. Marketing is typically less familiar with the sales process and has no incentive to learn. To add to the fray, the sales team rarely gives the marketing group detailed feedback as to why a lead was poor or what type of leads are needed to sell more effectively. Without a closed-loop feedback process between the two groups, it’s not hard to understand why so many lead-generation processes today remain inefficient and disconnected.
To make the process smoother and more efficient, the marketing group must be realigned with the way leads are consumed. Using a new sales-driven orientation to lead generation helps marketing focus on the common company goal of closing more sales, and become closely synchronized with the sales process.
Fruit Picking and Sales Leads
A major cause of lead-generation inefficiency is the “single shot” campaign model: Campaigns are typically executed in isolation and leads that did not convert immediately are discarded in favor of new leads.
It is a bit like an orchard farmer during each harvest season, who collects all the fruits from the trees and picks out and sells the ripe fruits, while throwing away all the fruits that are not yet ripe. An orchard farmer would not stay in business if he had to throw away as much as 95 percent of his fruit because they are not ripe when they are picked. Yet, 95 percent is about the average number of not-ready-to-buy leads thrown away from a typical lead-generation campaign.
Interestingly, roughly 45 percent of all respondents to a lead generation campaign will make some type of purchase within 12 months – this is known as the marketing rule of 45 that was discussed in the Marketing Management Journal, Volume 3, Issue 2 in 1994. This means the revenue potential in the leads that didn’t convert immediately is actually quite high. Smart orchard farmers quickly figure out that if they wait a while for the fruits to ripen, they can squeeze out more profits. Perhaps this is a lesson for the marketers as well.
Why do many leads fail to convert immediately? The answer is complex and multifaceted: even for a prospect that has a project that is already budgeted, situations change, the project team may change, and the timing may be delayed. With each change, a potential purchase can be pushed out by several calendar quarters or more as a hot lead quickly cools down to a warm lead and then a cold lead. When it falls off the sales forecast, it doesn’t necessarily mean that the lead will no longer convert; it just means that it probably will not convert right away. Eventually many will still convert to a sale. But how long can your sales team economically stay engaged? Depending on your sales cycle, most salespeople will probably not engage beyond the current calendar quarter, because their compensation structure motivates them to pursue other more immediate opportunities. Since sales has no time or interest to follow up on these cold leads, another process must be put in place to give the lead time to ripen, without sometimes irritating pressure from a salesperson. The logical place to nurture these leads is within the marketing department, and such a process involves engaging the cold leads periodically, collecting insights from them that the sales team can later use and monitoring them until they are ready to be converted.
Read the full article on the CLOSE web site.
Market2Lead, Inc delivers on-demand marketing automation solutions to plan, automate and gain visibility into the closed loop campaign-to-cash metrics via powerful executive dashboards. Supporting every size business from start-up to public companies, Market2Lead solutions deliver progressive insight into individuals, their needs, and their purchase intentions enabling marketers with a powerful and comprehensive, single source of marketing intelligence. Market2Lead solutions have powered over 50 million leads to date. |
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Oracle Vertical CRM Applications: Realizing Business Benefit Through Industry Best Practices
Download now to read more (requires CLOSE registration) |
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Liz Miller Kim Korupp |
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Lee started out in sales with IBM in 1992. During the time Lee worked for IBM, he was one of the top sales representatives, at one point blowing his quota by over 1000%, and he has won every sales award that the IBM Corporation offered. Lee currently works in a marketing role at a joint venture between IBM and Ricoh (InfoPrint Solutions Company) where he is challenged by bridging the gap between sales and marketing functions.