Why Too Many Leads Can Hurt Sales Performance Nov 6, 2006 12:11 PM
, By Dan McDade
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Is it possible to produce too many sales leads with
a direct marketing campaign? Are qualified leads really that important? The
answer to both questions is yes.
How can that be when big companies spend millions on
large-scale marketing campaigns that bring in an avalanche of leads? Well, the
answer is in where all of those leads end up—buried.
That’s because
this type of direct marketing campaign is designed specifically to focus on
lead volume. And while there are undoubtedly some good prospects in the load,
the true sales opportunities are mixed in with a ton of low-quality names that
really are not leads at all. It’s a bit like looking for a needle in a very
large haystack, which is not how sales reps working on commission like to find
their leads.
Culling fewer, but better qualified, leads can lead
to higher sales. When sales reps are presented with a smaller number of highly
qualified sales opportunities (instead of a stack of low-quality “leads”),
they’re able to focus their efforts and give high-value prospects priority
attention.
The problem is that frequently little if any lead
management is integrated into a direct marketing campaign. Volumes of names are
passed directly through to the sales rep, without qualification or
prioritization.
Practicing lead quality over quantity is more
difficult than it sounds, however, because a traditional direct marketing
campaign is typically measured based on the volume of sales leads it generates,
not on lead quality. In contrast, sales success is measured based on the number
qualified leads converted into revenue.
Do you see the
gap? This reveals why in most companies today, there’s a huge misalignment
between sales and marketing. It’s also why a direct marketing campaign that is
initially deemed a success based on the number of leads it brings in can end up
generating much less revenue than expected.
Defining qualified leads
So what are qualified leads made of? The best
normally have 10 attributes. In comparison, unqualified leads rarely have more
than three of the following:
SIC or NAICS code
Firmographics (revenue, number of employees, number
of locations)
Decision-makers and influencers identified
Environment documented
Decision-maker engaged
Business pains uncovered
Decision-making process and timeframe documented
Budget allocated or process for budgeting documented
Competitive landscape documented
Awareness of sense of urgency or existence of
compelling event
Qualifying
your prospects with these data delivers benefits beyond simply enabling sales
reps to identify the most likely sales candidates. For instance, by having a
detailed picture of the prospect’s business drivers, plans, and buying
processes, the sales rep is positioned as a knowledgeable adviser interested in
the prospect’s business challenges. As part of the qualification process, the
prospect has also been “warmed up” to the proffered solution before the actual
meeting with the sales rep ever takes place, eliminating the dreaded cold calls
and providing better results than can be obtained from a generic direct
marketing campaign.
Dan McDade is the founder/president of PointClear, a business prospect
outsourcing company based in Norcross, GA.
Why Too Many Leads Can Hurt Sales Performance
