Why Too Many Leads Can Hurt Sales Performance

Nov 06, 2006 10:41 PM  By

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.