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Conventional sales thinking says to focus selling efforts on the “hot” prospects – those people who are most likely to be sold quickly. It’s certainly hard to argue with the logic – a salesperson’s time is his or hers most valuable asset, so why spend that valuable time pursuing those who are unlikely to buy in the near future?
Yet this short-term thinking is costly to a company’s long-term sales goals. Peppers and Rogers, a leading consultancy on Customer Relationship Management, made this observation in their paper on “The Next Generation of Lead Management”:
“Eager to capitalize on immediate opportunities, sales reps tend to focus on the ‘hot’ leads for a quick close and rely on basic, product-centric qualification efforts that limit visibility into the unique needs of prospects. To truly unlock the ROI potential of a lead management initiative, a deeper level of insight into individual prospects is required.”
Research supports this position. Gartner Inc. reports that as high as 70% of sales leads are not properly leveraged, leaving significant revenue opportunities on the table. A sales consulting firm reports that surveys of “cold leads” routinely show that 80-90% of these leads acquired a solution to address their needs within a year.
While sales representatives and managers often complain of poor lead quality, the CMO Council, in a study of 800 Chief Marketing Officers, found that:
- 38% of respondents feel they could add more than 20% of incremental revenue if their company’s new business development practices were more effective
- According to 71% of the respondents, fewer than 20% of potential deals actually get closed.
Lead quality is a difficult metric to study. But In-Stat/MDR found that sales reps spend 82% of available time on current customers, leaving only 18% for customer acquisition and prospect development.
The growing body of research, and the concurring observations of leading consultants, certainly seems to support the contention that lead management is a significant issue...and that the handling – or mishandling – of “cold” leads is a significant gap in business today.
Sales management must also face the market reality that “high-quality leads” are more difficult to come by. The fragmentation of today’s media means that relatively static marketing budgets are reaching fewer prospects than even five years ago. Prospective buyers have more choices than ever, and can find any number of suppliers with a few clicks of a mouse. Prospective buyers also have access to more information about any product or service, and don’t need to consult with vendors before the sale as they had in prior years.
Furthermore, obtaining quality prospect lists is a constant struggle and an expensive proposition for marketing. Your cold list may still be a more viable marketing list than those your organization can acquire. “Cold” prospects have at least expressed buying interest at some level, and shouldn’t be dismissed as poor leads.
Clearly, companies that want to increase sales must take a look at their lead management process, particularly how to leverage opportunities that may not appear, at first glance, to be opportunities at all.
Why Leads Become “Cold”
Understanding why your sales team put leads in the “cold” category is the first step to developing a better lead management program. This issue should be explored with your sales team, but prospective buyers may tell representatives:
- They are not planning to purchase for another 6 to 12 months
- They have no specific budget for a purchase
- They are leaning toward a competitive product or service
- They are just investigating alternatives and have no specific purchasing plans
All these are flags that indicate a possible lack of immediacy in a sale.
These may be legitimate statements by prospects – but that doesn’t mean the sale is lost. It only means the sale will be deferred or that the sale may take more effort. Yet all these statements are also excuses buyers may use to deflect perceived sales pressure and scrutiny. This makes it even more important to implement a lead development program for prospects that don’t make the “hot” list.
Creating a Lead Development Program
A sound strategy begins with an effective process. Here are a few key steps to help you organize your approach.
Gain buyer intelligence early. The first contact is the best time to gain the most information about a prospective buyer. What are the problems they hope to solve? What were they attracted to with your company? What quantitative information can be gained – income, business revenue?
The objective is to get useful information for targeted communications campaigns. The more you know about a prospect, the better you can create marketing pieces to move them closer to a sale. But once a prospect “goes cold,” getting this detailed information will be more difficult.
So salespeople should learn more about prospects early, rather than quickly judging the sales opportunity and dismissing those prospects who seem unlikely to buy.
Segment cold leads by key characteristics.
Time after time, marketing effectiveness studies show the importance of targeted communications instead of one-size-fits-all mass marketing. Cold prospects can be targeted based on any number of characteristics – perceived needs, decision time-frame, reason for delay, industry or geography. Regardless of how you do it, just don’t treat all “cold” prospects as a single group – they are distinct as your current customers.
Develop e-mail and postal drip campaigns.
A drip campaign is a series of timed, automated messages to selected target prospects. The objective is to keep your solution top-of-mind until prospects are ready to buy…without communicating so frequently that you become an annoyance. You want to provide information your prospects will value, but you also want to be simple and brief. Each element in a drip campaign isn’t a full sales pitch. Focus on a single message, make your point, and build your sales message over a period of time.
Provide a mechanism for opt-out.
Make sure your drip campaign allows recipients the capability to opt-out of future communications, and that you have a process for removing prospects who become active customers. The last thing you want to do is communicate to new customers as if they were still prospective buyers.
Don’t forget telephone follow-up.
Automated campaigns are an effective strategy for keeping in contact with prospective buyers… while letting salespeople focus on customers and higher-probability prospects. But don’t forget the human touch. Some companies schedule a day-long telephone “blitz” to touch base with “cold” prospects.
An unsuccessful first or second contact doesn’t mean a lost prospect. Prospects may even buy from a competitor, become dissatisfied, and re-evaluate a purchase decision. A solid lead management and development program may not achieve immediate results, but unless your business is short-term, don’t turn your back on prospects. You never know when a “cold” prospect will become hot, and you want a business relationship with them when they do.