The Chemistry of Strategy tm Newsletter June 30, 2015

Unqualified leads are worse than no leads

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"What happened to the leads we got from the last trade show?" Beth, the CEO, wanted to understand why she should continue to invest in marketing when their manufacturers' reps obviously were not following up on the trade show leads given to them. Beth had hired Val to expand the customer base, but after eighteen months, all Val appeared to have accomplished was spending a lot of money on marketing events, expanding the number of manufacturers’ reps receiving commissions for existing work, and many, many unpursued leads.

"We’ve gotten our name out there and prospects are expressing interest," said Beth. "I don’t understand why the reps aren’t jumping on the leads we send them. What’s the problem?”

So she invited one of their reps to attend the company's planning meeting in order to help them understand what was happening. “It’s really very simple,” said Bob, the rep. “The only resource a rep has is his time. The successful reps optimize their use of time. Using a rep's time to qualify a raw lead has been proven to be a waste of their time."

In fact, a study of successful reps a few years back reviewed the three possible strategies for handling leads. Sales reps can:

  1. Follow up on every lead they are given.
  2. Flip though the deck to see if they recognize anyone and toss the rest in the trash.
  3. Toss the entire stack in the trash and continuing working with their own known base.

The strategy that optimized a rep's income was #2, closely followed by #3. It turns out that following up on all the contacts in the typical deck of leads generated negative income for the rep. Here’s why:

  • Most leads are old by the time they reach the sales reps. If a prospect was truly interested a month or two ago, he’s either solved his problem or moved on to something else.
  • Most leads are raw and need to be qualified
         Do they have a current need?
         Do they recognize your product can meet their need?
         Do they have the budget to buy?    
         Is there sufficient urgency to make a buying decision soon?

A lot of the “leads” from the last trade show were people who wanted to get a free coffee cup from Beth's company. The only thing the company knows for sure about these leads is that they like coffee.

“So,” Beth said, “what if we improved our lead handling process to quickly qualify and distribute them. Could we count on the reps to follow up?”

“I would expect them to, once the reps verify that following up on your leads is a good use of their time," said Val. She and Beth agreed to shift resources and invest company resources in quickly qualifying leads, and to avoid lead generation via free tee shirts and coffee cups.

As it turned out, the coffee cup leads were easy to qualify. The company hired to ship the coffee cups did a poor job and most arrived cracked. One by one, the recipients called the company to ask for a replacement cup. Val’s staff was now trained to get answers for a set of four qualifying questions. Thus the company was able to send the sales reps a much smaller deck of completely qualified leads.

Create a strategic plan with your team

"Half the money I spend on advertising is wasted;
the trouble is I don't know which half."
 --- John Wanamaker

A well-facilitated strategic planning process is a proven way to make sure the company, including the marketing department, has clarity with regards to the company's strategy. A good strategic planning process helps you create a plan that not only capitalizes on long-term opportunities and optimizes the value of your company's current reality; it creates a plan that can provide directional guidance and sustain the support of your stakeholders.

How long have you been saying that you will develop your strategic plan, but you haven't yet done so? Why? Perhaps it remains on your to-do list because it feels like a huge, laborious process and you haven't the time to spare to do it. Peak-performing companies have a clearly defined strategic plan…and it doesn't have to take long to create an effective one.

John W. Myrna

is co-founder of
Myrna Associates Inc


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