Marketing Templates. Lead Generation How-To Guide By Ruth P. Stevens

Transcription

1 By Ruth P. Stevens

2 Your Template for, Qualification and Tracking INTRODUCTION Marketers can enhance the productivity of salespeople dramatically by providing them with a steady stream of qualified leads. Sales leads reduce the amount of time salespeople need to spend making cold calls and increase the time they can be in front of likely prospects, selling and closing business. Generating leads effectively involves seven steps. 1. Set campaign objectives 2. Select the most effective media 3. Develop a compelling offer 4. Plan for response management 5. Qualify the responses 6. Develop a nurturing program 7. Measure your campaign results This MarketingProfs will walk you through the steps, providing worksheets and examples to help you revamp your lead generation processes. 1

3 Your Template for, Qualification and Tracking CONTENTS Introduction Page 1 I. Set Campaign Objectives Page 3 Objectives, Examples, Your Goal Calculate the Exact Number of Leads 2. Select the Most Effective Media Page 7 Communications Medium to Use and Avoid 3. Develop a Compelling Offer Page 9 Checklist of Proven Offers 4. Plan for Response Management Page 11 Inquiry Media, Handling and Fulfillment 5. Qualify the Response Page 13 Setting Qualification Guidelines and Criteria 6. Develop a Nurturing Program Page 17 Communications and Lead Development 7. Measure your Campaign Results Page 19 Seven Techniques to Measure Sales Results Calculating the Cost per Sale Appendix Page 28 Author Page 29 2

4 Your Template for, Qualification and Tracking I. SET CAMPAIGN OBJECTIVES We all know that you won t be able to recognize success unless you clarify exactly where you are heading. Here are some steps to help you set your lead generation objectives and determine your success factors. Try selecting from this list the most appropriate objectives for your campaign. Recommendation: Select one primary objective and no more than two secondary objectives. Objectives Examples* Your Goal Number of leads expected Number of leads qualified Number of leads contacted Lead-to-sales conversion ratio Time frame for sales to close 500 leads 20% of all leads 50% of qualified 20% of contacted leads (or 10% of qualified leads) (or 2% of all leads) 3 months Cost per lead $25 Revenue per lead $5,000 Expense-to-revenue ratio (ROI) $12,500 : $50,000 * NOTE: Numbers are for demonstration purposes only. 3

5 Your Template for, Qualification and Tracking I. SET CAMPAIGN OBJECTIVES (cont.) It s very important to select only two or three objectives and to make them very specific. Most campaign planners decide in advance how many leads they expect the campaign to produce and at what cost. It s also important to generate only the number of leads that the sales team needs to do the job. If you give the sales team too many leads, what happens? They throw them away, and you ve wasted a lot of time and money. If you give them too few leads, they won t make their quota and everyone in the business will suffer as a result. 4

6 Your Template for, Qualification and Tracking I. SET CAMPAIGN OBJECTIVES (cont.) Use this form to calculate the exact number of leads that will make your salesperson (or group) successful. Metrics Formula Examples* Your Numbers A B C D Revenue quota per rep Percent of quota self-generated Quota requiring lead support Revenue per order your number $3,000,000 your number 40% A * [100% - B] $1,800,000 your number $60,000 E Sales required C / D 30 F G Conversion rate for qualified leads Qualified leads required per rep your number 20% E / F 150 NOTE: Numbers are for demonstration purposes only. 5

7 Your Template for, Qualification and Tracking I. SET CAMPAIGN OBJECTIVES (cont.) The numbers here are for illustration only, but they are not atypical in B2B lead generation environments. First, examine the sales quota of each territory concerned and subtract out the amount that will be self-generated through the natural course of territory management. The remaining amount is what needs to be supported by lead generation programs from marketing. Divide this amount by the average order size in your company or category to arrive at the number of closed leads required. Then divide again by the lead-to-sales conversion rate, to arrive at the number of qualified leads required per rep. 6

8 Your Template for, Qualification and Tracking 2. SELECT THE MOST EFFECTIVE MEDIA Not all communications media are equally effective in lead generation. The media choices that give the best results today include: Communications Medium to Use Your Web site (with an offer) Search engine marketing Outbound telemarketing Direct mail Dimensional mail (mail that is lumpy or comes in a box) Trade shows, if the audience is highly qualified Rationale Anyone who visits your site already has a certain degree of interest in your product. But it is essential to capture those visitors contact information, so you can continue marketing to them. Place a simple offer on your home page, inviting visitors to download a case study or white paper, for example, in exchange for leaving behind their or phone number. Keyword bidding and site optimization techniques are extremely effective for lead generation today. With targeted lists, the phone is effective for penetration within relatively small universes. Direct mail is still the workhorse medium for lead generation due to its flexibility and the wide availability of targeted lists. Mail that comes in a three-dimensional package is effective at getting past gatekeepers, like secretaries and mailrooms. Trade shows that attract a highly qualified audience are an excellent choice for lead generation. 7

9 Your Template for, Qualification and Tracking 2. SELECT THE MOST EFFECTIVE MEDIA (cont.) There are many media options that are not working for lead generation today. The media options to avoid include: Communications Medium to Avoid Print advertising Bingo cards Broadcast advertising Rental Trade shows, all other Rationale Most print advertising today is done for awareness purposes, so it does not generate leads effectively. However, if you use direct response techniques, including a strong offer and call to action, print advertising can be effective in lead generation. Also known as Readers Service Cards, bingo cards invite readers to circle a number placed on a print ad in a trade publication, and then send the readers names to the advertisers. These names tend to arrive so far after the original interaction that they are essentially worthless. Broadcast can work for some product categories, like office supplies, but the costs are so high as to make it risky choice for most companies. Due to the scourge of spam, unfortunately, few companies are finding rented lists effective for lead generation. Because the cost per contact is so high at trade shows, horizontal shows generate much waste. 8

10 Your Template for, Qualification and Tracking 3. DEVELOP A COMPELLING OFFER Like any direct marketing effort, lead generation offers are designed to motivate a response. The offer should provide a reason to act something compelling enough to overcome people s natural inertia compelling them to stick with the status quo. It can be a consumer-like incentive, with personal benefit to the recipient. Or it can be related to solving a business problem. Here is a checklist of proven offers that work in B2B lead generation campaigns. free information premium free trial free sample free shipping free self-assessment tool seminar or webinar discount free installation sales call free consultation or audit free estimate self-assessment tool ROI calculator demonstration 9

11 Your Template for, Qualification and Tracking 3. DEVELOP A COMPELLING OFFER (cont.) If you are having trouble deciding which offer to try, you might begin with the most effective category among B2B offers, namely: more information. Business buyers need information to do their jobs, and they welcome information supplied by prospective vendors. Among the most popular informational offers are: brochure newsletter white paper research report Example of a 10 Tips Document case study article reprint demo CD book or video 10 Tips sheet 10

12 Your Template for, Qualification and Tracking 4. PLAN FOR RESPONSE MANAGEMENT Before you go out with your campaign touches, you need to have a well-planned process in place to capture the inquiries so they can be fulfilled, qualified and managed properly. Campaign inquiries come through a variety of media, among them: Mail: Including business reply mail. Telephone: To a toll-free number or your company office number. Scripts must be in place to capture qualifying information and source code. Fax: If possible, set up a dedicated fax line for responses, so they don t get mingled with regular business communications. Like phone and fax, brings with it an expectation of fast turn-around. Web: online response form. Inquiry handling comprises the following steps. 1. Log the inquiry in a database, whether a dedicated lead management database or the general marketing database. Match the inquiry against prior sales and marketing contacts to make sure it is not a duplicate. 2. Fulfill the inquiry with the appropriate materials. 3. Conduct a first screening of the inquiry. 4. Begin the qualification process. 11

13 Your Template for, Qualification and Tracking 4. PLAN FOR RESPONSE MANAGEMENT (cont.) When considering inquiry fulfillment, speed is of the essence. As a rule of thumb, inquiries should be fulfilled no later than 24 hours after receipt. Studies show that the faster the fulfillment materials are received, the more likely the lead is to be qualified. You may choose to fulfill the campaign inquiry in a variety of ways. Traditionally, the promised material is delivered in a flat mail piece. But consider some other ways to mix it up: Fax Catalog Surveys Sales call Press releases Web-based download Telephone follow-up call Multi-dimensional mail piece New product announcements Events related correspondence Personal notes, like congratulations 12

14 Your Template for, Qualification and Tracking 5. QUALIFY THE RESPONSE Not all leads are created equal. You must find out if the prospect is ready to see a salesperson, according to pre-determined qualification criteria. You can find this out via two methods: 1. Ask the qualification questions on your response form. 2. Use follow-up communications to qualify. ( is excellent for this purpose.) The most important approach to setting qualification criteria is to follow the needs of your sales force. It is your salespeople who will be handling the leads and taking them to closure. They know best the nature of the sales process and which buying characteristics are most likely to be indicators of success. Develop a qualification form suitable for your business. To get you started, here are some typical qualification criteria used by B2B companies. Of course, qualification criteria will vary by company and by industry. So just use this list to help you identify the qualifications that make sense for your organization. 13

15 Your Template for, Qualification and Tracking 5. QUALIFY THE RESPONSE (cont.) Budget. Is the purchase budgeted? What size of budget does the prospect have available? You will want to establish categories or ranges for easier scoring. Some companies request information about the prospect s credit history here. Authority. Does the respondent have the authority to make the purchase decision? If not, you should try to capture additional relevant contact information. Need. How important is the product or solution to the company? How deep is their pain? This criterion may be difficult to ask directly, but it can be approached by roundabout methods. "What is the problem to be solved?" "What alternative solutions are you considering?" "How many do you need?" "What product do you currently use?" Timeframe. What is the lead s readiness to buy? When is the purchase likely to be? Depending on industry and sales cycle duration, this can be days, months or even years. Also be sure to ask whether they would like to see a salesperson. Potential sales volume. How many departments in the company might use this product? How much of or how often might they need the product? 14

16 Your Sounds Template great, for Lead but Generation, there are many Qualification challenges and Tracking in Content Match: 5. QUALIFY THE RESPONSE (cont.) Predisposition to buy from us. Are they past customers? Are they similar to our current customers? Would they recommend us to their colleagues? Are they willing to call us back? Account characteristics. Company size (number of employees or revenue volume). Industry. Parent company. Some tips: We are doing an exercise here, but in real life you MUST develop these criteria in concert with your sales team. Ask them "What are the characteristics of an ideal lead? How would you describe someone who is ready to buy?" Keep your criteria limited. Less is more. Don't ask anything for curiosity's sake. And resist the temptation to use this process for market research. Make the form easy to complete. Use ranges and checkboxes. 15

17 Your Template for, Qualification and Tracking 5. QUALIFY THE RESPONSE (cont.) Guidelines For Qualification Possible Criteria Your Requirements Budget Authority Need Timeframe Potential sales volume Predisposition to buy from us Account characteristics Other Remember: Never, ever, pass an unqualified lead to sales. 16

18 Your Template for, Qualification and Tracking 6. DEVELOP A NURTURING PROGRAM When an inquiry is only partially qualified and does not make the grade of readiness for the sales team, it needs to be nurtured, in a process sometimes called incubation or lead development. Nurturing involves a series of communications intended to build trust and awareness and to keep a relationship going until the prospect is ready to buy. Sources of leads requiring nurturing include: Partially qualified inquiries. They are not ready to deliver to sales, according the pre-defined qualification criteria. Leads returned by the sales team. The contact may have changed jobs, or the business need may have changed. Nurturing can be done via all kinds of media telephone, direct mail, and being the most popular. 17

19 Your Template for, Qualification and Tracking 6. DEVELOP A NURTURING PROGRAM (cont.) Here are some typical nurturing tactics: Catalog mailing Seminar invitation Trade show invitation New product announcement Newsletter ( or print) Press release Survey Video or CD mailing White paper, downloaded or mailed Article or chapter reprints Testimonial Case study Personal communication, like a birthday card or holiday card Letter from various sides of the company, such as the CFO, customer service department, engineering, or senior executives The objective of the nurturing program is to be in touch with the prospect when he is ready to buy. Things change rapidly in businesses. The only way we can know when he is ready is by regular communication. 18

20 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS Business marketers operating in a multi-channel world are frequently challenged by problems with measuring the results of their lead generation campaigns. Without solid measurements, it s hard to demonstrate the value of marketing and justify the budget. But when multiple people and functions are involved at various stages of the lead generation and conversion process, evaluating the contribution of each element can be close to impossible. Here are seven techniques to you could incorporate into your lead generation campaigns to measure sales results. Each has something to contribute to the mix and each has its limitations. Experiment with applying them to your situation. 1. Closed loop Method: Track each qualified lead to its end result, whether closure, rejection or loss to competition. Powerful but expensive, so it works best on high-value products and services. Usually under-reports results, so it needs to be supplemented by other techniques. 19

21 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) 2. End-user sampling Method: Select a statistically projectible sample of end users who received the campaign message. Survey them via phone, or mail. You ll find a sizable number of accounts who did buy from you but whose purchase fell through the cracks of your closed-loop tracking system. Inexpensive, reliable and captures actual sales from multiple channels. But you need to be careful not to over-survey your customers. 3. Data matchback Method: Wait a suitable period (around the average length of the sales cycle) and then review the revenue levels in the accounts that received the campaign. Not suited to situations involving third-party distribution channels. May overstate the sales that result from any particular campaign. 20

22 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) 4. Control groups Method: Isolate a set of customers who won't see the campaign and compare sales in these accounts versus a set of similar accounts that were promoted. Ideal in a single-channel mail-order environment, but difficult to implement in the broader world of business marketing. Works well in long-term, multi-tactic campaigns, like loyalty programs. 5. Exclusive offers Method: Create an offer that is only promoted in a particular campaign. Best suited to single tactic campaigns for products with short sales cycles. 6. Product registration Method: Use your product registration systems to ask the customer to indicate where or when they bought, and some ask what influenced their purchase decision. 21

23 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) 7. Activity-based Measurements Method: Measure just lead-generation activities that are controlled by marketing. Metrics include: cost per thousand, response rate, cost per inquiry, conversion rate to qualified lead, cost per lead, campaign turn-around time. Good for when it s too difficult to get sales information connected to marketing campaigns. Calculate the Cost Per Closed Lead (cost per sale) Let s take a closer look at one activity-based measurement. One of the most helpful metrics you can track is the cost per closed lead, also known as the marketing cost of sales. This will help you figure out whether you are spending the right amount on your lead generation. In the hypothetical example below, the campaign costs $15,000 and generates 150 inquiries. So the cost per inquiry is $100. Separately, we calculated the average cost to qualify an inquiry for the year by dividing the company s total cost of inquiry qualification (backend handling) by the total number of inquiries put through the qualification process. 22

24 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) Next we divide the total cost per inquiry qualified ($150) by the qualification rate (25%) to calculate the cost of a qualified lead. Then we divide that by the conversion rate (30%) to get the cost of a closed lead ($2,000). If you don t know your qualification or conversion rates, check with your finance people. Metrics Formula Examples* Your Numbers A Cost per inquiry [campaign cost] / [number of responses] $100 B Average cost to qualify an inquiry [backend handling costs] / [number of inquiries] $50 C D E F G Total cost per inquiry qualified Lead qualification rate Cost of qualified lead Lead conversion rate Cost of a closed lead A + B $150 your number 25% C / D $600 your number $100 E / F $50 NOTE: Numbers are for demonstration purposes only. 23

25 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) Make Sure Your Cost Per Closed Lead Isn t Too High Next we calculate the allowable cost per closed lead and compare it to our actual costs. To get at the allowable, it s not actually necessary to know how many inquiries will be generated, qualified and converted. Instead, you just need to know the net margin per order and the direct sales expense per order, which you can get from your finance people. Simply subtract the cost of sales (hypothetically set here as $3,500) from the net margin per order ($6000). Then compare the cost per closed lead to the allowable cost per lead. 24

26 Your ma Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) In this example, the campaign looks promising, since the cost per closed lead is $500 less than the allowable cost per lead. Metrics Formula Examples* Your Numbers A Average order size [average revenue] / [number of orders] $10,000 B Net margin per order A * [your margin rate] $6,000 C Allowable cost per closed lead B [your direct sales expense] $2,500 D Cost of a closed lead From Step 4 (on previous page) $2000 E Is the cost per closed lead within the allowable limit? Is D < C? YES NOTE: Numbers are for demonstration purposes only. 25

27 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) Calculate Your Break-even Campaign Response Rate Finding the campaign break-even response rate begins with the same calculation we just performed to identify the allowable cost per closed lead. It then works back from the allowable cost per closed lead, to the allowable cost per qualified lead, to the allowable cost per inquiry and ultimately to the response rate required to break even. In this example the break-even response rate is 0.8%. So you would ask yourself whether you can be fairly sure you ll get at least 8 responses per thousand. If that doesn t feel realistic, then you need to lower your CPM, strengthen your offers and lists, or improve your qualification or conversion rates. 26

28 Your Template for, Qualification and Tracking 7. MEASURE YOUR CAMPAIGN RESULTS (cont.) Metrics Formula Examples* Your Numbers A Average order size [average revenue] / [number of orders] $10,000 B Net margin per order A * [your margin rate] $6,000 C Allowable cost per closed lead B [your direct sales expense] $2,500 D E F G Lead conversion rate Allowable cost per qualified lead Inquiry qualification rate Allowable cost per inquiry your number 30% C * D $750 your number 25% E * F $ H Campaign cost per piece your number $1.50 ($1500 CPM) I Break-even campaign response rate H / G 0.8% NOTE: Numbers are for demonstration purposes only. 27

29 Your Template for, Qualification and Tracking APPENDIX Reading List The Marketing Manager s Handbook, by Eric Gagnon (Internet Media) Business-to-Business Direct Marketing, by Robert W. Bly (NTC) DMA Handbook, by Ruth P. Stevens (The DMA) fro the Complex Sale, by Brian J. Carroll (McGraw-Hill) Trade Show and Event Marketing, by Ruth P. Stevens (Thomson) Business-to-Business Marketing Research, by Martin Block and Tamara Block (Racom) The White Paper Marketing Handbook, by Robert W. Bly (Racom) B2bmarketingbiz.com: weekly case studies 28

30 Your Template for, Qualification and Tracking AUTHOR: Ruth P. Stevens is author of Trade Show and Event Marketing: Plan, Promote and Profit, published in 2004 and The DMA Handbook, with a second edition published in Ruth consults on customer acquisition and retention, for both consumer and business-tobusiness clients. She has held senior marketing positions at Time Warner, Ziff-Davis, and IBM, as well as two Internet startup companies. Ruth teaches graduate students at Columbia Business School, and is past chair of the Business-to-Business Council of the DMA. Crain s BtoB magazine named Ruth one of the 100 Most Influential People in Business Marketing in Ruth serves as a director of Edmund Optics, Inc. and is president of the Direct Marketing Club of New York. She has studied marketing management at Harvard Business School and holds an MBA from Columbia University. 29