Grading Leads

When Marketing is chartered to bring in leads at a very low dollar amount per lead; more is not always a good thing. There is pressure to bring in only low cost leads, which tend to have a lower value to sales. By assigning multiple attributes to sales leads, such as developing a point system and targeting an average lead quality along with a target acquisition cost, sales groups will see better sales results.

Not all businesses and sales teams are driven by leads and converting those leads to sales. If your business is based on lead generation and the conversation of leads to sales you might find the following of interest. I have worked in both types of sales environments, those focused on leads and those focused on the enterprise. One sales organization I worked for, sold to the 35 largest telecoms in the world. It is a relatively easy task to find out who the largest telecoms are, and once the list is developed it is straight forward to determine the individual or individuals who are the decision makers in those organizations. There is not a large need to use marketing resources for lead generation in this type of sales organization.

Yet in other organizations I have worked in, leads were the life blood of the organization. Fresh leads flowed into the top of the sales funnel and executed sales deals flowed out of the bottom of the funnel. What happens to the leads while they are inside of the funnel is in many organizations a bit of a mystery. The mystery surrounding the processes that are associated with leads needs to be pealed back to really maximize sales impact. If leads are your life blood, then you had better have a good fix on how to maximize their value to your sales organization.

To see how one comes to terms with this process I am going to jump ahead a bit and then come back to the beginning. Depending on a number of factors (sales infrastructure, experience of reps, complexity of sale) businesses who require sales leads to keep their business going find out quickly that there is an optimum number of leads that one sales person can deal with in a day. It is important to know what that number is. Too few and your sales people are sitting on their hands; too many and the process becomes very inefficient. Sales reps need to wade through a heap of leads to find the hot sales opportunities.

Let’s say for example that one sales representative can make 50 quality contacts in one week, but you have 200 leads for each sales representative every week. That means that 150 of the leads are not being properly followed up on. Now if we had the ability to gaze into a crystal ball and judge the quality of each of those leads, we might see that 40 of the leads are hot, 80 are cold, and 80 are marginal. Which leads do you want your sales team to follow-up on? The 40 hot leads should be the number one priority of the organization. Once the leads are not graded, there is only a 20% chance on any random call that your sales team is following up on an optimal lead. Why not move the hot leads to the head of the call queue and then message the 80 marginal leads with a campaign that addresses customer value and has a clear call to action. When the prospect responds, they come back into the system as a hot lead.

Usually most organizations will send some type of communication to all 200, just to keep them warm. After this general communication let’s look at the numbers. As an example let’s say that after the campaign 7 of the leads that were previously marginal come back as hot; and out of 80 cold leads, 3 come back as hot. With the original 40 leads classified as hot, this gives us 50 hot leads for one sales representative to follow-up on that week. The amount of time a sales rep would have spent chasing bad leads has been cut dramatically.

Second level qualification or a “Closed Loop Marketing” system is imperative to making a lead driven sales team more efficient. Sales should pursue prospects that represent the best opportunity and there should be a process in place to bubble up these high-value prospects. All leads must be graded by some agreed criteria to maximize the efficiency of a sales department, if there is not an effective grading system in place then sales resources are being wasted, the team is not motivated to work at their peak, and the entire sales process slows down to a crawl. When I am focused on lead grading criteria, I like to grade very aggressively. I would prefer exceptional leads and have some sales capacity left over, instead of overrunning my sales team with poor leads.

Everyone needs to establish their own grading system that works for them and gets the sales machine rolling. Criteria for leads grading can be accomplished in a number of different ways. You can ask the customer if they would like to be called (yes) (no). If someone is asking to be called they must be considered as having good potential. Other ways to categorize a lead are asking for a purchase time frame, number of units, company name, all of these and additional criteria can be used to determine grading leads. I recommend you develop your grading system and then divide the leads into their buckets. Do you now have enough or not enough to work with? You then adjust the criteria based on the amount of leads you need to put into the top of the sales funnel on a daily, weekly or monthly time period.

By grading leads you will see an increase in employee morale, achieve higher close rates and see increases in revenue per employee. All of these are good things.

Whatever decisions you make, make sure you identify what your objectives are prior to designing the sales process, establish your goals, and measure the effect of the sales process. If you do not see a measurable improvement in sales closures that means your sales people need further training, or the criteria you use to grade the leads is wrong. Adjust based on measured feedback, try again and compare results. It has been my experience that 5 salespeople with good sales leads will outperform 5 salespeople with bad leads any day of the week.

In baseball the batting the coach instructs players to not swing at bad pitches. Sales is much the same, don’t chase bad leads, not all leads have the same value to your sales organization, figure out how to establish a grading system, measure the effect of lead grading and see improvements in your sales.

Necessary Evil or Tradeshows & Conferences: Part One

Trade shows and conferences are still an important part of the marketing mix, but very seldom is their potential fully realized. The booth is packed and shipped with the latest literature packs. People who may or may not be appropriate to staff the booth are volunteered for booth duty. Flight reservations and hotels are booked. The day arrives and the show commences. The booth is always staffed, the literature is always present, anyone and everyone who enters your floor space is talked to and their badge is scanned. Someone is placed in charge of the leads, everyone goes home, and management feels that shows not that important in the marketing mix.

Most companies have very professional people who worry about the show logistics, but few companies focus on what happens in the booth, and the follow-up process. Why? Because event marketing is not that high of a priority to most companies. People are sent, not selected for their potential impact. The follow-up is spotty. The potential impact for the show is not really realized.

To really understand what the potential is, someone has to be given the ability to change what is done at a show. At a company I was in charge of sales at, we would take four workstations to a trade show and demo all day. At the end of the day we would be dead tired, and have accumulated 100 to 300 questionable leads. We talked to so many people that they started to blend to together. Well meaning booth staff would look for people that were standing two or three deep at the demo stations and ask to if they could scan their badge for follow-up. When we left the show we would send out a mail pieced that thanked everyone we scanned for their attendance and then we would just wait to see what would happen next.

I lobbied to not do any demonstrations and request that booth visitors fill out a form during a brief product overview. The first question was, I am here only for the “give away”, and I am not interested in your product. True or false. After much debate the company decided to cut back to one demo station for occasional demos and to include the form. Just the action of qualifying the lead had such a positive impact on the sales people that they spent more time in the booth. They were excited about talking to real potential customers and about real potential deals at the show. No phone exchanges, no who are you again scenarios, or no I can not talk to you right now I am in a meeting. Real sales conversations with the sales team fully engaged were happening on right in our booth. The next show we left the single demo station behind and we improved the process five fold. We actually were plugged into some sales deals only because we had attended the show. Our competitors adopted our strategy a couple of shows later.

Think about it. As an example say someone throws 10,000 Monopoly dollars on the floor of a room, and in that paper mess they mix in 1,000 US dollar bills. You are given 10 minutes in the room and whatever you can carry out is yours. Now let’s say you have an hour, then a day and now 3 days to sort through the money on the floor. At what point have you picked up all of the US dollars and you start collecting Monopoly money? My guess is that point is never reached. Now let’s say for ever piece of money, real or counterfeit that you walk out of that room with, you are going to be charged 10 cents. Remember leads do not come for free. The answer again is that you come out of the room with no Monopoly money.

In the real world all leads cost money. Why does your company want to spend money on something that is a very long shot? In accounting there is the concept of “Sunk Cost”. Once you spend money for something, you have lost the ability to spend that money again. Any decisions you make should not be based on spend. Once you have spent x number of dollars on the booth why chase bad prospects? Prospects that burden your sales and marketing effort. I call it the “high-body count effect”. High body count gives management a warm glow that the company is on the right path. All a high body count means is that you were effective in drawing in anyone with a heart beat that walked by.

In the room example, let’s say you take a vacuum in to the room and you vacuum everything up in 10 minutes. You walk to the door then to settle your account. You have just vacuumed 11,000 pieces of paper that at 10 cents each will cost you $1,100 dollars. You have $1,000 dollars of real money in the canister. You have just lost $100 dollars. If you had picked up just the real money, you would have been charged $100, 10 cents per piece of paper, and you would have made $900. The delta is $1,000 and the difference between profit and loss. Trade shows should be thought of as an opportunity to highly qualify prospects and establish the initial contact. It is not about collecting every name in the place. You can buy a cold lead list from many sources and have spent a lot less money. Part of the sales process has to be qualification. The earlier you qualify a lead and turn them into a real prospect the better off you are as a sales and marketing team. Your resources are focused on making deals not shifting through trash. Just as in any process, not everything is perfect. You will find out later that there are some people who have a casual interest that will heat up over time, but if they fail to give you the information to have a dialog with them, it would have been impossible to engage them anyway.

The take away here is just because you are spending a big chuck of money on a trade show, don’t ever think you are doing the right thing by just collecting names. In fact this could have a harmful effect on your sales results and the company’s bottom line.

Tell Me What I Want to Hear

Lots of us listen to the radio during drive time. The commercials spew out with great regularity (unless you are a satellite radio customer). The message most of the time falls on deaf ears, or worse yet a change in channels. The commercial messaging has little effect on the listener until they need what is being advertised. This struck home for me when I had a clutch fail on me a couple of years ago on a car that was out of warranty. I was trying to determine what my options were and then I recalled a radio spot for clutch repair shop that I had heard at least 50 times, but had paid little attention to. I called the shop, received a price estimate, and then had my car towed to the shop for the arraigned repairs. I never mentioned to the manager that a big reason I had contacted and then selected his shop was because of the radio spots they ran. Maybe I am the reason the shop does not buy radio spots anymore.

What is the point? The point is that in Business-to-Consumer or Business-to-Business sales you can deliver your message as often as you want, but until conditions are such that the prospect you are talking to is really interested in buying, you are not going to be able to establish a dialog with the prospect. The entire sales process is predicated on the sales dialog. The dialog can involve mail, email, commercials, and phone calls that allow you to send messages to your potential market, and allows interested prospects to raise their hand that they are interested. That is the start; the rest of the dialog is about the prospect’s budget, needs, timing, evaluation and decision. The figurative raising of one’s hand is when the sales dialog really starts.

There is a very good article on “Dialogue Marketing”, published in November of 2005. The article touches on retail mostly and is now a couple of years old but the messaging is spot on for today dynamic sales environment. My only criticism of the article is that it addresses mostly the marketing and messaging part of the sales process, and does not address the transaction side of the acquisition process. However the article is excellent food for thought. One of the critical elements of the article I felt was the following quote I pulled from the article, “Companies that blast frequent, irrelevant messages dilute their brand equity. What customers want is great service and a consistently excellent experience across all channels.” How many of us know the above is true, even without any empirical evidence to support it. We all want to be treated with respect.

In the past when working with integrating sales and marketing groups I have always focused on building a team environment, this can be hard to accomplish in many organizations, but is important for success. Many sales organizations like to give marketing a list of what they need and then sit back for the delivery. Many marketing organizations tell sales what they are going to deliver and then take little other feedback. I call this “Tick the Boxes Go-To-Market”. What is required is a sales process that makes sense from a business process standpoint and the marketing materials and infrastructure to support that. A sales process that makes sense starts with the customer, what is needed to support their buying decision.

To acquire new customers determine what your current customer expectations were pre- and post- sale, design a process that addresses those requirements in an intelligent manner and then implement the changes to your organization with the buy-in of all concerned parties.



The Perfect Message at the Perfect Moment. Kalyanam, Kirthi; Zweben, Monte. In Harvard Business Review, Case No. R0511G. Published 11/01/2005, Harvard Business School Publishing, (6 pages).