Sales Thinks Your Leads Stink. And yes, you can fix that! This is how. (Part 3)

You know the smell. It’s late and you’re driving on a deserted highway out in the country. The smell hits you like a ton of pungent, acrid bricks. Dead skunk. Your only thought is how to not get any of that on you as you carefully navigate the darkness seeking to avoid the putrid remains.

Now picture this. Sales thinks your “marketing qualified” (imaging the sales leader making sarcastic air quotes as she complains to you) stink like a dead skunk. That smell you try desperately to avoid on the road in the dark of night. Then the unthinkable: after describing the nauseatingly disgusting state of your (air quotes) leads, she asks for more. Who intentionally runs over that dead skunk? Is your Sales department stupid? Nope. Just uneducated. And it’s your job to educate them!

Remember the Brass Tacks questions?
Last week, we ran the math. (If you missed last week’s blog, click here. You’ll want to know the math behind the brass tacks!) Math is indisputable, but it doesn’t answer the question of “how?” This left us with three Brass Tacks questions:

1.     How many Contacts do we need at top of funnel to meet the required number of MQLs?

2.     What can we do to affect out conversion rates at each stage?

3.     What can we do to affect the time-in-stage to increase velocity?

We actually need to ask question 1 twice, once before we begin our exercise (to establish a benchmark) and again after we finish (to establish our improvement). In last week’s example, we needed 10,000 Contacts at the top of our funnel to reach the target number of Marketing Qualified Leads (MQLs). This established our benchmark segment size. (Again, click here to review how to calculate your waterfall.)

The answer to brass tacks question 2 is a lot more flexible, and requires your unique marketing skill set to execute. However, there are some guiding “Best Principles” that will help you get there quickly, regardless of your market or product.

Principle #1: Execute every program with a specific funnel objective in mind.

This is different from a shotgun approach that targets everyone at every stage in the buying process. Unless you are selling commodities and your only market advantage is price, it is unlikely your B2B buyer is going to find you out of nowhere and send in a million-dollar order based on a single online interaction with your company. Nobody seems to disagree with this fact, but I find it amazing how many people execute marketing programs in this manner.

Principle #2: Even if you’re right, you’re not right.

This means you need to test everything, even if it seems to be working. Improving conversion rates is a matter of playing a continuous game of “King of the Hill.” Your current champion is only the benchmark by which you will compare the next challenger. And as soon as a challenger dethrones the current champion, the game begins anew.

Principle #3: There’s not one answer for everything.

What works for one market or vertical may not work for another, so don’t assume someone else’s “best practice” will automatically work for you. For example, at a time when “best practice” was to send all emails as HTML, I tested this practice. It turned out not to be “best” at all for my application. In fact, text-only emails outperformed their HTML counterparts (as measured by click-throughs) by over 35%. Again, test everything, including “best practices.”

Affecting velocity (brass tacks question 3) is a matter of reducing time in stage for those stages up to a conversion stage, such as MQL. Similar to question 2, there are principles, rather than practices you should follow to decrease your time in stage. Remembering that we need to be executing every program with specific stage movement in mind, we can add two more principles to the mix:

Principle # 4: Know your buyer.

In order to accelerate your funnel, you must completely understand your buyer: who, what, when, how and why she buys. If you have not profiled your buyer, you have no hope of accelerating your funnel because you have no idea which parameters to change and, likely have no data to support those changes. As an example, if your product or service is highly reliant upon FY-driven buying cycles, does your MAP database contain FY start month? If not, how are you going to know when to begin delivering marketing messaging? Does your buyer rely heavily on input from a technical user to make purchasing decisions? Have you created the right content to help that buyer with the technical conversation, and is that communication a part of your funnel acceleration strategy?

Principle #5: Make sure you’re measuring the right thing.

Your MAP will require customization to automate and measure time in stage for your specific demand waterfall because your stage promotion and demotion rules are unique to your organization. Having a correctly defined waterfall program is the first step in measuring progression.  Once built, you need to measure your demand waterfall on a regular cadence – at least monthly, perhaps even weekly. The two key metrics you need to capture are:

1.     Total number of Contacts in each stage. From this metric, you will be able to calculate your stage conversion rates and cumulative conversion rates.

2.     Average time in stage for each stage.

You will want to keep a running log of these measurements to spot trends and measure improvement over time. In general, you want your funnel to move from looking like this:

Change the conversation.

Once you have a complete view of your demand waterfall and understand the factors that affect conversion rates and velocity, you can change the conversation. Following theses principles, you will know beforehand the who, what, when, how and why of your buyer’s journey and know what it will take to reach a specific goal. And you’ll have both the math and the data to back up your argument.

Notes:

You must agree with sales on the definition of a “sales-ready” lead.

There are only three components of Lead volume Marketing can control.

Learn to calculate each of these components and let the math do your talking for you.

This week we talked a lot about testing. Test your conversion rates. Play King of the Hill. Even test “best practices.” That’s a lot of testing. So how should you go about testing? Next week, we’ll begin a new series named Three ways A-B testing will improve your Marketing results.

Sales Thinks Your Leads Stink (Part 2): We need MORE LEADS. And yes, you can fix that!

Have you ever heard the phrase; “You made your own bed, now you have to lie in it?” This is the perfect example. As Marketing seeks to become smarter and evaluate leads quantitatively, the initial impact to the lead pipeline is going to be a sudden drop in volume. This will happen virtually every time. And the inevitable reaction from sales is a predictable as the sunrise: “We need more leads!” Let’s examine why giving in to this lie is a terrible idea.

Remember how we got here?
Let’s first recount how we got here. We came to an agreement between Marketing and Sales on what constituted a “sales-ready lead.” Those attributes were quantitative and measurable. Marketing created a Lead scoring system to evaluate every contact on the basis of those agreed-upon criteria. What is being passed to Sales fits those criteria. They have a name and are no longer generic Leads but MQLs or AQLs. Remember?

This is where the rubber meets the road, and demonstrates the importance of previous steps of gaining Sales agreement on the criteria for determining the meaning of “sales-ready.” This is also where Sales either becomes Marketing’s greatest ally or greatest enemy. And it’s your choice. But, before we get to your decision, let’s look at the math. Yes, math.

Look at the math. Because math is indisputable.
Let’s start with the demand before you, “We need more Leads.” And, for the sake of clarity, let’s call them by their proper name, Marketing Qualified Leads, or MQLs. The total number of MQLs is a function of two factors:

1.     Number of Contacts in your Marketing database.

2.     Conversion rates between funnel stages.

3.     Velocity of those Contacts from Prospect (or your top-of-funnel designation) to MQL.

How many Contacts do you need?

The number of Contacts affects your MQL output as a simple multiplier. For example, if your ratio of MQL to Prospect is 0.1 (10%), then you simply determine the number of MQLs you require by dividing that number by your ratio. In this case, if you need 1,000 MQLs, your simple ration equation is 1,000/0.1=10,000 Contacts in your database

Calculate your Conversion Rates.

Conversion rates are much more complicated to change, but should always be top-of-mind for Demand Center managers. Small changes to conversion rates have a big impact on your ratios and, by extension the required size of your Marketing database. The 10% MQL-to-Prospect ratio above is likely a combination of conversion rates between multiple steps, something like Prospect à Inquiry à MQL. If Prospect à Inquiry conversion rate is 50% and Inquiry à MQL conversion rate is 20%, you net out at an overall conversion rate of 0.5 * .0.2 = 0.1, or 10%. By improving the conversion rate between Prospect à Inquiry by 20%, we move that ratio to 0.6 or 60%. And, let’s say we move the Inquiry à MQL rate by 25%, we move that ratio to .25 or 25%. Now let’s look at the math: 0.6 * 0.25 = .15, or 15%. We actually moved the total ratio by 50%! Our calculation now looks like this: 1,000/0.15=6,667 Contacts in your database.

Velocity has impact.

Finally, the velocity calculation can increase your throughput to MQL. However, this calculation is difficult to measure and has the least impact on your ratios. Regardless, you should know it and be able to calculate it for your MAP platform. Velocity is simply time in stage. Velocity impact is time-in-stage*volume-in-stage. By reducing time-in-stage, we successfully improve our pass-though volume by the same percentage. For example, if your average time-in-stage for Inquiry is 20 days, this means you have Inquiries stacking up behind a 20-day “dam.” This analogy is a great way to visualize the velocity effect. If you can lower the time-in-stage by 25% to 15 days, you are allowing more volume through your dam by lowering its threshold. Imagine lowering a dam on a diver from 20 feet to 25 feet – what would happen? Initially, a flood of backed-up Leads would flow through. Remember, you will need to maintain the volume of incoming Lead flow to maintain this volume, once the threshold is lowered!

Brass tacks.

We now know what needs to change. The “brass tacks” question is how do we effect those changes. We need to ask these three questions:

1.     How many Contacts do we need at top of funnel to meet the required number of MQLs?

2.     What can we do to affect out conversion rates at each stage?

3.     What can we do to affect the time-in-stage to increase velocity?

The WRONG Response!

In many cases, the immediate response is to take the easy road to answer question 2. The easy road is to artificially lower the dam by reducing or eliminating the agreed-upon criteria for a “sales ready” Lead. (Bypassing Lead Scoring.) This leads directly to Cause A, and negates one of the key benefits of a Marketing Automation platform. It is quick, easy and completely wrong.

Change the conversation.

Let’s go back to the original demand, “We need more leads.” The conversation usually goes something like this:

Sales: What happened to all our Leads? We’re dying over here.

Marketing: Lead Scoring has reduced the quantity, but improved the quality of the MQLs.

Sales: What? I don’t care. I need more leads NOW!

Marketing: But we agreed on the criteria for MQLs, and we are sending exactly what you require.

Sales: I don’t care! I have 200 reps sitting around not making phone calls because the pipeline is dry! Do what you have to do to get me more leads today!

Marketing: That’s not so easy, since we set up the system to do what you requested.

Sales: I’m calling the SVP. This is BS. We need people to call. The Sky is falling and the world is coming to an end by noon.

Marketing: Ok, OK, I’ll turn off Lead Scoring!

And, you just wasted hundreds of thousands of dollars on Marketing Automation.

Instead, let’s have this conversation. We’ve established and agreed upon the definition of a “sales ready” Lead. We now have the calculations to demonstrate exactly what we need to generate the required number of MQLs. Based on this equation we can know ahead of time what it’s going to take to generate the required number of MQLs. Here are the two options:

1.     Marketing is provided the necessary funding to perform the necessary actions to meet the required number of MQLs, or;

2.     Sales can reduce its staff of sales reps to meet the number of MQLs that will flow through the system at current capacity.

How many times is option number two even contemplated? Is that just because Sales screams louder? Data will answer the screaming and help prevent Marketing from falling for the “We need more leads” trick at the expense of maintaining the quality of those leads.

Notes:

You must agree with sales on the definition of a “sales-ready” lead.

There are only three components of Lead volume Marketing can control.

Learn to calculate each of these components and let the math do your talking for you.

We looked at three “brass tacks” questions earlier, and you probably thought to yourself, “Great, but how?” And that’s an excellent question. Next week, we’ll dig into the “how” for both increasing conversion rates and stage velocity. When the boss asks you how to fix it, you need to be ready with the answers!

Sales Thinks Your Leads Stink (Part 1) Because they Really do? And yes, you can fix that!

In the ongoing battle between Sales and Marketing, Leads are often the major casualties. Marketing claims Sales doesn’t follow up on its Leads and Sales claims Marketing only sends over garbage not worth any follow up.

Who’s right?

Over the next few weeks, we’re going to dig into some statistics provided by Sirius Decisions and ask the simple question, “Why?” Here is the data:

20% of Leads are followed up by Sales

80% of Leads are never followed up by Sales

Conversely,

20% of those same Leads never purchase anything

80% of those same leads buy within 24 months (usually from somebody else) – if they are nurtured.

That’s a big IF!
The finger pointing begins and our ongoing battle rages. Is Sales correct? Let’s look at the possibility Sales is correct, and assume for a moment our “leads” are really not sales-ready. Identifying the problem is the first step to fixing it. There’s a straightforward fix, and you can implement it in your Demand Center in a matter of weeks.

Step 1: Get on the same page
You absolutely must work with Sales to determine what will be considered a sales-ready Lead. You cannot do this on your own because, in order for this process to work, Sales must agree on the definition. Marketing cannot define it for Sales, so collaboration is essential. However, that agreement must be stated in objective, quantifiable terms, not just the subjective “sniff test” (which actually doesn’t stand up to its own sniff test). What should those objective characteristics look like, given your sales organization is unique?

These objective characteristics should be broken into two categories: Profile and Behavior. For B2B marketers, Profile is the combination of demographic and firmagraphic characteristics of the ideal prospect, such as company size, title and department. For B2C, Profile will consist entirely of the demographics of the individual. Behavior is the digital body language expressed in online buying behavior. Has the prospect visited certain web pages, downloaded something or engaged in click-to-chat?

Once Sales and Marketing have agreed to the Profile and Behaviors that comprise an ideal Lead, you can move on to Step 2.

Step 2: Put a ruler on your Lead

Simply stated, how will you measure your objective criteria? Again, Sirius Decisions has created a model you can easily adapt to your criteria. Its co-dynamic model assigns values to both Profile and Behavior characteristics to create a score you can use to evaluate the sales readiness of a Lead.

I also recommend adopting the Sirius Decisions Waterfall terminology for describing “Leads.” If everything is a Lead, then nothing is a Lead. By specifically describing a sales-ready Lead by a different name that every other “Lead,” you provide clarity in your communications to the Sales team. Once you’ve defined your measurement system and labeled your sales-ready Leads accordingly, you can move to Step 3.

Step 3: Act on this information

Some data points are actionable and others are not. For example, there isn’t a lot you can do to get your prospect promoted from Manager to Vice President. However, you can create content designed specifically for your Manager to pass on to his superiors, thereby creating the potential for additional Contacts entering your system. This is called an Audience Acquisition Nurture. There’s that word: Nurture! Well-designed Nurture programs have very specific goals, and the tactics and content should be designed to meet those goals.

Nurtures are NOT about sending repetitive sales-oriented content out to large, untargeted groups of prospects. That strategy does not work, and I have a very specific name for them: opt-out campaigns. Because that’s what they do, get more people to unsubscribe from your communications than respond to them.  

These three steps will effectively eliminate the “Your Lead Stink!” argument from Sales. How can Salespeople complain about Leads sent to them exactly as they requested? This is where the objective criteria and measurement comes into play. If they ask for VP and above in IT who have downloaded trial software, and that’s what you send them, the question then becomes why did Sales agree to that definition of “sales-ready?”

Notes:

You must identify the problem before you can fix it.

You must agree with sales on the definition of a “sales-ready” lead.

Your definition must be in quantifiable, objective terms.

You need to act on the information you have.

So, let’s say your Marketing team has agreed to a sales-ready definition, and there is still a problem with passing Leads to Sales that they still don’t believe are good enough. You have fallen victim to Cause A, the Sales argument that they are not receiving enough Lead volume. Like any other problem, Cause A can be fixed. Next week, I’ll tell you how.