Quality Matters – Analyzing the Effect of Quality on the Lead Handoff Process

We are glad to have Steve Woods, CTO of Eloqua as a guest contributor to The Annuitas Group blog.  Steve is a thought leader in the world of marketing automation and lead management and is also a prolific writer on topics related to demand generation and the current transitions within the marketing profession.  His book, Digital Body Language explores these topics, and he is a regular writer on his blog of the same name. Steve is also deeply involved with the Eloqua user community, with whom he regularly interacts through the discussions on hisEloqua Artisan blog.

Thanks Steve for this great contribution!

By now, there’s a general acceptance among most B2B marketing practitioners that a lead should be scored to determine its level of qualification.  At a predetermined score, a lead can be called a Marketing Qualified Lead and handed off to sales, and below that level, the lead should be continued to be nurtured.  This is a great foundation to build from as it creates a fundamental alignment between sales and marketing around the flow of these qualified leads.  However, this only forms part of the picture.  Not all leads, even marketing qualified leads, are created equal, and without paying close attention to the quality of the MQLs the effectiveness of your sales force can suffer.

To dig into this a bit further, it’s first worth exploring what we mean by a marketing qualified lead.  There are two dimensions that make up an MQL, fit and engagement. Fit is the demographic and firmographic criteria that define the type of person in the type of organization that generally buys your solutions.  Made up of such factors as title, industry, geography, and revenue, it does not change rapidly over time. Engagement, however, is the set of actions that indicate a current, real, interest in your products or solutions.  Made up of such factors as website visits, Google searches, Twitter activity, event attendance, or blog activity, it is highly transient and time sensitive.

Together, fit and engagement make up the two key dimensions of a lead scoring matrix that defines an MQL.  Ranked between A-D for fit and 1-4 for engagement, we can see a grid where the top right corner is the MQLs we will send to our sales team.  While all of these are MQLs, there is a clear difference between an A1 lead and a C2 lead.  It is this quality difference within an MQL that is worth digging into further.

The first thing to analyze is lead handoff quality.  By mapping each territory, and even each rep, to the A1, B2, and C1 leads they are given, quality differences in lead flow may become obvious.  While each rep may be receiving 30 MQLs per quarter, if one is receiving all A1 MQLs, while another is only receiving C1 MQLs, a material difference in deal flow would be reasonable to expect.

There are two possible avenues to explore if a difference in quality is observed.  If a difference in fit is observed, where one territory is seeing more A’s and another is seeing more C’s, it may be that there are natural differences in the makeup of geographic territories, based on size of company, executive presence, or company size, that make one territory more of a natural fit for your solutions than another.  If a difference in engagement is noticed, where one territory is seeing mainly leads with an engagement rank of 1, while another territory is seeing only 2s and 3s, it may be that the level of field marketing involvement in each territory is significantly different.

Looking at the quality differences within the set of leads flowing to a sales team allows optimizations of territory size, quotas, and field marketing engagement.  Without looking one level beneath the raw number of MQLs, however, this approach to optimization would not be possible.

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Three Things You Can Learn from the Process of Planning and Nurturing

I recently had the wonderful opportunity to be a part of a collaborative project headed by Craig Rosenberg of Focus called The Book of Funnels.  In this book, I (along with 13 other B2B marketing experts) was asked to contribute my thoughts on how to best approach the Lead Funnel, and provide insights on how it relates to sales pipeline.  I’m looking forward to the ongoing dialogue around lead management that this project will generate.

As a follow-up to the participation in this project, the contributors were asked to offer up what they learned while putting their funnels together.  This project reaffirmed some valuable insight, insight that we reinforce with our clients every day.  Below are three thoughts that I took away.

1.  Starts Planning at the End: Your Revenue Goal

Launching a marketing campaign with no idea on how it will contribute to revenue is an exercise in shooting in the dark that prohibits marketers from measuring success.  As seen in the funnel produced by The Annuitas Group (see image at the end of this post), the Lead Planning Process should begin with marketing determining the amount of revenue that they are expected to generate.  Once that number is determined (and agreed to by both marketing and sales), the rest of the planning process can continue.  Working backwards from the revenue goal, plan how many responses, qualified leads, etc. are needed to reach the goal.

One of the other benefits of starting with the revenue goal and working backwards is that it gives marketing keener insight in how to determine their budget.  Knowing exactly how many responses are needed to meet the revenue number will help marketing very quickly determine if they will have the necessary budget to meet the response goals.  This exercise is a great way to build a business case for budgetary planning.

2.  Lead Planning Helps Align Marketing & Sales

Many have made a good living at trying to solve the marketing & sales alignment problem.  However, misalignment of these two groups is not the heart of the issue.  It’s only a symptom of a greater problem: a lack of process.

When marketing and sales come together to work through the lead planning process (i.e. develop the funnel), the alignment begins to happen.  Why?  Because they both begin working towards a common goal.  Yet the lead planning process, while important, will not solve the alignment issue on its own. It must be combined with other components of the lead management process such as lead qualification, lead nurturing and lead routing.  Developing these component processes should also be a collaborative effort between marketing and sales.  Doing so will bring them into alignment, resulting in improved return on marketing and sales investments.

3.  The Lead Funnel is About Buyer Relationships

Many companies approach their lead funnel creation from a linear perspective.  In other words, they view the lead planning process solely based on conversions from one stage to the next (Responses to Leads to Qualified Leads to Opportunities, etc.). This approach places too much emphasis on conversions, and ignores the important step of nurturing those “non-conversions” at each stage in the funnel.  A better approach is to incorporate the nurture process along every stage of the funnel.  This includes nurturing at the marketing, sales and customer stages.

By incorporating the nurture process into your lead funnel, it drives an organization to determine how they will engage their buyers, build 1-1 relationships that will move them faster through the buying cycle, improve conversions at every stage, and ultimately increase revenue contribution.

Developing a lead planning funnel is one of the key processes in the Lead Management Framework^TM.  When done correctly it will provide valuable insight into the overall success of your marketing initiatives and show just how much marketing is contributing to the bottom line.

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What’s Worth More?

I’ve recently been involved in an ongoing online discussion regarding marketing automation, lead generation, and lead management (including lead nurturing).  The discussion has been focusing on the approach organizations should take in implementing marketing automation.  During the course of this dialogue one of the participants made the following statement:

“I guess I would add that neither lead nurturing nor marketing automation solves the core problem that most marketers actually have – getting more new leads. Neither help you get more fresh leads into your database – which is critical because most contact info expires at the rate of 20-30% per year”

This statement got me thinking.  Where should the focus be in an organization?  Should it be on lead generation, or lead management?  Which of these processes should have priority?

First, for discussion’s sake, let’s quickly define the difference between lead generation and lead management:

• Lead Generation is creating responses that go into the top of the sales/lead funnel.
• Lead Management is the process of managing leads through every stage of the sales/lead funnel through 6 integrated processes i.e The Lead Management Framework^TM

Lead generation is about filling the top of the funnel.  It’s about getting responses in the front door.  So, for many marketing and sales executives, the logic follows that if you get more in the top of the funnel, you’ll increase those closed deals that come out of the bottom of the funnel. However, if you look at the various studies that have been conducted by Sirius Decisions, Gartner, Forrester and others, up to 70-80% of generated leads don’t receive the proper follow-up.  Another study conducted by MarketingSherpa showed that 70% of all initial leads generated are NOT in a “buy-mode”.

These statistics indicate that for many companies, the lack of effectiveness in lead generation comes from ignoring the leads they already have.  These companies focus on the 10-15% of leads that are immediately sales ready, yet they ignore the 70% that aren’t.   The results are typically very low conversion rates.  Their remedy is to spend more so they can put more in the top of the funnel. This only compounds the problem, resulting in even MORE leads being ignored, and a potentially negative marketing ROI.

So perhaps a focus solely on lead generation isn’t the answer.  Instead, a focus on managing leads (the 70-80% that are currently ignored) has been proven to bring a higher return and higher conversion rates on lead generation activity.  Forrester does a great job at showing the difference between the two approaches:

Lead Generation Approach Where Leads Leak

Process Based Lead Management Approach

The shift from lead generation to a lead management approach allows you plug the leaks that exist in your lead management process.  With this approach, you now have 70-80% more opportunity to close a sale.

For those who are looking to make a business case for shifting to a lead management approach, here are some facts that will help:

• The Annuitas Group has helped its clients identify over $500 million in new revenue using a lead management process approach
• Companies that automated lead management processes realized 10% or greater revenue increase within six to nine months (Gartner, “The Top Six CRM Marketing Processes for a Cost-Constrained Economy,” 2008)
• Companies with best-in-class processes vs. companies with average processes achieved 25% or greater improvement in Waterfall Conversion Rates (SiriusDecisions, “Field Marketing 2.0: The Heart of Growing Conversion Rates,” 2008)
• Leads nurtured as part of the lead management process achieved a 47% higher order value when they closed compared to leads that closed, but were not nurtured. – Aberdeen, 2009

So, you decide.  Fill the funnel with more, or manage what you already have?  The numbers seem to indicate that success comes with following the latter.

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Starting The Lead Management Process

During a recent webinar we conducted, 76% of the attendees surveyed said they had not developed a lead management strategy due to lack of internal resources. This is a common issue facing many organizations, but is compounded further by not knowing where to start in the process.

Building out a lead management process is not an easy task, nor will it happen overnight. Just the sheer complexity of the process as well as not knowing what part of it to address first, can cause marketing organizations to feel overwhelmed and settle for the status quo. However, small steps can be taken to drive change which will go far to build momentum and organizational buy-in.

For organizations looking to develop an internal lead management process here are a few quick things you can do to get started.

1. Involve Sales

Many organizations look at lead management as a marketing-only exercise and begin to develop various processes in a silo with no input or collaboration from their sales counterparts. This kind of “go-at-it-alone” approach is doomed to fail as sales will not buy into anything that is just delivered or told to them. Their input, for example, on what defines a “lead” is just as important as and could differ greatly from marketing’s and needs to be considered. Knowing they are a part of the process will get sales to buy into the idea of lead management and go far in creating alignment.

2. Executive Buy-In

We touched on this in our last blog post, but it bears repeating. Getting your executives bought into the development of a lead management process is important. They will not only control additional funding needed for resources or projects, but often times are the best route to removing any potential obstacles within or across organizations. In order to accomplish this, speak the language of revenue. Be prepared to show the amount of money the organization is losing and stands to gain by adopting a lead management process internally.

3. Know What You Don’t Know

We have seen many organizations begin to develop their own lead management process without first understanding what needs to be fixed. As a result the development of the new process is disjointed and disorganized, leaving many in the organization to question the approach and eventually abandon the project. To avoid this, start with a Lead Management Audit. An audit is an exercise that takes an honest and factual assessment of what is broken, identifies where the current gaps lie and what needs to be done to fix them. This is not about finger pointing or an exercise to assign blame, but instead one that is meant to reveal what is keeping you from improving your marketing and sales success. When conducting the audit, be sure to look at every area that impacts your demand generation practice including but not necessarily limited to marketing, sales, CRM and marketing automation technologies.

 

4. Prioritize Your Approach

Once the audit is complete there is a good chance you will have an extensive laundry list of gaps in your lead management process. The first step is prioritizing those gaps based on which will have the most impact on your organization. A good place to start is by addressing the biggest obstacles to revenue and then moving down to the least. Doing so will provide a plan on how to move to the next phase of process implementation and avoid the “boil the ocean” syndrome.

5. Get In The Right Frame of Mind

It needs to be noted that developing a process based lead management approach in your company is not an easy or overnight task. It is one that takes time, collaboration, change and a lot of effort. If you enter into lead management with the expectation that all involved will embrace change and will be completed in a matter of days you will most likely be very disappointed.

Understanding what lies ahead and being honest with what it will take will help you get through the work involved and keep a spirit of alignment through your organization.

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Which Way Do They Go?

In spite of all the evidence that B2B marketing is changing, and that marketers need to engage buyers by building relationships, many organizations are still stuck in the past.  Evidence of this is in the fact that they continue to maintain a one-directional Lead Routing process:  leads only go from marketing to sales.  The result of this one-way, linear model is far reaching and results in …

• The inability to build a relationship with the buyer via lead nurturing
• Sales being inundated with names instead of leads, resulting in lack of follow-up
• The continuing of the ever widening gap between marketing and sales
• Lost ROI on marketing programs (See Counting the Losses)

At the end of 2009, we began a blog series where we defined Lead Management, debunked the myth that Lead Management is only Lead Nurturing and Lead Scoring, and began  describing each component in the holistic Lead Management process (See Much More To It! ).  This next installment of that series is on Lead Routing, another of the very important areas of focus in the development of a Lead Management process.

Lead Routing can be defined as “the mapped or documented process that determines how qualified leads will be routed to sales, and how sales will send not-ready-to-buy leads back to marketing.”

According to several recent research studies, up to 80% of buyers are not ready to purchase at the time they respond to a marketing program.  Since this is the case, the linear model whereby ALL leads go to sales doesn’t work (Why should a “not-yet-ready-to-buy” lead be sent to sales?)   To achieve a best practice Lead Management process, companies must move from one-way Lead Routing to a three-way approach:

1. From marketing (via campaign or marketing activity) to sales
2. From marketing (via campaign or marketing activity) to a lead nurturing campaign
3. From sales back to marketing for further nurturing and development

In addition to the three-pronged approach, marketing and sales need to establish Lead Routing rules to effectively govern the Lead Routing process. This is done through the use of defined Business Rules and Service Level Agreements (SLA’s). 

Business Rules are agreements between sales and marketing that define how Lead Routing will operate.  A Service Level Agreement is a time period affixed to the Business Rule that governs how long the recipient of the lead has to respond or process that lead.  Business Rules and SLA’s should be put in place for each of the three routes listed above – marketing to sales, marketing to nurturing and sales to marketing. 

To get started, here are some questions that will help you develop your Business Rules and SLA’s:

• How much time does marketing have to route Marketing Qualified Leads (or MQL’s) to sales?
• How much time does sales have to confirm receipt of a lead, making it a Sales Accepted Lead (or  SAL)?
• How much time does sales have to initiate contact with a lead?
• How much time does sales have to assign a qualification status to an SAL, making it a Sales Qualified Lead (or SQL)
• How much time does sales have to work an SAL or SQL through the pipeline before it gets sent into a lead nurturing program (This will depend on your organizations sales cycle and buying process

These are just a few questions to consider when developing your Lead Routing Business Rules and SLA’s.  And remember, proper Lead Routing cannot be accomplished without a defined Lead Qualification and Lead Scoring model. (See What Do You Mean When You Say That?).

Organizations that are serious about implementing an effective Lead Management process will not forgo this important piece of the puzzle. It’s too important to overlook and is often one of the key areas that allows the other disciplines to function fully. Conversely, proper Lead Routing will yield tremendous benefit including: 

• A better buying experience for your customer leading to longer term business relationship
• Better qualified leads delivered to the sales force, allowing sales to sell rather than qualif
• Better alignment between sales and marketing
• Improved ROI on marketing programs, and ultimately increased revenue

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What Do You Mean When You Say That?

Several months ago I was meeting with a Director of Marketing Operations and we were reviewing their corporate lead qualification process.  As he explained how they qualify leads, I asked him if sales and marketing agreed on the definition of a lead.  He was quick with a “yes” and even showed me a document that listed all of the various definitions.  I was pretty impressed and pleased to see they had progressed to this level. 

My next meeting was with the company’s Director of Inside Sales.  During the course of that conversation, I made mention of the shared lead definitions that they had developed together with marketing.  He responded with “What definitions?” 

This is a scene that plays out all too often with companies:

• Marketing qualifies leads based on their view of the world
• Marketing sends what they define as “qualified leads” to sales
• Sales rejects them, saying they are not qualified

This scenario serves to underscore the importance of Lead Qualification as part of Lead Management. Lead Qualification will be the focus of this 4th post on Defining Lead Management.

Most B2B marketers qualify leads at some level.  However, few have taken the important step of developing and documenting a formal Lead Qualification Model.  Even fewer have developed a Lead Qualification Model jointly with sales. Yet research continues to indicate that companies that do indeed have a documented Lead Qualification Model achieve…

• Marketing and sales alignment
• A higher quality of lead being sent to sales
• Increased close rates
• Overall improvement on lead generation efforts

You don’t have to read too many B2B marketing blogs and websites to determine that “lead scoring” is a hot topic.  More and more companies are looking to implement Lead Scoring models, and the increased adoption of marketing automation systems provides an easy way to develop one.  However, rushing too quickly into developing a Lead Scoring model is putting the cart before the horse.  Lead Scoring is simply a numerical representation of your Lead Qualification Model.

Building and automating Lead Scoring without first building a Lead Qualification Model is like framing a house without blueprints.  If you want to improve your Lead Generation results, then you must first create a Lead Qualification Model. 

The Lead Qualification Model starts with creating Lead Qualification Definitions. In this phase, seek to include all phases of the buying cycle:  Inquiry, Response, Lead, Prospect, Marketing Qualified Lead, Sales Accepted Lead, Sales Qualified Lead Closed Deal, etc.  Conduct joint sessions with marketing and sales to develop and agree to definitions for each of these terms.

Next, develop a profile of your ideal customer.  This is also a joint effort between marketing and sales.  Determine what quantifiable traits make up the ideal customer.  Criteria such as size, location, industry, audience, etc. should be identified and documented.  Once you have the customer profile developed, use the same criteria to develop an ideal prospect profile.  These profiles are the basis of your overall qualification model.
 
Once the definitions and profiles are confirmed, proceed to working to define the criteria that should be used for Lead Qualification. This too is a joint exercise between marketing and sales. The objective is to create standards that will allow everyone in the organization to identify when a lead should be qualified for routing to sales, which leads should be nurtured and which leads should be discarded.

It’s only after these steps are complete that you should begin to develop the Lead Scoring Model (assigning numerical values).  This is where you apply numeric point values to BANT criteria (Budget allocation, Authority or role in the decision making process, Need for product or solution, Timeline), criteria used from your customer and prospect profiles, and behavior or interactions of the buyer. Behavioral components include items such as the number of campaigns prospects respond to, what events they are attending, what assets they download, etc.

So you see, Lead Qualification is more than Lead Scoring. It’s a systematic, defined process developed jointly by marketing and sales.  Companies that develop this kind of Lead Qualification Process as part of their overall Lead Management strategy significantly increase their ROI on marketing and sales activities.

Posted in Lead Management Process, Lead Qualification, Sales and Marketing Alignment | 4 Comments

Leads for Sale!!!

Last night I was driving out to the store to grab a few grocery items and as is my custom, I began flipping through the radio stations.  I was mindlessly turning from station to station when I stopped at a commercial that caught my attention. The announcer asked, "Are you in sales or do you own a business?"  Because I could answer "yes" to both, I continued to listen.  The commercial went on to state that not getting good qualified leads for a business can be the main factor that stands in the way of a business making money.  The commercial then offered their solution to the problem:  leads delivered right to your sales people's inbox every day. The results?  Your business will grow, revenue will increase, quotas will be met and everyone will retire to Millionaire Estates just like in the game of LIFE!!!  OK, the last one I added. It wasn't really part of the commercial.

While it certainly is true that good qualified leads can make the difference in a sales career or for a business, I've yet to see where this "silver bullet" approach works.  After all, if it was as easy as subscribing to an email service, wouldn't every one in sales be succeeding? 

As I continued my "radio scanning" exercises, I thought about the issues that the "leads" commercial brings to light, many of which are not being effectively addressed at the majority of companies.  These are issues such as…

• Lack of clarification on the definition of a lead. What does sales say a lead is? What about marketing? What about customer service? Most companies cannot definitively describe what a lead looks like for their business.
• Lack of qualification criteria. At a significant number of companies, different groups are using differing weights and measures to determine a lead's viability.
• Lack of centralization for lead qualification. Many companies allow leads to be qualified at the point of entry instead of through one central repository and process.
• Lack of "on going" lead qualification, or lead nurturing. Most companies don't have a plan for ongoing lead nurturing for those leads that are not "sales-ready".

Making sure you have the answers to these and other questions is the start of defining and developing a sales and marketing process that will enable you to improve the return on the sales leads you receive, no matter where they come from. 

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The Baby and The Bathwater

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