Too many leads can do an organization more harm than good.
Posted Oct 1, 2006
Yes, you read the title correctly. Marketing campaigns that produce an abundance of leads can actually do your organization more harm than good. Why, you wonder? For starters, high-volume lead generation is a lot like creating a haystack in which the sales rep is responsible for finding the proverbial needle. Bona fide candidates do exist, but they're often hidden among the onslaught of unqualified leads being pushed to sales. This is why many sales reps cast a jaded eye toward leads generated by marketing--it's too hard to find the leads that translate into real sales opportunities. By forgoing lead generation practices that deliver volumes of mostly low-value prospects, companies can begin to focus on identifying and targeting their most likely buyers.
Quality Over Quantity
Gartner Research has stated that "Often, improvements in lead generation are at the expense of better lead management, resulting in an overabundance of unqualified leads of differing quality that cannot be handled by current resources and sales capacity. These leads compete for the time and attention of customer-facing employees who have no way to prioritize them. Having fewer, but higher-quality, leads provides more value to sales employees and improves the visibility and accountability of marketing." Sounds simple, right?
Unfortunately, focusing on lead quality over quantity represents a seismic shift in the way that most organizations operate today. These organizations tend to evaluate the success of marketing initiatives based on the number of leads generated or worse, the cost per lead. Consider "Jennifer" in XYZ Company's marketing department. In her monthly report, she writes: "We're on track for a great quarter in lead generation. This month we generated 1,278 leads--a 30 percent gain over last year. And in spite of higher ad rates, we continue to keep our cost per lead under $100."
Jennifer's report says absolutely nothing about lead qualification, how leads are nurtured, or what the sales force has done with previous leads. This causes one to wonder whether anyone in the company's management understands why investments in sales and marketing aren't resulting in more closed business.
The Lead Funnel
You can think of lead qualification as a funnel. Marketing pours raw, unfiltered leads from a variety of sources into the top of the funnel. Ideally, what emerges at the other end--ready for professional handling by a lead-hungry sales force--is a steady supply of qualified prospects, each with a defined process and timeframe for buying.
But the simple truth is that reality rarely matches the ideal. Too often, no one is managing what happens to leads once they enter the funnel. As in our scenario with Jennifer above, marketing has been told to focus on things like the number of leads generated and lead cost. It thinks it has done its job simply by dumping in a lot of unfiltered leads. No one contacts or qualifies the inquirers. No one augments the leads with demographic and "firmographic" data. And no one nurtures long-term prospects into short-term ones. These are all critical steps in the lead refinement and management process that are being overlooked.
When Less Is More
Too many raw, unqualified leads can clog the sales funnel, and actually impede sales performance. The bottom line is that sales reps don't need more leads; they actually need fewer ones--or more accurately, fewer raw, unfiltered, unqualified leads.
In the past, sales reps have wasted huge amounts of time following up on unqualified leads from marketing. For this reason, sales reps--especially those who make their money through commission-- become resistant to marketing-generated leads, assuming they're the same old, same old. Thus, these leads are largely ignored.
This cycle can be broken through processes that identify and nurture the most likely sales candidates. By sending your sales force only highly qualified leads, they're empowered to use their time more effectively and close more business. At the same time, by identifying and targeting only the highest-return segments, it's possible to actually decrease marketing costs.
Such a recommendation flies in the face of today's large-scale, costly marketing campaigns designed specifically to generate volumes of leads. But if you've tried that course of action and it hasn't delivered the bottom-line results you envisioned, it might be time to consider a strategy change.
Quality, not quantity, is a proven adage.
About the Author
Dan McDade is the founder and president of PointClear. Please visit www.pointclear.com
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