7. Lead nurturing 101
So you’ve managed to get a potential customer to register on your landing page. Congratulations! What do you do now?
If you are like many companies, the prospect’s information goes into an SFA system like Salesforce.com and sales gets alerted about the new lead. The problem is that up to 95% of prospects on your website are not yet ready to talk with a sales rep, according to research by Brian Carroll. They are on your site to research your product and your industry. Some of those prospects may be truly unqualified, but as many of 70% of them will eventually buy a product from you – or your competitors.
So what should you do with those leads?
Giving a non-sales-ready lead to a sales person is a recipe for disaster. Imagine how the first call might go:
Jim, my name is Mike, and I’m your sales rep from Widgets R-Us. I saw you downloaded our whitepaper “10 Ways to Improve Profits through Widget Optimization” and I wanted to know if you have any questions…. Oh, you haven’t read it yet? That’s OK. Do you mind if I ask you a few questions? Do you have a Budget approved to buy widgets? Are you the Decision Maker? When do you expect to purchase a Widget solution?.... Oh, I see, you’re just researching right now. OK, I’ll call back next month. Bye!
In this scenario, Mike is trained to ask for BANT criteria (Budget, Authority, Need, and Timing). Except for “Need”, these questions are entirely inappropriate at this stage of Jim’s buying process (and a little rude if Jim is a gatekeeper but not the final decision maker). As a result, Jim is left with a negative impression of the company.
At the same time, Mike is compensated for driving revenue this quarter, so this lead is useless to him and he’s left with the general impression that marketing-generated leads are no good. As a result, he’ll be more likely to ignore the next marketing lead he receives – which is why sales ignores up to 80% of all marketing-generated leads. (That’s like throwing away 80% of your marketing budget!) Lastly, unless Widget’s R-Us has a good process for recycling Jim back into marketing, Jim may never hear from the company again and will end up buying from a competitor.
Fortunately, there is a better way – lead nurturing. Lead nurturing starts by understanding that Sales executives don’t really care about leads. They want winnable opportunities in their pipeline. They care more about quality (defined as likely to drive revenue this or next quarter) than quantity. The implication is that leads should live in marketing, and that marketing should nurture leads until they are ready to become opportunities. Here is my definition:
Lead nurturing is the process of building a relationship by conducting an informative dialog that helps qualified prospects who are not yet sales-ready, regardless of budget, authority, or timing – and of ensuring a clean hand-off to sales at the right time.
(Of course, part of the nurturing process for a lead who doesn’t have authority should include getting in touch with the decision maker who does.)
Research from Forrester, CSO Insights, Brian Carroll – as well as Marketo’s own research –demonstrates the ROI of lead nurturing. In particular, companies that excel at lead nurturing:
- Decrease the percent of marketing-generated leads that are ignored by sales (from as high as 80% to as low as 25%).
- Raise win rates on marketing-generated leads (7% points higher) and reduce “no decisions” (6% lower).
- Have more sales representatives that make quota (9% higher) and a shorter ramp up time for new reps (10% decrease).
Additionally, anecdotal evidence suggests that prospects who are nurtured buy more, require less discounting, and have shorter sales cycles than prospects who bought but were not nurtured.
Lead nurturing is a rich topic, and I’ll continue to post more about it as well as Marketo’s upcoming lead nurturing solution. In the meantime, you can also download the first chapter of Brian Carroll’s book, Lead Generation for the Complex Sale, for additional information and tips.
Update January, 2009:
Here are some more useful lead nurturing links:
- Lead Nurturing Best Practices and Tools: Compilation of lead nurturing resources.
- Getting Started with Lead Nurturing: Practical ideas for structuring your lead nurturing program (on-demand webinar).
- Unleash Your House Database with Lead Nurturing: Five tips for effective lead nurturing (blog post).
- Lead Nurturing Software: Marketing automation software to unlock the value of existing prospect relationships.
I always recommend that the people who qualify the sales leads understand the product(s) themselves and filter leads, passing only the good ones on to salespeople. Further, I have seen the prospect of getting qualified leads to be an effective motivator for salespeople. That is, good leads go to the top earners while others have to prove they can close them before they get them. This is especially effective with project-oriented (complex) sales.
Posted by: Chris Denny of LeadOptimize.com | February 15, 2007 at 09:15 PM
I agree...lead nurturing is a huge initiative that every company needs to master. Far too many firms push leads into the sales channel as fast as possible and pay little attention to lead readiness, lead classification, or routing processes. The result? Sales productivity suffers, and frustration grows, as reps waste time plowing through unqualified leads to find the best prospects. Many B2B marketing organizations don’t pay enough attention to lead quality, agree upon consistent lead definitions with sales and nurture leads that are not ready to buy now.
Our company is hosting a webinar through the AMA on March 27, 2007 at Noon CT that addresses these issues and we'll provide easy solutions as well.
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Posted by: Sarah | March 22, 2007 at 03:06 PM
What an eye-opener! Thank you for a new perspective on a topic I've been researching recently. I work for a competitor of Sales Force (InsideSales.com) who actually worked with MIT researchers and Dr. James Oldroyd. They discovered that you are 100 times more likely to reach a lead and 21 times more likely to qualify that lead when they are called within the first 5 minutes after they enter their info in a web form. This may hold true more for simple sales than for complex sales, but I do know that we offer a very strong lead nurturing system as well.
(the study can be found at leadresponsemanagement.com if you're interested in reading the complete findings or referencing it yourself)
Posted by: Lisa | February 22, 2008 at 10:44 AM
I agree that you shouldn't jump right in to qualifying questions on the first call but the research we've seen does show that in both B2C and B2B that it is best to call the web lead immediately. They may not be ready to buy but they are ready to start an information gathering relationship.
Posted by: Darin Dixon | December 29, 2008 at 01:43 PM