The goal of any company’s marketing team is to generate sales leads and, thereby, to increase sales. Monitoring sales inquiries and leads is the best way to find out whether your marketing program is working. When you can determine that a specific ad, trade show event or direct-mail promotion generated a particular sales lead, you gain true control of your marketing budget.
To learn where your sales inquiries come from and what happens to them, implement an lead feedback management system, under which salespeople report back to the marketing department on the disposition of sales inquiries. Was the inquiry from someone who just wanted product information? Was it from a competitor trying to find out about your line? Or, did it result in a new sale?
Follow the Marketing rule of 45
Use the rule of 45 as a benchmark. Of the people who inquire about your products, 45% will purchase a product – either yours or a competitor’s. The best way to get the lion’s share of this 45% segment is to contact 100% of the people who ask you for more information.
When it comes to estimating sales, the rule of 45 works this way: “Inquiries x 45% x follow-up % x estimated market share % x average sales price = sales.” So, if your company has a 35% market share, you receive 10,000 inquiries and your average sales price is $5,000, project sales this way: 10,000 inquiries x 45% = 4,500 potential buyers x 100% follow-up = 4,500 buyers x 35% market share = 1,575 buyers x average sales price of $5,000 = $7,875,000. Notice that sales drop precipitously when follow-up is low.
In the case of 50% follow-up, sales will be $3,937,500. For 25% follow-up, sales will be $1,968,750. Following up on 100% of sales leads is crucial.
We see that leads begin to lose value as soon as you receive them. If you don’t follow up quickly, your competitors will. You can purchase specialized software packages to track the disposition of sales leads; your company’s customer relationship management software should also work for this purpose if it has an inquiry-management component. Or, you have other options: For our clients we do use a “nurturing” strategy in which specialists inside the company attempt to prequalify the leads through phone calls, e-mails or other communications. They turn these leads over to the sales force only when they are “sales-ready.”
Marketing and Sales Department Accountability
When salespeople follow up on all leads and report on them to the marketing department, marketers have valuable information that they can use to do their jobs better. They can project accurate return on investment (ROI) on particular marketing ventures, predicting how each will do in terms of sales. In addition, they can establish ROI goals for future marketing activities and predict the number of sales for each activity. How can sales “close the loop,” that is, fully report on all inquiry dispositions?
Naturally all inquiries do not always result in leads. Some, of course, will be strong leads right away. Others will take nurturing. Still others will never advance beyond product information inquiries or even bogus queries from competitors.
The best way to qualify leads is by asking questions. We find the best questions to ask are:
- Do you need our products or services?
- When do you plan to make a purchase?
- How many of our products will you buy?
- Do you have the authority to make purchasing decisions?
- What is your budget?
Once you have answers to these questions, grade the lead and the opportunity. Track how many inquiries your salespeople follow up by going directly to the inquirers. Ask whether someone from your organization has contacted them. Once you know your current degree of follow-up, create the “lead management reports” you will need from salespeople in the future. Common reports we use include “total inquiry,” which records how many inquiries each salesperson gets; and marketing campaign reports, which record, for example, leads from each individual campaign.
