Why Chasing Hot Leads is a Bad Idea


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In an ideal world, all B2B sales leads would be pre-qualified and ready to buy. And though recent studies suggest that a large chunk of the sales cycle may already be over by the time many prospects talk to a live salesperson, the reality is that inbound sales leads will always occupy a wide spectrum of sales readiness: tire-kickers, hot leads, and everyone in between.

This cold, hard reality: that hot leads will only ever be a subset of the total universe of potential prospects – means that feeding sales a constant stream of qualified leads requires a demand generation strategy that focuses on 1) reaching potential customers at every stage of the selling cycle, and then 2) employing systematic lead nurturing to move those prospects towards sales-readiness.

In theory, anyway. Of course, in the real world – a world of sales quotas, quarterly revenue goals, and impatient investors – not all stake-holders, especially salespeople, are interested in the notion that the most effective lead generation strategy is a long-term proposition. Because our agency works primarily with high-tech companies, we see this kind of pressure often. One result of that pressure can be a demand for tactical, sales-driven campaigns designed specifically to seek out hot leads, campaigns that lead with so-called “late stage” offers like demos, free trials, or even price discounts.

As I wrote previously in a white paper, “Lead Recycling: A More Cost Effective Approach to Demand Generation for High-Technology Companies,” focusing demand generation investment on acquiring net new, hot leads is an expensive proposition at best, and at worst, a recipe for failure. Some of the main reasons are these:

• It’s difficult if not impossible to target a message exclusively to those prospects that are ready to buy. Media options abound that will enable a company to focus on specific job titles, company revenues, industries, etc., but “budgeted to buy (insert your product or service here)” – not so much.

• Many high-tech products are first-of-breed solutions and/or of a complexity that involves multiple stake-holders and demands a more long-term, consultative selling process. Prospects may simply not be ready to buy a solution because either 1) they don’t know such a solution exists, or 2) they may not even be aware they have the problem in the first place.

• Focusing on only the most qualified prospects leaves many potential (albeit, more long-term) deals on the table. A potential customer might have precisely the problem that a particular product or service solves and are anxious to solve that problem, yet may not feel as though they’re ready to buy and so fail to respond to the campaign.

In addition, response rates from tactical campaigns are likely to be much lower — for the reasons outlined above — so companies need to spend more money to generate relatively few opportunities. Lastly, because the campaigns weed out all but those prospects in active-purchase mode, it leaves the sales pipeline empty once those deals have been either closed or eliminated. This requires a constant re-loading of the sales funnel with new, expensive leads.

Just to be clear: it’s no crime to include late stage offers as part of your demand generation mix to reach that small percentage of new leads that are indeed ready to buy. However, attempts to focus exclusively on those late-stage prospects are usually doomed to inefficiency. It’s a much better idea to cast a “wider net,” bring in prospects at every stage of the selling cycle, and then employ lead nurturing to drive that larger pool of prospects to the point at which they’re ready for sales.

Adapted from the white paper: “Lead Recycling: A More Cost Effective Approach to Demand Generation for High-Technology Companies.”

Republished with author's permission from original post.

Howard Sewell
Howard has worked in marketing for 25+ years, and is president of Spear Marketing Group, a full-service B2B marketing agency. Howard is a frequent speaker and contributor to marketing publications on topics that include demand generation, digital marketing, ABM, and marketing technology.


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