Lead-Generation Case Study: How Multiple Touches Can Lead to Profit Multiples
by Paul McKeon
March 28, 2006
It's Friday afternoon. Phil, the top sales rep for a technology company, is catching up on his paperwork.
Reluctantly, he picks up a stack of leads awaiting follow up. He rifles through them looking for the hot ones that have budgets and plan to buy within 90 days. He finds none. Among the discards: a prospect indicating an estimated budget of $200,000 to be possibly spent next year. Phil, however, needs to make his numbers this year and decides the decision-making timeframe is too far out. This "lead" goes into the circular file.
This is a fictionalized episode of an all-too-frequent occurrence. Salespeople are notoriously poor in following up on qualified leads. In fact, experts say, sales does not follow up on more than 70% of leads.
Why? Field salespeople in most organizations are compensated, motivated, and managed to focus on short term opportunities, not on the pipeline. Phil is paid to close—he's a "hunter," not a "farmer." But Phil's company has no one running the farm.
Contrast that scenario with the strategic marketing experts at CenterBeam, a San Jose-based IT outsourcing firm that provides sophisticated, yet affordable, IT outsourcing services on a fee-for-service basis. At CenterBeam, the closers are supported by expert "farmers" who cultivate leads into relationships.
By making the lead-generation process a cornerstone of its strategic marketing program, CenterBeam is getting many of its sales from long-term leads cultivated on the "farm"—and a ten-to-one return on its outside investment in the farmers.
Building Relationships From Lead Generation
Since it sells an IT service, you would think that CenterBeam would target CIOs. Instead, it goes after CFOs with a message about focus and expertise—let CenterBeam do what it does best (manage and support the underlying IT infrastructure) so the CFO's company can do what it does best.
CFOs are tough to reach and even tougher to sell, but the company has had extraordinary success using direct telemarketing, voice mail, and email in a multimedia, multi-touch nurturing campaign. In fact, in 2005 CenterBeam unearthed 17 sales in this manner worth an annualized $4.5 million. Since the company works off multiyear contracts, the lifetime value of these clients is actually much higher.
"CFOs are not going to respond to magazine ads or radio spots and say, 'Yes, my company's IT function is broken and I need somebody to fix it,'" said Kirstin Burke, CenterBeam's director of marketing. "This is about building a trusted advisor relationship over time—even before the need is implicit—so that they know about CenterBeam and our value when they are ready to consider alternatives."
Nurturing Leads Results in a More Predictable Sales Pipeline
For help in executing its strategic marketing plan, CenterBeam assigned key roles in the lead cultivation process to PointClear. The Atlanta-based direct marketing firm relies heavily on the telephone and email, as well as sophisticated database analysis and tracking to generate qualified leads for high-end products with a complex sales cycle.
Burke and PointClear have found that a mix of carefully targeted outbound calls, voicemails, and emails are much more effective than traditional marketing campaigns that generate interested—but not necessarily qualified—prospects. For her, the other key has been the fastidious use of PointClear's database methodology.
After each "touch," results are logged and the prospective CFO is "dispositioned" along the qualification continuum. "Not only do we have a very accurate and predictable sales pipeline, but by the time the prospect is ready to truly engage with us, we already have a lot of important historical information about this individual and the organization," said Burke.
For each qualified lead, CenterBeam sales reps get a clear picture of the prospect's business drivers, qualifying interview tone, plans, and buying processes. They use this information to further build on the emerging relationship with the prospect. Result: The sales rep is positioned as a knowledgeable advisor interested in the prospect's specific business challenges.
Why Outsource: The Ability to Nurture Leads Is Often a Cultural Issue
The other advantages of outsourcing much of its lead generation are largely defined by where CenterBeam can find the best and most effective expertise. Outsourcing lead generation frees resources to address activities critical to supporting its business—just like outsourcing IT services frees CenterBeam client resources to address their own core activities.
According to Burke:
CenterBeam doesn't have the in-house expertise to operate a lead generation and lead management function the right way—complete with a methodology, database tools, and analytical know-how. "This isn't an area where we have deep expertise, and for us to acquire, execute, and manage it effectively would have taken too long and drawn too much focus from other areas. We wanted to hit the market fast and leverage the knowledge of someone who had already gone through the learning curve."
CenterBeam doesn't want to manage an inside sales team. "There's no reason to take something of this magnitude on when I have identified a group of superb professionals who share our values, who can represent our brand well, who mirror our customer-first focus—and most importantly—who get the job done."
CenterBeam doesn't want to make the substantial capital investment to hire the expertise and obtain the necessary infrastructure to support them.
"We know when a PointClear lead comes in that there has been at least one relevant conversation, this person meets the criteria we established, and the prospect has committed to a specific time to talk to us," Burke noted. "Even if the scheduled call falls through, we have a wealth of information based on the prior conversations. We have something very actionable."
Long Lead Time/Multi-Touch Prospects Are Half of Sales
The lead development team regularly generates 25% of CenterBeam's prospects, but these convert into a whopping 50% of the company's sales, according to Burke. CenterBeam has seen a ten-to-one ROI on its investment in outsourced lead generation.
Given the high value of its contracts, the number of new clients CenterBeam needs to meet growth objectives is well-tuned to a focused, targeted approach. Last year, CenterBeam turned 17 prospects from the lead developers into deals worth $4.5 million annually. Of these 17 deals, 60% were originally classified as long-term leads, validating the approach of using multiple touchpoints to qualify and nurture opportunities.
In CenterBeam's experience, many of the best prospects turn out to be those who have been contacted five or six times by voicemail, email, and direct mailings over a period of months or even a year before responding. Executives often respond when a touchpoint coincides with a compelling event. "They are almost qualifying themselves better than we can, because they are saving our email or voicemail and calling us back when they encounter a specific situation to ask if we can help," Burke explained.
For many organizations, there is a big gap between lead generation and sales. But, according to Burke, if you can connect the dots between lead generation, lead qualification, relationship building, and sales deployment, you begin to see to get real traction and true alignment of marketing and sales.
A True Marketing Partnership
Not all partnerships between companies and marketing firms are so successful. But Burke and Kevin Francis, CenterBeam's CEO, recently traveled to Atlanta to present PointClear with its Partner of the Year Award. "You don't normally see those kinds of awards given to marketing agencies, but PointClear and CenterBeam share vision and values. It helps to build a business relationship when your partner thinks like you think—and lives it day in and day out in how they operate," Francis remarked at the presentation.
Eight Lessons Learned: Tips for Integrating Lead Management With Strategic Marketing
Leverage the talents of your sales reps. When a sales rep is focused on closing deals one month, make sure you have other resources continuing to nurture the rep's longer-term opportunities and filling the rep's pipeline.
Maintain a consistent message across all media. Each tactic should support and build on the others. At every new point, you should be giving out new and relevant information that the prospect can act on. The themes and key messages in your email should mirror those in your traditional mailings, collateral materials, and Web site.
To nurture a list into valuable leads, you need a long-term strategy that includes a high caliber inside sales or marketing staff trained in sophisticated selling methodologies, database marketing, drip marketing, and other successful techniques. This is a marathon and not a sprint. If you don't have those capabilities, consider outsourcing the function.
Don't discount the value of long-term leads. These can be just as valuable and close just as quickly as "hot" short-term leads. It's all about what you do with the lead once it's turned over and how effectively you align with the prospect's business strategy and need. Long-term leads give you a clean slate for managing the buying process.
Make sure that customer touchpoint is professionally executed and supports your company's strategic marketing plan.
Beware of the quick-fix promoters who promise bushels of leads to meet next month's quotas. If it sounds too good to be true, most likely it isn't any good—and your sales people will lose confidence in the program as they are inundated with low-level leads that are a waste of their time.
Be involved in monitoring results, and be available to provide feedback. You're outsourcing day-to-day lead management business processes, but you're not outsourcing accountability. Don't delegate management of a strategically important lead management program to a junior resource.
Think of the lead as the beginning of a relationship. Arm the sales force with in-depth knowledge about the prospect. Prepped with the prospect's motivations, pain points, and buying plans, the sales rep is in a great position to engage the prospect in a consultative conversation, instead of having to make a cold-call presentation.
