If You Can’t Take the Heat, Stay out of the Lead Gen Kitchen

I spent a lot of time on the title for this post, but frankly, I’m not sure if I chose the right one.  Regardless, this topic is near and dear to my heart. My main point is this: In lead  generation, a high percentage of your leads will NOT convert. To survive, you not only need to build a threshold for this but also be able to properly articulate success to  your boss, the CFO, sales and the rest of the organization.

Look, I’m not here to tell you that you can’t optimize. You can.  Conversion rates do go up, but they rarely go past 50 percent.  That means you’ll probably fail much more often than you’ll succeed.  That’s the fact of the business, and it’s OK.  This is one of those issues that falls in the “that’s the way it goes” territory.

To help you feel better, I’m turning to sports analogies. Even the best players in baseball and basketball fail much more than they succeed:

  • Alex Rodriguez, third baseman for the New York Yankees: A-Rod won the 2008 batting title with an average of .324.  That means for every 10 at-bats, he got roughly three hits. If baseball flipped these stats and started tracking an “un-batting average,” which I’ll call an “out-rate”,  he would have a .676 average. Or, for every 10 at-bats, he was out roughly seven times.
  • Lebron James, point forward for the Cleveland Cavaliers: James won the NBA scoring title in 2008.  His field goal percentage was an amazing 48.4; that is, for every 10 shots, he made less than five. Said another way, he missed five out of 10 shots. Put that way, his average doesn’t sound too impressive.

The point is these guys are two of the highest-paid, highest-regarded athletes out there (steroids withstanding for A-Rod) and no one thinks of their misses.  It’s the same for lead gen: You don’t need an amazingly high conversion rate to be extremely successful.

Take the example of the lead gen manager who has a sales manager saying, “These leads suck.”  In this case, the lead gen manager bought 100 leads and the first 20 the sales team called didn’t work.  Sales then gives up and the lead source is a failure, but not for a good reason. Sales’ expectations were simply wrong.

Most organizations I run into convert leads (convert to opportunity) from 3 percent up to about 30 percent.  That means the sales team in the example above could technically call 40 more leads that didn’t work, and the program still wouldn’t be a failure.  If only 10 out of those 100 convert, you’re having a good campaign.

That’s not all that matters, though. You also have to consider the “unconversion rate.” It’s one of the biggest reasons you should:

  • Build a telequalification function: Build a group focused on converting leads.  Sales guys don’t understand 10 percent conversion rates; they only remember the 90 percent that didn’t convert.  The best companies put a buffer between leads and sales.
  • Leverage marketing automation: First, with marketing automation, you give yourself the ability to increase conversion rates as you continue to work leads well beyond the date you have received them.  Second, you can control what actually gets delivered to sales without having to hear it from them.

To net it out:  Learn how to handle failure or you won’t last long in this business. With your “unconvert” threshold built, create processes that protect you from the downward spiral of the “leads suck” perception and set expectations properly with everyone in your organization, including yourself.

Craig Rosenberg is the Funnelholic. He loves sales, marketing, and things that drive revenue. Follow him on Google+ or Twitter

  • http://www.bridgegroupinc.com trish bertuzzi

    Not to bore your readers with our data but our 2009 LeadGen Metrics Study details an average lead conversion rate of 18%. Additionally, it also details that it takes an average of 8 touches to convert a suspect to a prospect.

    If you think your sales organization is going to hang in there and go through the 82% that don’t respond to their first outbound call – think again.

    Also, 8 touches is a lot so don’t give up! Develop a process that integrates the human touch with marketing automation in a way that is meaningful to the buyer. Don’t harass them…give them content that makes them fans and they will make your job easier.

    You hit it on the head Craig – set realistic expectations and everybody wins!

  • http://www.manticoretechnology.com Emily Mayfield

    Great post, Craig. Working for demand generation company, I’ll admit I might be a tad biased, but I do think leveraging your marketing automation system is the most effective way to increase conversion rates. As proving ROI on marketing spend becomes increasingly important, marketing automation solutions are becoming more and more popular. When you look at the impressive results companies are achieving using the software, it is obvious why. Below is a case study on one of our customers that implemented an ma solution last year.

    http://www.demandgenreport.com/archive.php?codearti=1210

  • http://socioteque.wordpress.com socioteque

    Agree, great post Craig. It’s a logical response to a tired arguement between sales and marketing
    “you gave us crap leads!” vs “you didn’t even give it a try!”

    also thanks to trish for the metrics on how many touches to convert a sale. i might just get a t-shirt made up with those stats because that’s all i’m going to be talking about for the next year.

  • http://www.activeconversion.com Fred Yee

    Great post and good comments. I’m also biased, but need to chime in.

    We view best practices as important as using a marketing automation tool. It’s amazing how many companies still have their sales people just hammer the phones, hoping for luck to fly their way when they need leads. Not only are the leads too raw at that point but it risks annoying a potential customer.

    Marketing automation is a must, and should also measure conversions easily. And there needs to be more marketers/sales execs who understand how to use it, or risk being left behind.