'Lead Recycling' Offers a More Cost-Effective Way
Focusing only on the most qualified prospects leaves many potential but more long-term deals on the table. A prospective customer might have precisely the problem that a particular product or service solves and is eager to solve that problem, yet may not feel ready to buy.
Generating hot leads also is expensive. A typical cost per lead for business-to-business hi-tech products ranges from $100 to $200. Because hot leads make up only a small percentage of the responses from any campaign, an effective cost per hot lead can be well over $1,000. In addition, response rates from tactical campaigns are likely to be lower, so companies need to spend more money to generate relatively few opportunities. This requires a constant reloading of the sales funnel with new, expensive leads.
An effective lead-generation strategy is one that not only captures hot leads but maximizes the value of more long-term prospects that otherwise would be ignored by the sales force. We call this approach "lead recycling." Lead recycling requires these changes in strategy:
· Casting a wider net to include prospects not actively in purchase mode.
· Building a database of short-term and long-term prospects that at least have the specific problem a company's product or service can solve.
· Focusing campaigns and resources on generating new leads and nurturing existing prospects.
The following outlines five steps to implementing a lead recycling program:
1. Establish a formal lead-qualification infrastructure. Ideally, this takes the form of a telesales department whose sole objective is to qualify and requalify incoming and existing prospects, thereby generating new, qualified opportunities for the sales force. Do not expect your primary sales force to fulfill this function unless you plan to pay them the same amount for a qualified lead as a closed sale.
2. Use offers that educate rather than sell. Examples of offers that sell are free demos, free trials and purchase discounts. An information offer (such as white papers, case studies and analyst reports) says, "Here's how to solve a problem" vs. "Here's why you should buy our product."
Presented with an information offer, prospects who are ready to buy will respond anyway. Meanwhile, you'll generate leads from companies or individuals who at least have the right problem (the one your product or service can solve) and want to do something about it.
3. Cast a wider net. Typical of the type of campaign that tries to capture hot leads is the so-called executive program that sends dimensional mailers complete with noise chips, golf balls and other attention-getting devices to key executives at a few select companies.
A more cost-effective approach is to use techniques that reach a wider range of prospects at lower cost. An example would be placing sponsorship ads in e-mail newsletters. Because they're less targeted than other media like e-mail or direct mail, leads can be less qualified initially but they're a great way to help build a database of both short- and long-term prospects.
4. Establish a regular dialogue with existing prospects. Besides periodic phone calls from telesales, create an opt-in e-mail newsletter and send it to prospects to keep them informed about your company as well as providing strategies, techniques and issues relating to your product category. As with your initial offer, keep the tone informative.
5. Create "next step" offers that requalify existing leads. Promotional events like seminars and Webinars used for lead generation can over-qualify leads by limiting response only to prospects interested enough to dedicate the time required of such an event. As offers made to existing prospects, however - perhaps through an e-mail newsletter - they can serve an important role as motivators for prospects who responded initially to information offers and now feel ready to take the next step.
Lead recycling requires a fundamental change in marketing philosophy, from a short-term, tactical approach to one that takes a more long-term, strategic view.
Ironically, a more long-term approach to marketing, rather than extending the sales cycle, tends to create a greater number of short-term sales opportunities. This is because it doesn't rely on the ability of prospects to self-qualify, to determine that your product or service is a good fit solely on the basis of your marketing message and their perceived needs.
Given the complex nature of most technology solutions, few campaigns succeed in selling products or in identifying prospects who are ready to buy. The most efficient use of lead-generation programs is simply to identify prospects with the problem or issue that your product or service can solve, and then use other resources (telesales, e-mail newsletters) to educate and sell those individuals over time.