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Brands enhance lead generation strategies

A small number of good leads will always trump a large volume of mediocre or bad leads. Generating reliable, convertible leads is vital to the success of b-to-b, as well as b-to-c marketing and sales teams. Knowing who customers are and how to segment them allows organizations to quickly move potential clients through the sales funnel. While it’s indisputably important to generate a large quantity of leads, the information’s accuracy and freshness are what ultimately determine how many sales are made.

The value of good leads, however, goes beyond just wins and losses; knowing the difference between leads that have shown slight interest, leads that are on the verge of being closed and leads that joined an email list only for the chance to win a free iPad allows marketers to more efficiently develop and target their campaigns.

The least valuable 20% of customers drain a company’s profit by 80%, while the most valuable 20% of customers generate 150% of revenue, according to Larry Selden and Geoffrey Colvin’s book, Angel Customers & Demon Customers. Knowing which leads will turn into which customers allows organizations to save time, money and resources when developing their marketing strategy.

“Some people who you consider a lead are no longer in jobs or don’t do functions you’re trying to sell into,” notes Dave Frankland, VP and principal analyst at Forrester Research. “The next level of bad leads, which I don’t think everyone is thinking about, is the right individual with the right contact information. His information may be accurate but does that mean he’s good business for you to chase? People overlook this. The cost of someone like that is the amount of money and time wasted chasing [them].”

Tracking leads

Marketers employ a broad spectrum of behavioral tracking techniques to differentiate good leads from bad leads, effective campaigns from ineffective campaigns and ?to establish the best way to respond in either circumstance. Analyzing email click-through, email open rates, time on site and page views are among the many different statistics accessible today to qualify leads.

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Lead quality has become so important to today’s marketer that it has caused some industry-wide discussion about how to determine which prospects should even be called leads. Leads can be generated by buying address and email lists, by shaking hands at trade shows, by allowing prospects to sign up for information online, among many other examples. None of these methods is infallible but each possesses its own positive attributes. Meeting potential customers at trade shows, for example, is great for conversion because those leads have spent time and money to find your business and are therefore more likely to convert. However, companies who purchase lists composed of 50,000 names are likely to touch more prospects than a few representatives at trade shows.

Peter O’Brian, VP of marketing program management and US customer operations at Xerox Corp., says an enhanced lead generation process has shrunk the number of Xerox’s so-called leads from roughly 100,000 to roughly 40,000 per year. When the company began an in-depth lead qualification system two years ago that verified key lead demographic information, desired means of communication, purchasing time frame, budget and product of interest, Xerox realized that 40% of its so-called leads were “garbage,” relates O’Brian.

“There were no qualifications, no nothing,” says O’Brian. “If you’re a rep and you get three leads a month and all three are garbage, you would just start to ignore the leads. So we made a commitment to the field to make sure every lead was good.”

Xerox worked with Sigma Marketing Group to determine how far along a lead was in the sales pipeline and which marketing communication method would be most appropriate. Now, leads are verified on the telephone with a telemarketer and cleansing is done upfront through email. “Our objective with email is more as a nurturing mechanism than as a lead mechanism,” adds O’Brian.

When asked what happened to the 60,000 prospects he no longer considers leads, O’Brian says Xerox sends their information out to marketing representatives so the marketers are aware there has been unsuccessful contact. Then the representative can choose whether or not to follow up with the prospects directly by telephone or to send more direct mail or email marketing materials. “The idea is nobody is left hanging,” says O’Brian.

Brian Getchell, national media sales representative for mid-market display at Yahoo, says he uses ZoomInfo to find and develop qualified leads. “We want good information on a few key people that we’re trying to reach within marketing departments within larger companies,” he explains. “We usually generate a couple of leads per day. Not a huge amount. Because [for us], it’s just about a quality lead.” Getchell later clarified the quote with Direct Marketing News, saying each rep generates “five to 20 leads per day. That’s not a huge amount compared to jobs I’ve had in the past where the focus was on quantity,” he said.

Steve Tafaro, president and founder of Steve Tafaro & Associates, a business advisory firm, explains there are three types of leads. There are leads that immediately go to sales, leads that are not at all a fit and leads that must continue to be “nurtured” or developed.

“Those who need to be nurtured are the most important for marketers,” says Tafaro. “The worst lead you can get is someone who says, ‘I’m ready to make a decision’. For those leads, you’re coming in as fodder, as a commodity. A great lead is someone who you can nurture. Then you can affect the sale a lot more and create value.”

Cost of bad leads

For those businesses that choose to prospect using lists, several factors need to be considered before creating a unique marketing and sales approach for each individual customer segment.

“If you go to the US Census, “there are more than 600,000 companies that started a business this year and 600,000 businesses that failed this year,” explains Kathy Sexton, VP of marketing at ZoomInfo, a provider of business profiles. “There’s been 33% turnover in jobs and more than 40 million jobs listed. Six thousand people change jobs every hour. The Sales & Marketing Institute found that 70.8% of business cards collected had one or more change within a 12-month period.”

With so much job turnover, it’s impossible for marketers and salesmen to know if the names on the lists available for targeting are actually up-to-date. Michael Feldstein, director of marketing at Boardroom, Inc., a direct response publishing company that sells books using direct mail, infomercials and email, says he is “never sure,” if a list he has purchased is accurate and current. “That’s why we always test. If a list has 50,000 names, we’ll test 5,000.” Feldstein says he tries his best to buy names from “reputable companies” that he can trust — companies that “give us representative names” and don’t “pre-load the test with good names.”

Despite his caution, however, he says he still buys lists that don’t meet expectations sometimes. Even if he is satisfied, “there’s always a drop-off in response when you expand to the bigger list. I’ve been in the business a long time, and it’s rare that any more than 10% of a list will respond even if you have a great offer,” says Feldstein.

Feldstein works with direct marketing services firm, Creative Automation, to make sure the lists he buys are clean and up-to-date. He says Creative Automation’s technology allows Boardroom to quickly identify duplicates and make sure addresses are clean and current.

“The timetable to do all of this is sped up with [Creative Automation] where you can clean and verify names quicker,” says Feldstein. “If the process takes a month longer [than it should], you’ll be targeting names and addresses that are a month older.”

The cost of bad information can be crippling for direct and digital marketers, says Jeff Hassemer, VP of product strategy for the data management services group at Experian Marketing Services.

“Each direct mail piece sent is roughly 75 cents to $1.25,” he says. “You lose that amount for every lead you lose. The cost of bad email information [is evident] on deliverability misses. Every bounce back counts against you, which can cause a whole slew of issues for your legitimate emails as well. Internet service providers hold you to deliverability thresholds. If you exceed the deliverability threshold for bad email addresses, you could get blacklisted and the rest of your email might possibly not come through.”

Duplicate identification, says Jake Hall, director of database solutions at marketing services company, SolutionSet, is a major problem when it comes to lead generation and it’s something he contends every direct marketer should take into account when purchasing prospect lists.

“Many prospect lists, whether compiled or generated through hand-raising, are prone to having a good amount of duplication, particularly between different sources,” says Hall. “It’s not uncommon to lose 10% of a single list or more than 50% across multiple lists going into a given mailing. Assuming a contact costs at least 60 cents to put in the mail, that could represent a cost of $60,000 on a 100,000 piece mailing.”

Hall also claims the “hygiene” of address lists can contribute to both deliverability and postage savings. SolutionSet did an evaluation for a client that found the organization could save roughly $49,000 in expenses and an additional $43,000 in revenue over the course of about 30 million pieces put in the mail by cleansing the information on its leads and taking advantage of postal bulk mailing discounts. “This is about $3 million to their bottom line from hygiene alone,” says Hall.

“Any wise marketer is going to test relatively small quantities [from a list of prospects],” says Bob Massie, CEO and owner of Marketing Informatics, a direct marketing services company. “You can do all the due diligence up front, but in the end the only way to know if your offer works well is to actively do it. It’s only when somebody puts money on the table that you can actually judge effectiveness.”

Keeping score

Understanding and optimizing the demographics of names selected for promotions and mailings can help to decrease marketing spend for unqualified leads. “We have a client with a pool of 538,000 names that applied a demographic enhancement to select the top 240,000 according to age alone,” says Hall, who declined to name any clients. “The mailer eliminated names that would have cost them $39,000.”

Monster.com, which buys data from third-party providers for its email and telemarketing campaigns, “cobbled together different solutions,” to ensure its prospect list was qualified and tracked, says Matt
Resteghini, VP of global CRM and database marketing at Monster.

The company uses Oracle’s Siebel CRM for sales force automation and Unica for marketing automation. The systems allow Monster to “get leads to the sales force in an expedient manner and track the results,” says Resteghini.

A year earlier, the company “wasn’t doing much with leads.” Monster had a manual process where “we used to be literally collecting business cards and calling them. It was not very efficient. We were not doing qualification up front. When our sales reps make a phone call, you want to make sure they’re making a phone call to get them the sale and not to qualify a lead.”

With Unica and Siebel in place, Resteghini estimates Monster has saved roughly $2 million per quarter and his sales staff’s morale has increased because they no longer have to telemarket to prospects.

Back when the lead process was manual, Resteghini says “we had no clue how much we generated from leads.” But he’s confident Monster is better off with the systems in place. “The number we generated back then was nowhere near $2 million,” he says.

The same can be said for Scotts LawnService, which has saved roughly $3.5 million over the course of three years by working with Anthem Marketing Solutions to make sure leads “aren’t just responses to mail but people that can be converted to sales,” says John Lewis, director of segmentation for Scotts. Before the two companies began working together in 2008, Lewis says Scotts was mailing too deep into its prospect pool. Prospects that Scotts thought were leads were just “responding to a compelling offer with no true intention of becoming a customer.”

Anthem has allowed Scotts to analyze a “robust set of data” that can be mined to create in-depth customer models, claims Lewis. Ranking customers has enabled Scotts to determine which are likely to reply to direct mail campaigns and which are not. As a result, the company has decreased its direct mail spending by 40% while increasing its close rate by 10 percentage points.

“We purchased lists and lead scoring [technology] from a company,” says Lewis. “We found that our response models were not as predictive as we wanted them to be. We knew we wanted to decrease mail, but we didn’t have models to intelligently do so. After Anthem’s first campaign, they proved they could build a [direct mail acquisition] response model that was predictable.”

Lewis says Scotts is now able to reinvest that $3.5 million into other channels such as email, telemarketing, referral programs, new homeowner programs and door-to-door sales. Though Scotts still “leans on direct mail” for overall sales, Lewis says he would like to cut direct mail even further as Scotts continues to diversify its channels.

Michael Harris, director of list sales at Lorton Data, has been in the data management and lists services industry for more than 42 years. He says he remembers feeling like he “had the world by the tail” back when he first started because his clients could use demographics lists to “pinpoint and target their market.” But today, he says, with so much information available, data quality matters more than data quantity.

“A lot of people are selling data and pushing numbers,” says Harris. “Well, la-di-da. But can you give me the right data?” He suggests marketers use advanced tools, postal tools, file standardization, and that they run lists through a national change of address databases to enable content deliverability. “The tools are out there if you know what to ask for,” says Harris.

Dan Rider, principal of Visual Intelligence, a business analytics service provider agrees. “The cost of these campaigns is not trivial. Email campaigns can be quite expensive. Postal campaigns can be quite higher, especially when you move from flat mailings to dimensional mailings,” he says. “You’ve got to apply know-how around advanced models to improve the campaigns to reach targeted individuals who are motivated to open an email, log onto the website and make a purchase.”

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