Marketing Expert's Corner
This article written in 2003
Part 2: Lead Generation & Starting the Sales Cycle
"These are the new leads, the Glengarry leads. To you they're gold... but you don't get them. Why? Because to give them to you is just throwing them away. The Glengarry leads are for closers."
For the three greatest moments in film about sales, go rent Death of a Salesman, Tin Men, and Glengarry Glen Ross. In this month's installment, we're looking at lead generation and cultivation. A lot of changes are afoot: the PC industry's Comdex has shrunk by 80% since the Y2K peak, and many shows are being cancelled altogether.
Let me start with a bit of heresy: Marketing cannot create high-tech demand. It can in consumer markets (think soft drinks and pop music), but not in B2B selling. In high tech, you can't create demand any more than you can create electrons. You can generate electricity and you can harness the flow of electrons, but the electrons already existed. Don't believe me? How about Scott Cook, the marketing wizard founder / CEO of Intuit:
"To me, there are only two parts to marketing. The first is figuring out what the customer wants and spreading that knowledge throughout your organization. The second is figuring out what they buy and why."
So why am I splitting hairs? Because words imply an attitude and a set of assumptions. "Demand creation" implicitly sends you down a path of trying to make the market want something it doesn't really need. This can be done, but is outrageously expensive (and rarely effective) in information technology. Better to focus on finding the people who actually do have a problem and don't realize there's a practical solution available for their need. This is where visibility and lead generation come in.
As I wrote in Pyramid Power Influences the Market, the internet really did change everything, irreversibly altering the leverage points and mechanisms of technology marketing. Even so, the big picture objective is still to gain credibility in the customer's mind through things that other people say about you. You need to be visible and viewed as a leader with the people whose opinion matters to your prospects. It may be true that "you can't eat visibility", but lead generation is a lot harder and less effective if you're invisible.
Large IT vendors have lots of ways of reinforcing and manufacturing visibility. Smaller companies usually have to give something of value to the market (information, good advice, a sliver of intellectual property) in order to get on the map with the right people. Take a look at this article (Community Building) for ideas.
No matter what your size, to be visible you have to choose a message and a target audience.
What Market Are you Really Going After?
This is at the core of market positioning and value propositions, things that require careful thinking. Here are some "reality check" items that many companies miss:
You can't afford a lot of value propositions. Even if your sales reps could pitch 12 different messages (they can't, and won't), customers will get confused or they just won't believe too many or diverse messages. For companies (or product lines) less than a $20 M, have one or two messages / value propositions. Billion dollar companies may be able to pull off 10 (assuming there are several product lines), but it's a lot of work.
Verticals really work, but most product companies can't really pull off more than two at a time. Being truly vertical means changes to your product, partners, messages, and sales cycle. Moving from a horizontal value proposition to a serious vertical one takes too long (over a year of real work) to yield the revenue acceleration required by most Sales VPs or profit-conscious CFOs. For product companies, a vertical needs to be over 20% of company revenues to be sustainable.
Make sure to target the right part of the customer's organization. Either central IT or the functional / business organization is the driver for a particular sales cycle -- not both. The budget for many product categories has been moved out of central IT. If that's true for your product, your marketing materials and sales tactics must be refocused to the business unit.
Get real about the levels of selling to. Every sales rep wants to sell high, but many product categories are decided at the director level -- even in small organizations. There's not much leverage in showing up in CIO magazine if your product category is used by system administrators or low-level developers.
Time to Build a Pipeline
Another stab at heresy: the last thing a company needs is lots of leads. If your company instantly got 10,000 new leads, you couldn't follow up on them before they went cold. What's needed is fewer, higher quality leads that have a serious chance of starting a sales cycle. Here are some things to think about:
Think cultivation first. There's no point in generating a ton of leads it you can't process them, cultivate them, and measure their progress in the sales cycle. If your organization has issues here, they will take longer to fix them than it will to start generating leads, so start on the SFA and telemarketing process stuff first.
Build a model of your pipeline and revenue flow. It doesn't really matter how many leads you generate per se. What matters are the particular characteristics of leads that deeply engage in a sales cycle and result in revenues. Most of the time, nobody really knows what types of leads are good, so decisions get made on the basis of urban legend. Creating a model of the pipeline will take you a few hours, but it's the best way to get sales, marketing, and finance on the same wavelength. Make sure your model has targets (e.g., time, cost, and conversion rate) for each phase of the lead generation and sales cycles. Tie all this in with the company financials, to the point that you can understand how many unqualified "names" you'll need every quarter to feed the revenue engine. You need to know what it takes to manufacture your next customer. Don't be surprised to find that pure lead generation costs exceed what you thought the entire marketing budget would be.
Configure your SFA system to measure the right things. An SFA system by itself yields nothing of value. The benefit comes when all reps and managers use the SFA system as theprimary way of initiating, monitoring, and managing customer interactions. This means behavioral change: generally, the telesales / telemarketing folks will like using your SFA system long before your direct reps do. The steps are:
All leads must be originally entered into the SFA system. The SFA must become the "system of record" for all prospect and customer activity.
The content items in each of the SFA pages must be configured to fit your company. Make only a few items mandatory, and make the mandatory items a pull-down list with a good default value to reduce errors and variances.
The SFA reports need to be set up with the right thresholds and filters. Unless you've done it before ;-), you'll probably need to redefine data items, pull downs, and reports for the first couple of months.
Once the SFA system consistently yields meaningful data, put some teeth in its use. This means MBOs for the marketing guys and commission penalties for the sales reps (e.g., reduce commissions for deals that close but which weren't forecasted through the SFA system, or which have incomplete SFA records). However, do not do this too early: if the SFA provides unreliable or misleading data, any punitive measures you put in place will backfire.
The most common problem in lead generation is a poor choice of audience or mailing list. Phenomenal efforts go into preparing the content and events to promote your story, but they are wasted unless the audience is well matched to your value proposition. Beforeyou commit to a marketing event, spend time designing the audience and figuring out how to get the right people to attend. As you can guess, response rates for nearly all media are low and going lower. For (e)mailings, the most effective list is the one already in your database: the people you've already contacted and who know a bit of your story. Several studies have shown that regular contact (perhaps a quarterly newsletter) with your existing database is the second most effective, and by far the most cost-effective marketing technique.
List rot happens. Expect that list data (particularly email and phone numbers) will degrade by as much as 10% per month. A high bounce-rate on an email blast indicates that the list you used is old or that your mail has triggered aggressive spam filters.
Don't send "reminder" invitation mails that appear identical. They will be viewed by recipients as spam, causing several "remove me" requests. Reminder mails should never be less than a week apart.
You must comply with do-not-contact requests. This is just a matter of good taste. In this case, a lack of good taste is subject to a $10,000 fine per incident in certain states / countries.
Spend like you mean it: quality, not quantity. My ideal lead generation campaign wants to capture 50 people whom we know in advance will care about this product or service offering. Spend time and money to get a list of just 250 of those people (instead of 25,000 maybe's). Consequently, you can afford to spend 100 times as much on each of them to get their attention. Send a clever $50 gift (USB devices are currently my favorite techie items) via FedEX to get through all spam filters and secretaries.
Think small and focused in lead generation. Nearly all of the lead generation tactics of the 90's are over. For small companies, multi-city seminars, trade shows, snail-mail, print advertising, and one-shot email blasts have yielded almost no real business for years. Lead generation must move away from long programs with big lead times. Instead, have lots of small, short programs "on the shelf," and then put them in place in "dry" territories within a 3 week (rather than 3 month) cycle. This is not easy, but to quote Apple, it's time to Think Different.
Lead generation budgets and execution need to move from the Field back into Marketing. This particular item goes through pendulum swings. At this point in the cycle, it's important for Sales to be improving skills and speed: lead generation tactics / execution are not the best uses of a sales rep's time. That said, it is imperative that marketing and sales be completely aligned in setting priorities and the details of lead generation programs. One good way of doing this is to have marketing decentralized and distributed close to the field, but be managed by a central leader. For most IT companies, large central marketing staffs are not effective.
Present Yourself Well
The web is where it happens first. A prospect's first contact with your company is through the web site, and they are likely to disqualify you solely from their web experience. The site has to be inviting and inclusive, but it must not tell your whole story. The site's message must be punchy and short (assume you get at most 150 seconds of the reader's attention) and it needs a call-to-action that motivates people to contact you. The site must be designed as a focal point in integrated, continuous communication via the web, email, phone and in person.
Paper and PowerPoint are passe. Printed collateral is needed only for case studies and press reprints for use with upper management. PDFs are acceptable and effective for everything else, and in some prospect bases are even better than paper. PowerPoints are still essential for web-based meetings, but they have been overused for in-person presentations. A really good "chalk talk" is way more effective than any animated slideware, and fits in better with Question-Based Selling techniques (which I highly recommend).
Sales cycles start over the web and the phone, but most deals close in person. The personal style and persuasive power of the rep really matters.
Relationships matter. The internet hasn't changed one thing: people connections are hugely important to getting through, taking a meeting, and moving a sales cycle forward. Rolodexes, connections, golf games and dinners will always be essential to enterprise deals.
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