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Monday Mornings with Madison

MADISON COMMERCIAL REAL ESTATE SERVICES MADISON COMMERCIAL REAL ESTATE SERVICES
#98

FROM LEADS TO DEALS… HOW TO IMPROVE SALES CONVERSION RATES
SALES SUCCESS, PART 2

Ever seen a salesperson who was excellent at finding potential new customers, yet wasn’t even close to being the company’s top producer?  That’s because finding potential new customers—known as leads—is just the beginning. For leads to benefit the company, they must be converted to sales.

Balancing time between lead generation and lead follow-up is one of the biggest challenges salespeople face.  How much time should be spent mining for new leads?  How much time should be devoted to cultivating the leads already generated?  And what qualifies as real sales follow-up, not just noise?    The goal is to find more sources of business while staying top-of-mind with your existing prospects as well as your valued customers.  The best salespeople know that this process can and should be approached systematically.

1.  What To Do

Qualify Leads
First, it is important for the organization to determine and agree upon a set of criteria for qualifying leads. While this profile will vary from business to business, in general a good prospect will have the following characteristics:

  • the financial resources to purchase your product;
  • the authority to make a purchase decision;
  • a genuine need for your product or service;
  • the desire to learn more about your product or service;
  • plans to make a purchase in the near future.

It helps to speak to the contact and request more details of their needs, in order to send information tailored to their needs. Merely getting a business card and then sending a generic brochure or eblast, with no attempt to gain an understanding of the prospective customer’s needs, is a waste of time and money.

Questions for Qualifying Leads:

  • Are you the person who makes the purchasing decision?
  • If not, who does?
  • Is your company currently buying this product or service?
  • What quantities do you buy, or how much do you spend on the service?
  • When are you likely to make your next purchase?
  • What information do you need on our product and company?

Target a Sales Process
Typically, a sales process is either one-step or two-step. In a one-step process, the lead generation and sales conversion steps are combined; this is equivalent to a direct selling operation. One-step programs are not appropriate for all products and services, but they can be suitable for less expensive products such as office supplies, software, low-value financial offers, or information services such as newsletter or magazine subscriptions.

In a two-step program, the prospective customer receives initial information and then the salesperson continues following up until the prospect is ready to buy. Two-step programs are typically suitable for more costly items, such as complex technical products, professional services, or high-value financial services.

Outline a Lead Conversion Process
Converting a lead into a sale can be a long-term process, the duration of which depends on the complexity of both the product and the decision-making process. The number of people involved and the level of importance to the customer (or the customer’s business) are two key factors. It is important to decide how each stage of the process will be handled, who will be involved in the sales team, and how communications with the prospect will be managed. For example, with a complex product, the lead conversion process might entail:

  • identifying key decision makers;
  • sending information to key decision makers;
  • arranging meetings with those decision makers;
  • providing sample products (or demonstrations) for evaluation by the prospect;
  • bidding for a contract against competition;
  • final negotiations;
  • purchase;
  • after-sales service and support.

Another situation occurs when a prospective customer is reluctant to change suppliers. Converting this type of prospect into a sale can take a long time; it requires planning a program to maintain contact and move the prospect away from the existing supplier. In this case, actions might include sending personalized direct mail with product information, offering regular updates on new developments in the company, and/or making targeted special offers to encourage the prospect to try the product.

Determine Responsibility
In most companies, the marketing department generates leads and the sales department follows up on those leads.  In some organizations, leads are generated by both sales and marketing.  It is crucial for the two departments to coordinate their respective activities, agree on qualifying criteria, and maintain focus on high-quality prospects. Sales departments often gripe about the quantity and quality of leads generated by marketing. They want as many leads as possible, however, they are unhappy if the leads are of poor quality or do not meet the right criteria. In turn, marketing departments complain about sales people who don’t contact new leads or follow-up on existing leads timely. 

Collecting a large number of high-quality leads can be a difficult balancing act. It is essential to discuss and carefully delineate responsibilities between sales and marketing. Some sales teams prefer to do their own qualifying, for example, while others prefer to concentrate on face-to-face meetings with prospects.

Provide Sales Support
Keeping a sales team on the road is expensive; this sales model can be a costly way of reaching customers.  Sales support can be used to enhance the performance and productivity of sales staff, resulting in an overall cost savings. The sales support team can be responsible for following up sales leads, qualifying prospects, setting up appointments, and maintaining contact with longer-term prospects. This frees the sales force for more face-to-face meetings and focus on the most qualified prospects.

Use A Customer Relationship Management (CRM) System
A customer relationship management system is a database application that enables sales teams to maintain a sales diary, record details of meetings and set follow-up activities. These applications assist in planning the conversion process and help ensure that the sales team does not miss any important contact opportunities. The same software can be used by management to monitor progress and ensure that no important contacts are overlooked. CRM systems store details of the prospect, their likes and dislikes, availability for meetings or calls, buying limits or authorization, and even personal information that can help to maintain a relationship with them.

Monitor Progress
It is essential to track progress at each stage of the lead conversion process and modify strategies as appropriate. When a prospect is especially promising, consider allocating additional resources to win the business. If a prospect is of only minor importance but consumes undue time and resources, the efforts of the sales rep(s) involved should be refocused. A typical lead progresses through several stages—but not necessarily all. 

  • Cold lead: an initial contact from any source;
  • Lukewarm lead: contact has been qualified and has some potential to result in a paying customer;
  • Warm lead / prospect: promising lead that has been qualified in more detail;
  • Hot lead:  a very promising lead that has been qualified and shows potential to convert to business very soon;
  • Inactive lead: a prospect who will not buy now but has future potential;
  • Dead lead: a prospect who has little potential to become a customer;
  • Customer: a prospect who has made a purchase.

Determine an Appropriate Contact Frequency
A single mailing, telephone call, or direct response advertisement may produce results, but a series of quality contacts will have greater impact and better ensure that response targets are met. Direct marketing activities raise awareness levels with each contact, so follow up with individuals who have not responded, to encourage their progress along the decision-making process.

Make Personalized Communications
Personalized, one-to-one letters can be an ideal form of communication for companies with detailed information on prospects. The letter should reflect an understanding of the individual prospect’s main interests and concerns, and might offer specific information or a product solution tailored to the prospect’s needs. Subsequent mailings can build an individual relationship with the prospect.

2.  What To Avoid

Targeting The Wrong Prospects
Human beings have a natural tendency to deal with friendly people and avoid the difficult ones. Sales reps are no exception. From a business perspective, however, this may not be the right choice. The qualifying process should identify prospects with the highest potential, and the sales reps should target efforts accordingly.

Mismanaging The Process
Lead conversion can be a long, complicated process, so it is essential to monitor progress and manage the process carefully. Converting leads can consume a lot of sales force and sales support resources; employ careful planning to ensure it is performed effectively.

Overburdening the Sales Force
In some organizations, the sales force is burdened with total responsibility for generating leads, qualifying them, and converting them to sales. This is not typically the best use of sales force resources. Supporting functions can be used to supplement the sales force and take over routine tasks, so that sales reps can do what they do best—close deals.

3.  What Else To Know

How is lead conversion measured?
It's most effective to gauge results at each stage of the lead conversion process; simply calculating sales as a percentage of initial leads is too simplistic an approach. For example, perhaps only 50% of initial leads turn out to be suitable prospective customers. If these leads have been well-qualified, the sales team may be able to convert 20% of that prospect list. These two metrics are more useful than a single number reflecting 10% conversion of initial leads. Measuring results at each stage helps you focus resources in the right places, refining the process for future lead generation programs.

Is it best to generate as many leads as possible?
Not necessarily. Quality is as important and quantity when it comes to leads. Following up on a large number of unsuitable leads is a waste of resources. Acquiring even a modest number of highly-qualified leads, however, is critical for any company that wants to expand its business.

QUOTE OF THE WEEK

"I find it useful to remember, everyone lives by selling something." Robert Louis Stevenson

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