by Christopher Ryan – President, Fusion Marketing Partners
Creative branding and awareness programs are not enough to give you the results you need unless you can produce sufficient revenue at the end of the process. A strong marketing operation needs to be evaluated to make sure that it meets seven important criteria.
- A sufficient quantity of inquiries and leads are produced to meet the overall revenue targets.
- Every step of the lead process is measured using conversion ratios to ensure the every inquiry, lead and opportunity is processed correctly.
- The system produces a good ratio of qualified leads relative to the total number.
- All leads are followed-up in a timely manner (e.g. within 24-48 hours), unless you can tell they are disqualified upon an initial screening.
- All critical information is captured about prospects, but not so much data that it suppresses lead flow.
- Inquiries and leads are produced at a reasonable cost-per-lead.
- The inquiries and leads are balanced by the needs of the business (e.g. sales rep, territory and product).
You will find that creating a lead generation program that meets these seven criteria will allow you to precisely measure your cost of a new customer acquisition. And when you know exactly how much it costs you to bring in each new customer, you are then able to put laser focus on lowering the cost of acquisition while at the same time increasing the average sale amount. These are both extremely important levers in the business and by manipulating them simultaneously, you can really impact your company’s top line (revenue) and bottom line (profit).
It’s important to start thinking about the end-to-end marketing and sales operation just as you would an assembly line. You will need to monitor every single step of the process, all the way from generating the raw inquiries through selling building repeat customers. Use conversion ratios to formulas called conversion ratios are used to compute exactly how many from each category move to the next.
To illustrate this point – if 100 raw inquiries are generated from a specific marketing campaign, and fifty of these pass the screening process and are deemed to be suspects, then your conversion ratio of raw inquiries to suspects is 50 percent. If you are able to turn 20 of these 50 suspects into qualified leads, your conversion ratio of suspects to qualified leads is 40 percent. Following the logic, if five of these 20 prospects become customers, you have achieved a 25 percent conversion ratio of prospects to customers.
You will have a strong marketing process as long as your conversion ratios are on target. However, just like with any assembly line process, the overall result will be negatively affected if any one of the conversion ratios is out of balance. There are not hard and fast rules about conversion ratios because they will differ greatly depending on your product, industry, target market, economy and seasonality However, it is important that you continue to monitor and rework the numbers to continually improve each step in the process. As soon as you thoroughly understand the achievable ratios, you will then know how many raw inquiries that you need at the top of the funnel to achieve your overall sales targets.
Hopefully, you can see that the concept of conversion ratios gives you three different options to generate new customers. First, generate a greater number of raw inquiries, while maintaining the same conversion ratios. Second, generate the same number of inquiries entering the system while improving the performance of one or more conversion ratios. Third, generate more inquiries while improving your conversion ratios. Obviously, this is the option that will give you the best results.
How to Use Fusion Marketing to TurboCharge Your Lead Engine
Fusion Marketing is the best way to optimize and synchronize your important resources in order to get superior results. (A description of the core Fusion Marketing principles). When our company evaluates a client’s lead generation operation, we first try to discover the under-performing steps in the process (e.g. the weak points in the assembly line) and we then assist in fixing these specific areas in order to create a turboCharged lead engine.
However, a TurboCharged lead engine is not valuable unless sales and marketing departments agree on its goals. This is why I strongly suggest that you both departments create and agree to a sales / marketing service level agreement (SLA) that specifies:
- The number of qualified leads that will be required
- A time period in which these leads will be generated (usually measured quarterly)
- The criteria of what constitutes a qualified lead
- The total pipeline coverage that will be needed to meet revenue targets
It is much better to negotiate these numbers up-front than to argue about them later. The last number mentioned, pipeline coverage, is perhaps the most critical number for sales because it is very important to understand how many potential dollars of revenue you need in active sales engagements to achieve a specific amount of revenue. If the sales force is successful at converting their sales pipeline into revenue, the business will be successful.
For more information please visit FusionMarketing Partners.