Lead Management Report

I just finished reading a recently published MarketingSherpa case study, this one titled "Lead Scoring & Management Roundtable." As always, it has some great data (interviews in this case) regarding the lead process and how the marketing department and sales department should work together in order to optimize the handling of sales leads.

Luckily, they are offering a free download for the rest of the week. Certainly a worthwhile 20 minutes of reading. I particularly enjoyed Brian Carroll's response to the first question of which leads salespeople should have access to. Check it out!

The Value of a Click

The price that a vendor should be willing to pay for someone to click through to their website is very much a math exercise - luckily a fairly simple one. The questions you need to answer in order to calculate the value of a paid visitor are:

1) What is the average price point of your product? Or better yet, what is the present value of all future revenue from my average customer?

2) What percentage of that price (or value) am I willing to spend to find that customer and remain profitable? (This is often in the 20% to 50% range, but can certainly vary from company to company.)

3) What percentage of your leads convert to sales?

4) What percentage of your web visitors (particularly those acquired from paid campaigns) convert to leads?

Multiple these 4 numbers together and you arrive at the limit of what you should be willing to spend per click. Here's an example:

Software Company XYZ sells a software product that has an initial price point of $10,000 and they charge an annual maintenance fee of $2,000. Considering interest rates and that they lose some customers over time, they determine that the total present value of any new customer is $15,000.

They are willing to spend 40% of that figure to acquire a new customer.

10% of their new leads convert to sales.

20% of their paid web visitors convert to leads.

Multiplying $15,000 by .4 by .1 by .2 results in a maximum price per click of $120 that they are willing to pay. So imagine their ROI when they are able to pay just a few dollars per click?

Unqualified Leads Are Good Too

Your online form (where you capture prospect contact details) should be as brief as possible. Three or four fields is ideal - name, email, phone and possibly company name. The reason is simple: the less fields you request, the more likely the prospect is to fork over their information.

Every week I get a few vendors that question that logic, citing that the reason they request quite a few fields is that it further qualifies the prospect. While this may be true, the question one has to ask is, "at what cost?" Sure, if you request 15 fields, the prospects that complete the form will, on average, be a little more qualified than if you request 4 fields. But how many leads do you miss out on in the process?

Let's assume that Software Company XYZ has their site perfectly optimized to convert visitors to leads and they receive 50 leads per month in this manner. Then they reduce the number of required fields from 15 to 4 and their number of leads increases from 50 to 150.

While all 150 may not be as good as the original 50, so what?

1) They still receive the contact details for all 50 original leads.

2) Some of the additional 100 leads will be just as good as the original 50. These represent the prospects who were in a similar part of the buying process but would not have wanted to complete such a long form.

3) The remaining leads will not be as good (yet) but they can be cultivated via an email marketing campaign and some of them will eventually become good leads.

The process of qualifying leads should not be performed on the website at the expense of turning away less qualified leads. Once a visitor thinks your form is too long to bother, the click that you paid for is lost. Wouldn't you rather get their email address first?

So remember, get their contact details, and then qualify.

Why Software Marketers Get No Respect

I feel slow on the take on this one, but it has only been in the past year that I have begun to realize that most marketing departments are low man on the todem pole in software companies. Here's my theory...

Two groups drive the initial success of most software companies: sales and engineering. This make sense. Afterall, you have to produce a good product and you have to be able to sell it. Otherwise, you're out of business.

The marketing department often comes aboard as sort of an afterthought. Unless they come from a marketing background, founders often view marketing as little more than brochures and advertising and, even worse, are clueless about measurement. So their respect for the value that marketing brings to the table is downplayed.

This in turn makes it difficult to hire the good marketers because they'd rather work for consumer goods companies where they do get respect. So software companies end up hiring people that don't really understand the importance of marketing either and it becomes a self-fulfilling prophecy. Low expectations result in poor results.

How to fix this? A topic for a future post...