Pitfalls in current sales lead logging methods
.. and a solution
There are essentially 2 ways most CRM systems currently recognize a “Lead”.
New contacts as leads: Many systems simply log any new contact name with address as a lead. The contact name may have been sourced from any place: web-form, trade-show attendant, purchased list, telephone directory; no matter. They are all “lead”s and are fed to the top of the funnel for further action by sales or marketing.
The benefit of this apprach is it has the widest reach; because it casts the net really wide. For a new company, this closely matches the business process as well. Very few existing customers/ contacts; so, any which way to expand the circle is useful.
The problem of this approach is that it can overwhelm your lead-processing system by putting the onus of swiftly “qualifying” all these contacts onto the sales or marketing. And since the quality of the input (the list of contacts) is never good, leading to a frustration with the qualification process.
Contacts with tasks as leads: An improvement on the above system is logging contacts with specific actionable requests as leads. In this way, a contact who has asked for a quote or a demo or a salesman’s visit or even attended a seminar or clicked on a link in a e-mailer is tagged as a lead.
The benefit of this approach is that this makes available for qualification a smaller list of contacts to start with. Also, the contacts have qualified themselves somewhat by professing a level of interest. This is as useful for a new company as an established one, with existing list of clients.
The problem with this approach is that it still leaves the bulk of qualification tasks open. And, there is still no systematic way to prioritize which leads need attention ahead of others.
Over-riding issue with “metrics”: Marketing gets measured by leads that they manage to “create” while sales is measured by revenue. For a detailed discussion read my previous posts, here and here. So, even under the second scenario above, marketing has an incentive to “stuff” the funnel with contacts as leads who have shown even the slightest desire to engage with us. Unless there is a clear understanding of the minimum state of qualification at which the lead gets passed on to sales, such leads will continue to be held in contempt by the sales function.
In B2B scenarios, we need to recognize that decisions are normally collectively undertaken. Also, by attaching a lead to a contact, we are re-stating the obvious: this contact can potentially give us business. Well, that’s why he was in your contact list to start with, isn’t it?
A lead, thus:
1. Is not a contact but is associated with one or more contacts in the same customer account.
2. Needs to be nurtured and progressed into a deal.
3. Needs to be jointly “owned” and seen as having resulted from sales and marketing efforts in order to have credibility.
4. Needs association with a product or service that we can sell into that account.
5. Needs to result from activities performed by the contacts in an account – as logged in the system and sales and marketing activities targeting those contacts related to the same class of products and services.
I discussed this in more depth in my post called A better way to recognize “leads” in CRM systems.
What do you think? Is a shift of focus from contacts to their activities warranted? Do share if you spot challenges in either the thought or its practical implementation.