How So Many Companies Mismanage Their Sales Leads

by Tom "Bald Dog" Varjan

If selling is the proverbial engine of any business, then it is only fair to say that qualified sales leads are the fuel of this engine. Yes, you can fill up your engine with oil (the equivalent of fancy, eye candy type websites, colourful brochures and mahogany desks with special chiropractor-endorsed chairs) until it overflows and you are ankle-deep in oil, but it is no more useful than a cat flap on the elephant house. You haven't made sale yet. And you can have a legion of award-winning salespeople oozing out of the rafters but you are still heading for disaster.

And this is where the problem lies.

Companies all over the world spend an inordinate amount of money on generating qualified leads for their sales forces, but a large percentage of these leads fall through the cracks and never get followed up on. And the sad fact is that simply having a CRM (customer relationship Management) software installed on computers doesn't make a dickybird of a difference either.

The truth is that acquiring qualified leads, incubating them and converting them into clients and customers is much more than having a fancy software programme. In a way it is a mindset. A mindset of valuing these leads, and being committed to following through on them.

Not losing sales leads through the cracks is a major challenge for organisations worldwide. According to the Yankee Group's 2002 study the average total lead loss is between 40% and 80%.

And this is where business development automation can come into the equation. Business development is basically the seamless integration of marketing and sales. One recommendation I always make to clients is to integrate marketing and sales in a Business Development Department, under the leadership of the Vice president of Business Development. Depending on the size of the company, there can be a sales and marketing team within the Business Development Department, but the key is that they work under united leadership.

Why is this important?

Contrary to conventional wisdom, prospecting for leads is not a job for the sales team. Lead generation is a marketing function. Sales people must be provided a steady stream of qualified leads they can "follow up" on. This is the lead conversion process. It is the marketing team's job to guide prospects through the sales funnel to the point when they are ready to buy. And this is where the sales gang comes in finds out what exactly buyers need and want, what problems they are facing, so they can recommend solutions accordingly.

Yes, in most businesses salespeople are chasing prospects, suspects in most cases, who are running from the salespeople as fast as a turbocharged racehorse.

And in the mist of this mindless pursuit, we are getting back to losing sales leads through the cracks.

The results are devastating. Here are only nine of the major devastations, but there are many more.

10% of leads are lost due to ill-defined processes

10% of leads are lost due to inadequate technology, that is, email, fax, web, etc.

20% of leads are lost due to lack of processes and system for handling "not ready" prospects

20% of leads are lost due to poor lead follow-up

10% of leads are lost due to lack of tracking marketing efforts

5% of leads are lost due to the wrong territory

15% of leads are lost due to antagonism between sales and marketing departments

8% of leads are lost due to poor lead distribution

20% of leads are lost due to poor qualification

Let's Just Look A Few of These Problems

Lack of Tracking Marketing Efforts

At the age and speed of the Internet, when it is so easy to track business development results, far too many companies use nothing for tracking besides hope and pray.

It is the same as putting the strongest engine into a car and making it the fastest but not putting in a feedback loop to check such crucial data as speed, revolution, engine temperature and fuel and oil levels.

So many marketing efforts can be summaries like this: Print brochures and stuff them into a big bag. Now fly over your chosen territory and throw them out. Then get on your knees, hope and pray.

Yes, it takes some technology to develop a tracking system, but with he arrival of the Internet it is a lot easier than it used to be.

Antagonism Between Sales and Marketing Departments

This is huge. It mainly stems from the difference in compensation. You can't expect salaried "professionals" and commission-based "grunts" (this is how so people at many companies regard their own sales staff) work together in harmony. It just doesn't work.

Sales people are trying to make a living by bringing in business, while the marketing folks try to maintain their positions with as little work as humanly possible. And I am not even cynical here, merely realistic. It is not sales folks who gather around the water cooler and the coffee maker.

In most companies marketing folks live like kings, designing logos, creating brands, slogans and fancy graphics, while utterly failing to make a single penny for the company. And at the end of each month sales folks get beaten up for underperformance. And they are beating the pavement and pounding on their phone's dialling pads because the few leads the company has generated are stuck and gone missing at the marketing department. After all, who has ever heard about marketing generating leads for the sales folks?

Poor Qualification

Once upon a time I was selling high-end ($2,000) vacuum cleaners. I would go to the office and get my leads every day. Then I would go out and convert these leads. More exactly, I would try to convert them.

There was one problem: The leads were generated through cheap bingo cards. So, let me ask you this first: Predominantly what kind of people play bingo? Yes, usually the poorest layer of society. The toothless, jobless and hopeless. I would go out and do a demonstration for families most of whose members were...

• Chronic welfare warriors
• Lifetime unemployed
• Hopeless drug addicts
• Minimum wage labourers

I could clearly see they would never spend $20 on a vacuum cleaner (I saw some of the filthiest homes in my whole life), not $2,000. Managers at marketing couldn't see it. They loved the cheap promotion opportunity the bingo company offered. They failed to recognise the "cheap prospects" the effort created.

And what was the result? The annual turnover in the sales department was some 240%. You can't run a company on this figure. Well, the company soon died in screaming agony.

Summary

Sales leads can be managed successfully. However, you can't rely solely on people. You have to offer them some kind of easy-to-follow systems, so they don't have to re-invent the wheel every single time. You have to create a system of generating those sales leads and getting them to the sales people.

And as long as you have a "Sales and Marketing" department, you will gloriously fail at this effort. What you need is an integrated "Business Development" department.

And remember! Don't sell harder. Market smarter. Both you, your employees, your clients and prospects will find it more enjoyable, profitable and attractive.

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