Why Generating More Leads Isn’t the Answer to Greater Sales Revenue

Updated: June 16, 2009

Today's economy is tough, with buyers holding onto cash and taking more time to make purchasing decisions. This naturally creates anxiety in businesses that are trying to sell products and services. Most often, their response is to populate the pipeline with more leads in the hope that some will turn into sales. After all, this approach seems logical, since more leads equal more opportunities, right?

Unfortunately, the opposite often turns out to be true. Flooding sales reps with more leads — especially low-quality ones — can actually make the problem worse.

The Problem with Too Many Leads

Today's leaner-looking sales numbers are fueling a growing interest in high-volume lead generation practices. But this most often just results in a lot of marketing dollars being wasted. In the end, what you get is simply a large pile of poor-quality leads that fail to provide ROI.

To this end, a 2009 CSO Insights survey reported that senior sales executives rate just 35 percent of leads as "good" or "excellent," and 65 percent as "average" or "poor." And only 26 percent of sales executives surveyed were satisfied with the quality of leads received.

It might be disconcerting to know that today sales organizations do not follow up on 79 percent of leads. The reason? Perceived poor quality.

Taking a Less-Is-More Approach

Conversely, when sales reps are given fewer but better quality leads, they can focus their time more effectively on the most likely buyers. Such a practice makes sense in any economic climate, but in the current market downturn it can be a way to improve efficiency and do more with fewer resources.

Experience has shown that by taking a less-is-more approach and working on lead refinement, it becomes possible to funnel only the best prospects to your sales reps. This is also a sure-fire way to renew the value of lead generation programs, since sales reps start receiving leads they can actually use.

Practice Lead Nurturing

Businesses naturally want short-term leads, because they feel a need for immediate results. In the search for the quick close, however, some of the most promising leads can get lost.

This is unfortunate, since prospects who don't respond immediately, or respond that they aren't interested, often represent the largest base of potential new customers. In fact, companies that focus strategically on long-term opportunities realize by far the highest lead conversion rates.

By nurturing quality leads over time, companies can forge deeper relationships that ultimately translate to business. Nurturing longer-term leads is especially important now, as prospects are stretching the buy cycle and making purchasing decisions more slowly.

Despite the temptation to focus only on dollars coming in short-term, companies should broaden their outlook to include longer-term prospects.

Segment to Find Higher-Value Prospects

If you're going to capitalize on leads with the most sales potential while reducing the time spent on weak leads, properly identifying them through segmentation is key. Because some market segments respond better than others, it makes sense to identify those segments and market to them specifically.

Initial segmentation requires basic research to weed out the prospects that really aren't a match for your offering, and to group others into related categories you'll want to target in similar ways. Most companies find it helpful to group leads by industry, annual revenue, employee headcount or similar characteristics. You can then test these groups to determine the highest responders.

Additional segmentation into short- and long-term prospects should come as you begin making contact. As part of this, it is important to interpret "I'm not interested" to mean "I'm not interested at this time."

Any lead that fits your criteria for a high-value prospect, even those who claim not to be interested, should be kept in the prospecting loop. You never know when changing circumstances may transform "I'm not interested" to "let's talk."

Use Multiple Touches and Multiple Media

Just as you don't want to abandon leads that claim not to be interested, you shouldn't abandon leads that don't respond to initial contact attempts.

In an age of communications overload, it can take 10 to 12 touches to identify whether a prospect is sales-ready. To further increase your chances of reaching promising leads, employ some mixture of media — quality outbound calls, voice mail messages, email and direct mail — to touch prospects repeatedly over time.

Multitouch, multimedia campaigns work because they build familiarity with busy decision-makers and increase the potential of impacting them at a time when their need for a solution is high. They also increase the chance of dovetailing into a prospect's communications preferences, as some are more email oriented, others more voice mail oriented and still others more receptive to traditional direct mail or live conversation.

There is Business Out There

The reality is that the business climate has changed, and sales numbers are often harder to hit these days than at the same time just last year. But by focusing on strategic practices that identify and reach the best prospects, it is possible to rise above the sluggish economy. Working leaner and smarter is the key to success.

Dan McDade is founder and president of PointClear, a prospect development company. Tim Sullivan is director of development at Sales Performance International, a global provider of sales and marketing best practice consulting, training and tools. Their recorded Webinar on "Why Sales Needs Fewer Leads, Even in Tough Times" is available for viewing without charge on the PointClear Web site.

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