Marketers can more than triple their results by categorizing prospects into four groups, A-D. This process enables marketers to model the potential ROI of their lead generation effort over time and avoid abandoning their effort prematurely.
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Written by Jenny Vance, President, LeadJen
When it comes to lead generation, marketers should know their ABCs.
That’s right, the key to achieving better lead generation results can be found in the alphabet. Categorizing prospects into four groups, A-D, enables marketers to model the potential ROI of their lead generation effort over time and avoid abandoning their effort prematurely.
Many companies first pilot lead prospecting to determine if it’s successful before diving into a larger campaign. However, most trials are doomed to fail from the outset. That’s because most trial periods are equal to the average sales cycle. The thinking is that if the average sales cycle is six months, the company will see some ROI within that time period.
That thinking is faulty for a couple reasons. It assumes that all leads in the trial program are the same quality and have the same level of urgency. Yet, during this time period, the only leads that will close are the very best leads: those with the right contacts, with identified pain points, and with a budgeted timeframe for making a decision. In order to close during this time period, leads must be ready to make a decision on the first day of the program.
These leads, which can be categorized as A leads, actually make up a small percentage of total leads; in my experience about 10%, and sometimes less when bringing a brand new technology to market. Because even some A lead appointments are set after the first day of the program, they don’t close within the trial period, so many marketers may decide the effort isn’t worthwhile.
Don’t forget the 90%
If only the 10% of leads that can be categorized as A leads have the potential to close within the average sales cycle, what happens to the other 90% of leads? This is where it gets interesting because the real payoff of a lead generation program happens after the average sales cycle.
For example, B leads – those comprised of the right contact in the right company with an identified pain point, but without a budget or timeline – close in about double the average sales cycle. These leads make up about 35% of a company’s database.
C leads close in about triple the average sales cycle. These leads are similar to B leads, except the contact is still learning about how to solve his pain point. These leads may make up 45% of a company’s database.
Finally, D leads make up about 10% of a company’s database. They should be taken out of the marketing funnel because it’s unlikely they will ever become a customer.
When the B and C leads begin to close, companies experience significant sales increases, but over a longer period of time. At the end of the typical sales cycle, if 15% of A leads have closed, it is likely that 10% of B leads and 5% of C leads will close within their extended sales cycles, making this extended period even more valuable than the initial period.
Using this example, it’s clear why companies need to look downstream at the leads that are likely to close before deciding whether or not to continue a lead generation program. By extending the program to allow B and C leads time to close, marketers can more than triple their results.
Jenny Vance is President of LeadJen, a B2B lead generation company that uses unparalleled data and insight to drive prospect interactions that convert to sales. She can be reached at jenny@leadjen.com or on Twitter @jennyvancyindy.