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“Most Marketing leads we get are rubbish,” complains Dave Apthorp, sales executive at Modernis.
“How can Sales possibly know this?” says Maria Smith, marketing manager at Modernis. “They never phone any of the leads we DO give them!”
But where’s the truth? Are Marketing leads so poor it’s not worth Sales following them up? We wanted to find out.
Twelve months ago the Modernis marketing team attended a trade show. Sales immediately called up the leads. And how many opportunities were created? None. Absolutely none. Which led to a lot of sales complaints about the quality of leads. And one heck of a lot of friction.
So, 12 months later we called 10 of the marketing leads. We wanted to find out what had happened in the intervening 12 months. Here’s what we discovered:
2 had purchased products from a competitor of Modernis.
2 were actively engaged in a purchasing process to select a supplier. Sadly Modernis wasn’t one of the candidate suppliers.
1 hadn’t started a formal purchasing process. But they fully expected to make a purchase in the next 12 months.
4 of the leads had taken no action following the trade show. They didn’t anticipate starting a purchasing process any time soon.
1 wasn’t in Modernis’ market place and is unlikely to ever make a purchase.
In other words 5 of the 10 were great leads. Two had already bought from a competitor. And yet these leads were all rejected as rubbish by Sales.
So why didn’t these prospects engage with Sales at the time? Here’s what they told us:
“We weren’t ready”.
” We didn’t have stakeholder support”.
“I didn’t have a budget at the time”.
“We weren’t sure what the right solution was. The last thing I needed was a sales pitch.”
“We hadn’t decided which vendors we wanted to talk to”.
The prospects were legitimate buyers. But they simply weren’t sales ready. They were at an earlier stage in the buying process. They didn’t want to speak to a sales person. Yet.
Which is why Sales thought the marketing leads were rubbish. “That’s why we don’t bother to ring them”, says Dave.
But what’s worse, after the trade show the activities of these warm prospects were invisible to Modernis. Which meant no-one knew when they were sales ready. And led to lost sales for Modernis.
So what what can we learn from this research. Six things.
1. Manage the invisible pipeline pro-actively
Customers start their buying process long before Sales get involved. These early stage activities form an invisible pipeline. Yet this invisible revenue pipeline can – and must – be managed to drive sales income.
2. It pays to be patient
Modernis has a sales cycle of 2 – 3 months. But that’s Modernis definition of the sales cycle. That’s how long it typically takes an opportunity to pass from Created to Closed in the CRM system. But looked at from the perspective of the customer, the buying process is much longer.
3. Lead nurturing is essential
Traditionally prospects had to rely on sales people for their information. Not any more. There’s a wealth of information available on the internet on every product on earth.
And ad hoc marketing campaigns – delivered only when time permits – have only a short term impact on sales revenue. Effective lead nurturing means a structured process of communications throughout the buying process.
4. Useful is the new cool
The creation of content that is highly useful to prospects is critical to lead nurturing. The leads we spoke to were hungry for information. Highly useful content satisfies this hunger. It helps leads narrow choices. In your favor.
5. Engage sales when prospects are sales ready
Prospects don’t mind talking to sales people. But only when they’re ready to do so. And only with the relatively small number of vendors with whom they’ve decided to engage. And the challenge for Marketing? Track human behavior to gauge when leads are sales ready.
6. Marketing is becoming increasingly process and technology driven
It’s hard to know when a prospect is sales ready without knowing if they open your emails. Read your blog posts. Visit your web site.
Lead nurturing cannot be done in an ad hoc fashion. And it can’t be done manually, at least not effectively. It requires planning and well defined processes. Together with the marketing automation tools necessary to make the whole thing scalable and efficient.
Getting the sales team to cold call an unqualified list of leads is like giving up smoking or going on a diet.
There’s always something that gets in the way. Tomorrow is always a better time to start than today.
And in any case, it often turns out to be an unfruitful waste of valuable time.
But how do you increase the flow of sales-ready leads and opportunities to the sales team?
The answer, increasingly, is marketing automation. Thousands of B2B organisations – and quite a few B2C ones – are investing heavily in marketing automation systems from vendors such as Hubspot, Pardot and Marketo. These systems provide scalable and automated marketing processes that boost the number of warm leads and drive opportunity conversion rates.
So what exactly is marketing automation? And what are the essential marketing automation terms that matter in any discussion on lead generation? Terms such as content marketing, lead nurturing, lead scoring, sales qualified lead and marketing qualified lead.
If you want to start an argument, ask a room full of Sales and Marketing people to explain the difference between a Lead and an Opportunity. You’re guaranteed a bun fight.
But why does the difference between a Lead and an Opportunity matter?
It matters because every business wants to generate more Leads in order to drive revenue. Consequently organisations are focussing increased attention on the effectiveness of their lead management process. And to implement an effective lead management process, Sales and Marketing must agree on the difference between a Lead and an Opportunity.
But that can be harder than it sounds.
However if Sales and Marketing can’t agree on the difference, then how can they agree on when a Lead should become an Opportunity? And if they can’t agree this, then it’s simply not possible to implement a robust, end-to-end Lead and Opportunity management process across the organisation.
It’s a challenge we’ve helped many businesses resolve. So here’s our definitive guide to the difference between a Lead and an Opportunity.
Sales person’s definition of a Lead
Why is there so much confusion in the first place? After all, most Sales and Marketing people will acknowledge that a Lead is the first step in the sales cycle.
The reason is that to a sales person, a Lead can just as easily come from an existing customer or known prospect, as a brand new one. It’s simply the start of the sales process. The process may not be sufficiently advanced to warrant creating a formal Opportunity in salesforce.com. But it has at least started.
So from a sales person’s perspective, a Lead reflects a broad range of early stage, potential opportunities that require action. It’s these opportunities, both early and late stage, that show on the salesforce dashboards that focus on sales performance and funnel visibility.
Marketing person’s definition of a Lead
A Marketing person’s perception of a Lead can vary in two important ways in the absence of an agreed organisational definition.
First, a Lead is often a person or business that will potentially make a purchase at some undetermined point in the future. Marketing may hand the Lead to Sales, but not necessarily with the expectation that a sale will immediately result. The Lead is a potential customer that may engage in a future sales process.
Second, Marketing often defines a Lead as being a brand new company or person. The business or contact didn’t previously exist in the database. Indeed the role of Marketing in many businesses is to increase the overall prospect base for long term benefit, rather than directly impact immediate revenue over the next month or two.
Sales are under pressure to close deals in the short term. Marketing want to nurture the Lead. It’s this contrast in expectations that frequently results in Sales to complaining about the quality of Leads created by Marketing.
Definition of a Lead in salesforce
These differing definitions of a Lead mean Sales and Marketing fail to agree on the difference between a Lead and an Opportunity. This directly obstructs the implementation of an effective Lead management process in salesforce.com.
So what constitutes a Lead in the salesforce.com CRM system?
In fact, salesforce uses the term Lead in several different ways. Let’s take them step by step.
1. Lead as a brand new enquiry
Start by thinking of a Lead in salesforce.com as a brand new enquiry, from a business and person you’ve never previously heard of.
For example, let’s say you’ve a Web-to-Lead form set up on your web site. Web-to-Lead is an easy, standard way to integrate salesforce with your web site. It means anyone that fills in your Contact Us form will be automatically inserted into salesforce.com as a Lead.
What’s the first thing you’re going to do? Click on the Find Duplicates button on the Lead page layout. This will identify any matching Leads or Contacts that already exist in your salesforce database. Let’s assume you don’t find any.
Now you make an outbound telephone call to the Lead. Essentially, one of three basic outcomes is going to result from the conversation:
The Lead is a dead end. It turns out the person isn’t interested in any further dialogue. Or perhaps it was a student simply looking for research information. Either way, set the Lead Status to Closed. You don’t necessarily delete the Lead from the database, but no further action is anticipated.
The Lead is a definite maybe. The Lead is moderately interested in your products and services. He doesn’t want to speak to a sales person – at least not yet. But you agree to send a brochure, product specification or price list.So this time set the Lead Status to Contacted. You might also create a follow up Task to call the Lead again in the future.
The Lead is a sales Opportunity. The Lead agrees to a meeting or phone call with a Sales person. Or he requests a quote. In other words, he gives you some indication that he’s a legitimate potential customer. He’s a Qualified Lead.
This time leave the Lead Status alone. Instead, click on the Convert Lead button. Salesforce will convert the Lead into three separate records; an Account; Contact; and Opportunity.
Here’s the process in a flow chart diagram.
The Account represents the business or organisation. The Contact is the person employed by that organisation. And the Opportunity represents the potential sales deal.
It’s this early stage Opportunity that many Sales people will regard as a Lead.
Indeed Sales people may be reluctant to use the term Opportunity. It raises expectations about the outcome. It creates visibility of the deal in the sales pipeline dashboard. And from the sales person’s perspective, the Lead may – or may not – have been properly qualified before it was converted to an Account, Contact and Opportunity.
All legitimate issues. Before we address them, let’s deal with several other ways salesforce.com uses the term Lead.
2. Leads that match existing Lead records
Let’s go to back to our person that filled in the Contact Us form on your web site.
In our example we assumed that there were no existing Leads or Contacts that matched our new Lead. We established this by clicking on the Find Duplicates button on the Lead page layout.
What if one or more matching Leads had been found?
No problem. Use the Merge Leads button to merge the various Leads into a single record. Then make your qualification call.
Here’s the process diagram.
3. Leads that match existing Contact records
How can an existing Contact be created as a Lead in salesforce? Well, there’s a number of ways.
For example, Leads can be created by importing the spreadsheet that contains a list of people that came to a booth at an exhibition. Some of those people may well be existing Contacts.
Or say you’ve a Web-to-Lead form on your web site that allows visitors to register for an event. When an existing Contact registers he’s created as a Lead. The same thing happens if you’re using Web-to-Lead to enable visitors to download a document from your web site.
In any of these cases, when you click on the Find Duplicates button you may find there’s a matching Contact.
Here’s three ways to deal with the Contact-as-a-Lead situation.
Convert the Lead without making a Qualification call. During the Lead conversion process, salesforce will help you merge the Lead into the existing Contact record. If the Account Owner is already actively engaged with the Contact – on an existing Opportunity for example – then perhaps it isn’t appropriate to make the qualification call.
Convert the Lead and then make a Qualification call. This is the common approach when it’s the Account Owner that is dealing with the Lead. He or she merges the Lead into the Contact record and then makes a call to the Contact.
Make a qualification call before Converting the Lead. This approach is used most frequently when Marketing or Inside Sales is dealing with the Lead. They make call to the Lead, cognisant of the fact that the person already has a relationship with the company. Following the conversation the Lead is converted, but Marketing or Inside Sales make a human decision on whether to simultaneously create an Opportunity.
Here’s the process diagram for the last of these scenarios.
To Convert a Lead without creating an Opportunity, check the box “Do not create Opportunity upon conversion” during the convert process. It’s underneath the Opportunity name on the Convert Lead page layout.
When to Convert a new Lead into an Opportunity
Let’s go back to our first example. The one in which we found no matching Leads or Contacts. At what point should we convert the Lead to an Opportunity?
In fact, salesforce doesn’t mandate when you should do this. It’s up to you. The conversion point in the lead management process will vary from business to business. The key is to define the Lead Qualification criteria with the Sales team and convert the Lead when it meets these agreed criteria.
Defining who should convert a new Lead into an Opportunity
If new Leads are assigned immediately to Sales as soon as they arrive, then it will be the Sales person that converts the Lead to the Opportunity. This is the case in many businesses. There simply isn’t the resource available to have someone other than the Sales person deal with new Leads.
This is a high risk approach though. Remember, Sales are under pressure to meet short term revenue targets. If new Leads require patient nurturing in order to become sales opportunities, there’s a significant risk Sales will quickly start ignoring the Leads passed over by Marketing. Better to use a marketing application such as Pardot, Marketo or Hubspot to automate the nurturing process and transfer the Lead to Sales when the agreed qualification criteria are met.
What if Marketing or an Inside Sales team qualify the Lead before it can be converted? As a general rule, the team that performs the qualification activity should convert the Lead to the Opportunity. But to make this work, a robust Lead qualification process needs to be in place, with agreement between the qualification team and Sales on the criteria that will allow an Opportunity to be created. Again, a marketing application can add power and sophistication to the lead nurturing and lead qualification process.
If there’s ambiguity on the definition of a qualified Lead then it’s better to have Sales perform the conversion process.
The difference between a Lead and an Opportunity in salesforce
So, a meaty answer to what seems like a straight forward question – what’s the difference between a Lead and an Opportunity? At least now you’re ready to referee the argument that breaks out when you ask the question!
Whichever way you look at it, Leads are the first step in the sales process. An effective lead management process requires the difference between a Lead and an Opportunity to be clearly articulated and agreed between Sales and Marketing. What’s the first step in achieving this? Agreement on the qualification criteria that determine when a Lead can be converted into an Opportunity.
Free lead management process diagram download
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We’ve worked with many businesses to define and implement detailed Lead management processes. We also help companies implement salesforce.com and marketing automation applications including Pardot, Marketo and Hubspot. Simply get in touch for an informal discussion on how we can help your business innovate your sales and marketing process to boost revenue.