CRM Tips: When Leads Lie

CIO - The business purpose of CRM is to capture new customers more quickly, grow them more predictably, and keep them as loyal repeat customers. A CRM system should streamline the revenue business process and make every revenue dollar more profitable. And it will-providing you focus on optimizing the overall revenue business process, not individual point measurements like "new leads."

"If you can't describe what you are doing as a business process, you don't know what you are doing"-- W. Edwards Deming.

The revenue business process starts with market planning, audience targeting, and outreach campaigns, and it ends with collections. The process spans marketing, sales, customer service, delivery/fulfillment, and accounting departments. While the sales cycle may take only a few weeks, the revenue process cycle is several months (if not several quarters) in B2B environments. A flow-chart of the revenue business process will often take up an entire wall, and will include a surprising number of question marks. Trust me, it's more complicated than you think.

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Why do leads lie? Leads lie because we think they're saying something that they aren't. A lead is not ready to buy. They're typically not even ready to talk with one of your sales reps. A lead is merely somebody who indicated "tell me a little more," by clicking on a link, responding to an email, or registering on a site.

Marketing wants to look good, so they market the value of leads. Easy to measure, straightforward to buy. Declare victory.

Unfortunately, Sales wants to make money this quarter-and they optimistically jump at the idea of 100 new prospects a day. But they quickly find that those 100 leads don't want to take a meeting, and the inevitable frustration with marketing starts to set in.

If you think of the revenue business process as a refinery, it takes in low-grade ore and purifies it to gold. Leads are the low-grade ore, often with conversion rates of 1 percent or less, ready for refining but not for final use. Until the leads are cultivated, nurtured, qualified, and converted to contacts, there is no sales cycle. In many B2B and B2C businesses, the unqualified leads that are in the nurturing cycle may be numbered in the millions. Industry statistics show that up to 40 percent of leads may make their first purchase after having been in the "remarketing database" for 18 months or longer. Even though the exact statistics depend on your industry and target market, this principle applies equally to B2B and B2C markets. This is the whole purpose of marketing automation systems that integrate with your CRM system.