Sales Leads 123
Generating, Qualifying, and Converting Sales Leads
in 3 Proven Steps
Barry Silverstein
A 123 eGuide
Smashwords Edition
Copyright 2012, Barry Silverstein
123 eGuide is a trademark of 123 eGuides
Smashwords Edition, License Notes
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Table of Contents
The Starting Line: Sales Leads Basics
The Finish Line: After You Make the Sale, the Selling Continues
Sales leads are the lifeblood of any company, large or small.
Some companies generate direct sales via mail order, online, or retail outlets, so it might seem that they don’t really need to generate, qualify and convert sales leads.
Does a fast food restaurant, for example, need to generate sales leads -- or just get people in the door to make a purchase? The real question is, How does that restaurant get people to show up in the first place? They probably advertise, or run a Facebook promotion that a potential customer sees, or maybe a customer tells a friend about them. Guess what: Every one of these actions generates a sales lead, and that lead turns into a sale when the person comes in to the restaurant and buys something.
So when you think about it, every company, whether selling directly to consumers or businesses, whether selling products or services, needs to generate sales leads in one way or another. The same principles of sales lead generation can be applied to any company, large or small, or any product or service being sold in any market.
This eGuide is intended to help you understand the basics of generating, qualifying, and converting sales leads. The eGuide offers a quick overview rather than an in-depth explanation. The same 3-step process will generally apply to most sales situations, but it isn’t tailored to a specific industry or company. That’s why the eGuide includes a section called “To Learn More” with current articles at the end of every section, as well as a list of current books on the subject at the end of the eGuide. These recommended resources will provide you with additional essential information.
Before we get started, let’s cover some basic definitions.
Generating, Qualifying, and Converting
This eGuide is divided into three steps: Generating Sales Leads, Qualifying Sales Leads, and Converting Sales Leads.
Before you can generate a lead, you need to build a strong, memorable brand and successfully launch a product. If these are things you have not done yet, you are sure to find two other 123 eGuides of value:
Branding 123: Build a Breakthrough Brand in 3 Proven Steps
Product Launch 123: Launch a New Product or Service in 3 Proven Steps
These two eGuides are available wherever eBooks are sold.
Generating a sales lead is the act of identifying a prospective customer and using one or more methods to get that prospect to express an interest in your product or service. At the point of contact, you have acquired a lead, and in the best of circumstances, you have also acquired enough basic data to communicate with this lead (such as email address, mail address, and phone number). You may know very little else about the lead.
Qualifying a sales lead means taking a lead that you have acquired and discovering if it has any value to your business. You use commonly accepted techniques, which will be discussed in this eGuide, to generate leads, but your job doesn’t end there. Think of a lead you generate as a faceless prospect (pretty scary, huh?). You cannot see the prospect’s eyebrows, eyes, ears, nose, or mouth yet. You don’t know what the prospect is feeling -- happy, angry, sad and so on -- because you can’t see any expression on the face.
When you qualify the prospect, you are adding the face. The physical characteristics of the face are like demographics. Demographics tell you where the prospect lives, whether the prospect is married and has children, the educational background of the prospect, whether the prospect owns or rents a home, and other such information. If it is a business prospect, demographics can reveal the prospect’s company location and size, the prospect’s job title and function, and other data about the business.
The expressions on the prospect’s face are like psychographics. Psychographics tell you about the prospect’s attitudes, values, lifestyle, interests, likes and dislikes -- what they believe in and how they feel about things.
Demographics and psychographics are valuable things to know about a prospect, because they help you understand if the prospect is a good fit for your product or service. They also give you information you need so you can relate to the prospect. This is important because an effective qualification strategy often includes communications that are highly relevant to a prospect who has shown an interest in you.
Converting a sales lead is the act of turning a lead that you have generated and qualified into a customer. For most businesses, numerous contacts with a prospect are required in an effort to determine whether the prospect is “cold, warm or hot.” A very hot prospect typically has an immediate need for your product or service and has the ability to purchase it, while a cold prospect may have an interest in your product but no immediate need to purchase it.
Converting a prospect to a customer is not the end of the sales process; in some respects, it’s really just the beginning. That’s because, these days, acquiring a new customer usually costs a lot of money. But the lifetime value of that customer can be substantial, so it is necessary to cultivate and retain that customer. We’ll talk more about this later.
B2C vs. B2B: What’s the Difference?
Marketers frequently use the terms “B2C” and “B2B” to mean “Business to Consumer” and “Business to Business,” respectively. All businesses nlater eed sales leads, whether they sell to consumers or businesses. Without generating and qualifying a lead of some type, there cannot be a conversion to sale.
While lead generation, qualification, and conversion principles are essentially the same, there is a distinct difference between B2C and B2B. As mentioned earlier, the demographics of the consumer prospect are different from the demographics of the business prospect. More than that, there is a fundamental difference in the way the prospect thinks about a product or service.
A consumer prospect considers and evaluates the purchase of a product or service for herself, her family, and possibly her friends. (I’m referring to the consumer prospect as a female because females tend to dominate consumer purchasing.) If she likes a particular product, she will even tell family and friends about it, often through the use of social media such as Facebook and Twitter. The product purchase is therefore a very personal decision.
A business prospect has the qualities of a consumer at heart, but the business prospect’s head is in a different place. In a business setting, the individual considering and evaluating the purchase of a product or service takes on a different responsibility. He is potentially going to buy the product, or recommend it be purchased, for his company. (I’m referring to the business prospect as a male because males tend to dominate business purchasing.) The business prospect is advising that the company’s money be spent on the product or service, so he’d better have solid justification for the purchase. He isn’t about to take a risk on making a bad buying decision, because that could put his reputation at his company, and maybe even his job, at risk. (That’s where the old saying, “You can’t be fired for buying IBM” came from. It meant that a business manager could confidently recommend IBM, because it was a “blue chip” company that stood behind its products and services.)
This business responsibility also means that the manner in which you generate, qualify, and convert a business lead is different from the way you do the same thing with a consumer lead.
First, you have to look in a different place to get business leads, because they are associated with businesses, not with consumer households. Then you have the added complexity of locating the right person or people within a business. Often, there will be a primary prospective buyer and several secondary prospects who act as buying influencers. You’ll also have to use different techniques to get your lead generation message through business screens that don’t exist in the consumer household. And you’ll need to offer the business prospect a different level of information from the consumer to help him get through the purchase justification and approval process within his business.
A Fundamental Change in the Sales Lead Process
There has been a fundamental change in the sales lead generation process that has made it far more complex today. Not surprisingly, this change centers around the impact of the online world and electronic media.
Basically, before broad-based connectivity and social media came along, lead generation was kind of formulaic. Professional marketers often thought of the process in terms of a “marketing funnel,” which is broad at the top and narrow at the bottom. Prospects were dumped into the top of the funnel and, using a series of common qualifying techniques, they were pushed further down the funnel. The prospects that dropped out at the bottom were the highest quality ones, ready to be converted into customers. Typically, that’s when a telesales or direct salesperson took over to close the deal.
Today, however, consumer empowerment, fueled largely by the growth of social media and the ease of online and mobile communication, has changed the notion of the funnel. Now consumers evaluate products in different ways. The opinions of friends and even strangers who write reviews on websites, blogs, and Facebook pages are taken into consideration. You might call this the “Amazon effect,” since Amazon was one of the first large e-commerce companies that made a practice of encouraging customers to rate the products it sold. Consumer and business prospects alike share information about products freely, ask each other for comments, and have interactive discussions about products.
Thais is why the well-known consulting firm McKinsey suggests that the marketing funnel needs to be replaced with a “Consumer Decision Journey.” According to David Edelman, a principal in McKinsey’s marketing and sales practice, “It’s taking a fundamentally different view of what’s going on in consumer behavior. What we have seen in sector after sector is that this [funnel] is not what’s going on’ we need to reframe the consumer decision journey to something more iterative, circular and more about what the consumer is actually doing. And marketing needs to be about helping customers through that journey.”
While there may be other ways to look at it, McKinsey’s analysis seems very fitting for current times, so we’ll talk more about the impact of the transition away from the marketing funnel and to the “consumer decision journey” later in this eGuide.
To Learn More
Articles
“Marketing Benefits of Using Lead Generation,” Laura Lake, About.com
http://marketing.about.com/cs/targetmarketing/a/leadgeneration.htm
“The Funnel is Dead, Long Live the Measurable Customer Narrative,” Jen Evans, MarketingProfs.com, Aug. 18, 2011
“How to Build a Traffic-Siphoning Marketing Funnel,” Herman Diaz, ProBlogger.net, Jan. 14, 2012
“The Short Life of Online Sale Leads,” James B. Oldroyd, Kristina McElheran, David Elkington, Harvard Business Review, March 2011
http://hbr.org/2011/03/the-short-life-of-online-sales-leads/ar/1
Think About This
Think about your current sales lead process:
- How do you generate sales leads? What are some of the methods you have used to generate leads that you believe work the best?
- What techniques do you use to qualify sales leads? What criteria do you use to prioritize sales leads?
- Do you currently prioritize leads numerically (1=hot and 5=cold, for example) or in some other way?
It’s a basic fact: If you have anything to sell, you need to attract the attention of prospective buyers. But you need to do more than that -- you need to get the buyer to first identify and then qualify himself/herself as a legitimate prospect for your product or service.
Whether you are a B2C or B2B marketer, and whether you market a product or service, the process of generating sales leads begins with a tried-and-true timeless formula that marketers have used for many years: “A-I-D-A.”
A represents AWARENESS. Before you can generate a lead, a prospective buyer must be aware of your product or service. To generate awareness, you must first know what audience you are going after. You can use a variety of criteria to narrow your audience, including the demographics and psychographics referred to earlier. Then, with an understanding of what media your audience consumes, you need to target this audience through those media channels with messages that highlight the benefits of your product or service to that audience.
I represents INTEREST. Once your target audience is aware of your product or service, you want them to form an interest. Typically, it is at this stage that traditional lead generation activities begin. By offering the prospective buyer something relevant to your product or service, you can determine (1) if the individual is interested and (2) whether that interest is “legitimate.” It is not uncommon in the lead generation process to uncover two types of prospects -- one with a sincere interest who could some day become a buyer, and one with a casual interest who has no intention of buying your product or service but is interested for other reasons, such as research or general knowledge. At this stage, the prospect is merely making an inquiry. Your goal during the INTEREST stage is to help the prospect with a sincere interest to head down a path that leads them to the next stage: DESIRE.
D represents DESIRE. At this point, the prospective buyer begins to think that yours is a desirable product or service. You can help create desire for your product or service by making a very compelling sales argument that fuels the prospect’s desire. Typically, this is the stage in which lead qualification occurs. You may offer the prospect a “qualifying offer” -- something the prospect would find of value -- in return for information from the prospect that helps you qualify the person’s desire. Your goal is to determine whether the prospect’s need is immediate (“hot” prospect), short-term (“warm” prospect) or long-term (“cold” prospect). The more qualifying information you have about the prospect at this stage, the better able you will be to cultivate the prospect at the appropriate time. In the most effective lead qualification programs, marketers take into account where the prospect is in the purchase consideration cycle and provide information and sales contacts that take advantage of this intelligence.
A represents ACTION. Through the lead qualification process, you should be able to uncover a percentage of prospective buyers who are ready to take action right away. This is the stage at which the conversion from a prospective buyer to a customer takes place. Ultimately, it is the prospective buyer’s decision to become a customer, but as a marketer, you must do everything you can to reinforce the buying decision, stressing the key benefits associated with your product or service and doing whatever is reasonable to make your product or service as attractive as possible to the prospective buyer. Depending on the type of product or service you are marketing, involvement by sales people will occur at this stage. This is also the time to reassure the individual that they are making the right choice by purchasing your product. The ordering process should be quick and easy, and the order fulfillment should be prompt and professional. After the sale, it is wise to follow up and make sure the buyer is fully satisfied, and also to see if anything additional is needed to support the sale.