Lead Nurturing is Coming of Age Part 1: Making the Case for 2011 Marketing Plans
Written by Rockannand on November 12, 2010 – 6:57 am -I just finished assisting a client develop a marketing plan for 2011 and they needed the most help with the justification for the expanded programs for lead generation and lead nurturing. Here are some of the arguments we used to educate the executive management team. We started by asking the team to consider these statistics that have been reported (by many B2B marketing authorities) over the past few years for B2B tech product companies:
- Only 3-5% of new lead inquiries are “sales-ready”.
- 70-80% of the other inquiries are latent demand that will buy within 2 years, BUT are not called on by sales.
- 87 out of 100 deals are left behind by sales.
- It takes 7 to 9 proactive communications to gain a B2B decision-maker’s attention.
- Best-in-class sales and marketing teams generate 4x closed deals than average teams from the same pool of leads.
My message to management team was to optimize their efforts at converting the leads they already had into deals vs. only generating leads at the top of the funnel. I used Sirius Decisions’ recent study showing the sales and marketing waterfall conversion numbers of average, good and best companies to get the executive team’s attention.
| Funnel Stage |
Average |
Good |
Best |
|
Inquiries |
10,000 |
10,000 |
10,000 |
|
|
|
|
|
|
MQL |
5% |
7% |
10% |
|
|
500 |
700 |
1000 |
|
SAL |
58% |
65% |
75% |
|
|
290 |
455 |
750 |
|
SQL |
50% |
58% |
60% |
|
|
145 |
264 |
450 |
|
Closed |
22% |
26% |
30% |
|
|
32 |
69 |
135 |
Source: Sirius Decisions 2010
We developed budget scenarios of program costs required to impact the number of closed deals. Scenario 1 involved generating more inquiries at the top of the funnel. Scenario 2 involved lead nurturing campaigns to increase the conversion rates at each step in the waterfall. The cost difference was significant – almost twice the program cost. And Scenario 2 included the cost of a new marketing automation system to replace the old email “blaster” they were using.
The case is just too compelling FOR lead nurturing supported by marketing automation technology. In the next three parts of this series on lead nurturing, I will look at proven approaches to get started and how to focus efforts that will move an “average” performing marketing team to “good” and for a “good” one to attain market leading status. With a 4x improvement opportunity, what CEO and CFO would not listen to reason.
Stay tuned.
Related posts:
Lead Nurturing is Coming of Age Part 2: Where do I Start?
Case Study: Lead Nurturing Through Thought Leadership Content
Lead Nurturing is Coming of Age Part 3: Moving From Average to Good
Lead Nurturing is Coming of Age Part 4: Moving From Good to Best
Posted in Lead Generation, Lead Nurturing, Lead Quality, Marketing & Sales Alignment | 4 Comments »
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November 12th, 2010 at 12:43 pm
Looking forward to the next in the series.
Do you think the ratios hold true for small companies, say with 500-1000 inquiries a year?
November 12th, 2010 at 2:17 pm
Thanks Rick. I would say they do so long as we are talking B2B SMBs. The thing to focus on is the relative ratios for conversion from average to best. The one advantage that companies with smaller #s of inquiries and thus smaller target audiences is their ability to use social networking communities like LinkedIn and Facebook to segment and personalize their follow up campaigns. I think that will become more apparent in the the next installment in this series. The next one will post Sunday or Monday.
November 12th, 2010 at 5:24 pm
Great article Henry! It’s always interesting to hear about the strategies and data offered to “convince” CEOs and CFOs that a solid lead nurturing and gen program will produce far better results in the long run than traditional methods. I had not yet seen the Sirius Decisions study which provides some compelling data. Also looking forward to the next 2 installments!
November 12th, 2010 at 6:59 pm
Thanks for the comment John. For B2B tech companies, CEOs tend to be more sales oriented with many from Sales side of the house. They need to be educated with as much industry facts and stats as available to get their attention. I will look for the link to that Sirius Decisions research that was delivered at Silverpop’s user conference.