I talk with a lot of marketing and sales managers and have spent most of my life working in these environments. In spite of the dramatic advancements in software tools available, I still find gaping holes in the way many sales and marketing organizations manage and account for the flow of leads into the sales pipeline. Although there are undoubtedly some technology constraints, I suspect that the primary issue is one of process more than anything else. Employed properly, changes in the output of the lead refinery foreshadow expansion or contraction of volume in the sales pipeline.
Here are some thought-starters for employing the Lead Refinery approach to improve your performance:
The Concept of the Lead Refinery
Leads are the raw materials that ultimately end up as closed sales. Both marketing and sales engage in a great number of activities that may start out as raw contacts and flow through a system of qualification and disposition. Trade shows bring badge scans, individuals register to download content at a web site, marketing campaigns result in inquiries and sales reps prospect in target accounts to identify projects and interest. All of these contacts enter the Refinery, although some enter at different points, depending upon their level of quality (qualification).
Some contacts remain in the Refinery to be processed (incubated) over time. Others are purged and some percentage of the contacts continue on their journey through a series of filtering steps into the selling process. Contacts are transformed to leads, qualified leads and ultimately closed or lost sales. While the labels differ from environment to environment, the process is fundamentally the same.
Changes in Volume at Different Points in the Refinery Foreshadow Future Pipeline Changes
Critical to leveraging the Lead Refinery concept is developing the ability to measure changes in volume of different types of leads at different points in time. In my simplistic example of raw contacts to qualified lead (low, medium, high) to active prospect to closed/lost/delayed sale, the sales and marketing managers must develop an understanding of how changes in one total impact another. The marketing manager impacts contacts and the volume of qualified leads (low, medium, high) and can increase production or change campaign tactics to impact that volume. The marketing manager wants to put an increasing volume of the right leads (qualified...ideally at high) in the hands of sales counterparts, and must manage the drilling for leads to keep the volume flowing and growing.
Over time, the marketing and sales manager should develop an understanding of the relative impact on sales pipeline that comes from changes in the volume and quality flowing out of the Lead Refinery. For example, a 20% increase in what is agreed upon as a raw contact might increase qualified leads by 10% and medium and highly qualified leads by 5%. With discipline and experience, the managers will learn that a 5% increase in moderately and highly qualified leads translates to a growth in sales pipe of a $x. From this point of course, sales pros that manage to a pipeline have a good idea of what the change in this volume and quality means for ultimately closing sales over time.
Employing the Lead Refinery Approach Can Bring Sales and Marketing Closer Together and Fuel Organizational Growth
- Organizations that employ the refinery metaphor described above find that some traditional sales and marketing "problems" tend to disappear.
- Visibility into marketing activities and outcomes increases for everyone to see...this is healthy for management teams and executives that often struggle with how marketing is directly impacting the organization's results.
- New disciplines around lead qualification and measurement develop as all parties strive to develop an understanding of what changes in volumes mean for future changes in sales results.
- It becomes easier to align sales and marketing executives around shared KPIs, further improving ownership of key objectives and fueling performance improvements.
- Marketers develop clear insight into what works and what doesn't for campaigns as they focus on measuring their results in an objective matter around clearly visible criteria. Campaign execution begins to consist of thoughtful experiments followed by informed tweaks as numbers ebb and flow in different directions. The choice of tactics and investment in programs becomes more like science and less like alchemy.
- Forecasting confidence increases and management teams (and CFOs) avoid the surprises in sales results that are so annoying and so impactful to an organization.
The development of a Lead Refinery metaphor for your marketing and sales processes introduces "systems thinking" and transparency into what is often a very opaque and non-scientific process. While modern technology can be an enabler, the lack of technology isn't an effective excuse for avoiding creating the processes and measures that improve visibility, management and control over a firm's critical lead generation processes.
Future posts: Common Pitfalls Creating the Lead Refinery, Connecting the Lead and Sales Pipelines, Best Practices in Managing the Lead Refinery.