Following on from my piece about the benefits of contact management, this post explains the benefits of using CRM technology for lead management. Lead management is an interesting area because, for reasons I will explain in more detail later, it can have a very significant bottom line benefit. However, for reasons I will also cover later, it’s not something many organisations tend to manage effectively, even when deploying otherwise pretty comprehensively featured CRM systems.
For those of you involved with the management of leads the following are likely to be familiar issues:
- Leads are not responded to or followed up effectively. Though I’ve never accurately tracked it, it feels to me like around 30-40% of the sales enquiries I make fall into this category.
- Salespeople are not good at managing longer term leads. This is a generalisation of course, and there will be many exceptions, but salespeople tend to focus on the immediate opportunities and are not good at developing longer term leads.
- Salespeople will change territory, or role, or move on to pastures new. The history of the lead and the interactions relating to it are not retained, which means that new staff struggle to get up to speed and opportunities fall through the cracks.
- Salespeople are given poorly qualified leads which mean time is wasted with prospects who are unlikely to buy.
- There is no cost effective system for developing early stage enquiries and leads, a situation that becomes more problematic as companies increasingly use inbound marketing techniques.
- The source of leads is often unclear, or becomes confused over time, which means that marketing return on investment reporting is inaccurate.
- It is extremely time-consuming to monitor and report on the status of leads.
- There is limited visibility of progress through the sales funnel which means that it’s difficult to identify and address sticking points in the lead to sale conversion process.
By developing an effective lead management process and supporting it through the CRM system the following improvements can be made:
- Once logged a lead can not be lost.
- The history of actions relating to a lead for example, communications, meetings, or quotations is retained and is easily accessible and transferable to other staff.
- The system can facilitate more structured lead qualification and scoring to ensure that sales are working on the most promising opportunities.
- Companies can introduce lead nurturing strategies using for example direct marketing and telemarketing to develop a lead to be ‘sales-ready’.
- It‘s easier to identify leads that are not being effectively developed and take remedial action.
- It’s easier to coordinate lead development activities between multiple channels and departments.
- The quality, immediacy, and value of management information is increased allowing, for example, marketing to get a truer picture of return on investment by campaign, or to identify friction in the lead conversion process, or to forecast future business more effectively.
Despite the potential value of doing so, many businesses have not automated the lead management process. There are a number of reasons for this:
- More effective lead management can often require significant changes to existing practices. For example, while it may make sense to have a structured lead nurturing process to ensure a lead is sales-ready before direct sales are involved, the telemarketing team might be rewarded by appointments made and motivated to secure meetings at the earliest opportunity, requiring a significant changes in approach and remuneration.
- There’s potentially a significant amount of process development required. For example careful through will need to be given to things like what constitutes a lead, how should different lead types be managed through their life, what are the key stages in the lead process, what’s the nurturing process for each type of lead, when should they be passed to direct sales, when should direct sales pass them back etc. etc.
- Supporting the defined processes within the CRM system is often not as straightforward as it might appear and may require a reasonable amount of customisation. For example, a lot of CRM systems have a lead entity, but it’s intended for managing potentially dirty data rather than supporting lead management.
In other words CRM technology isn’t going to do it on its own. The right strategies and supporting processes need to be developed, and the system needs to be tuned to support them. While this is not, as the saying goes, rocket science, it can be sufficiently involved to discourage the more casual user of CRM technology.
The benefits of doing it well however can be extremely significant, in essence because improvements in lead to sale conversion rates flow directly to the bottom line. The costs of converting ten out of every hundred leads are largely the same as converting fifteen out of every hundred. The margin on the additional five sales is all therefore additional profit. The effect of a few percentage points in conversion rate can have a highly leveraged impact on an organisation’s profitability. For many businesses therefore, despite some of the challenges, automation of the lead management process can prove to be one of the most beneficial aspects of using CRM technology.