As we come out of pandemic lockdown and face a likely highly adverse economic environment, one area that businesses might want to look carefully at is the optimisation of lead conversion.
This might sound a little dull, but let me give a worked example to give some idea of the potential power of it.
So, let’s say we have a software company (to avoid complicating the narrative with margins), whose average revenue per sale is £10,000. The company generates 1,000 sales leads per year, and currently converts one in six to an order.
This means that 1,000 leads converts to 166 sales orders which means total sales of £1,666,666. The company’s overheads happen to be £1,500,000, which means that net profits are £166,666.
The company is able to improve its conversion rate from one in six to one in five leads. This means that 1,000 leads now converts to 200 sales orders, which means that sales grow to £2,000,000.
This is great in itself, but if we now consider that the change in conversion rate hasn’t cost us anything, and the overheads have remained the same at £1,500,000, our net profit has tripled to £500,000.
Obviously the mathematics is going to vary from business to business, but the principle is that if you can improve your lead conversion rates then, it will benefit sales turnover, but more importantly is likely to also have a highly leveraged impact on the bottom line.
So, in this post I’m going to explore some of the means of improving lead conversion rates and how your CRM system can play a key role in supporting it. I’m going to specifically consider the handling of incoming sales enquiries.
The first means of improving conversion rates is to respond to incoming enquiries. That might sound obvious, but I’m sure you’ve experienced the same as I have – you fill out an enquiry form on a company’s website and hear absolutely nothing. This is surprisingly common. I haven’t formally tested it, but my gut is 20-30% of enquiries don’t get responded to at all.
So to address this from a system standpoint, every enquiry should be logged in the CRM platform, and it’s someone’s responsibility to monitor if leads are being followed up.
The second, is to respond quicker. An enquiry has a limited shelf life. Interest may wane, competitors may move faster, so a quicker response tends to increase conversion. I see a lot of businesses, particularly larger more complex ones, who measure their response time in days, whereas minutes would generally be more appropriate.
So the starting point is to establish suitable target response times which are then monitored through the system. In order to improve response times integration with the website to allow leads to be automatically created within the platform, and the automated routing of leads based on factors such as location or product interest will also help, but the key is to get the incoming lead to the person that can handle the enquiry effectively as fast as possible.
The third, is to improve the quality of interaction that the salesperson has with the enquirer. This is about providing guidance on how the responder should manage the conversation. Traditionally this isn’t well defined, and where it is, tends to be overly focused on qualifying the prospect rather than building a relationship. While qualification of the opportunity is important, so is the customer experience. The aim here is to facilitate consistent best practice across the organisation.
The role of the CRM system in this respect is to support that interaction by ensuring the system data capture is aligned with the questions we want salespeople to ask, and retain information that might be beneficial in terms of the subsequent development of the sale.
The CRM platform can also add value by providing easy access to sales collateral and templates that can be used to help fulfil any actions arising from the call.
The fourth, is to ensure that an enquiry continues to be followed up and developed. Not all enquiries will close in the short term, so having the means to nurture a lead of the longer term can be important.
From a CRM perspective this can be as simple as setting follow up activities in the system through to more sophisticated drip marketing campaigns to nurture leads using automated workflow and marketing automation capabilities.
Finally, the key is to monitor and improve the approach over time. Given how much attention marketers give to things like optimising landing page conversion rates, it’s surprising that there seems to be a lot less focus on optimising the conversion of the resulting leads themselves.
By tracking metrics such as time from initial enquiry to first contact and enquiry to sales order conversion rates, it’s possible to spot and address issues, and introduce improvements and gauge their impact, with a view to getting better and better lead conversion rates over time. The CRM system clearly has a key role in making this sort of information available.
The beauty of these sorts of programmes is that aside from being highly beneficial, in a likely time of increased austerity, they don’t require significant investments in technology. It’s simply about defining and optimising operational processes, and tuning your CRM system to support them.