Why Marketing-Generated Leads Die on the Vine

Chris Dent

Not long ago, I was talking to the marketing director of a mid-sized manufacturing client about leads. He explained that his company’s biggest problem lay on the sales side: “We pass off hundreds of great leads to sales and they never follow up on them,” he complained. Strangely enough, I’d had a similar conversation with some of the company’s sales reps earlier in the day. From reps, I’d heard things like, “All the leads from marketing are poor quality. They never go anywhere.” And, “All the good leads I get are the ones I generate on my own.” When I asked what defines a “good lead,” I heard at least five different definitions, all with varying levels of specificity and none of them consistent between sales and marketing.

This kind of disconnection continues to exist at far too many B2B companies. One of marketing’s most important roles is generating leads for the sales force, but too often this is done in a vacuum. Marketing pours energy and resources into drumming up leads and lobs them over to sales feeling confident they are live opportunities but never hears anything more about them. In the meantime, the sales team is inundated with prospects, discovers many of them have no need or budget for the company’s products, and gives up on the rest while questioning the value of the marketing function. It’s a downward spiral that begins with focus and energy around lead generation and ends in disappointment and frustration.

In our work with hundreds of B2B companies, we have found that these common scenarios are rooted in three basic failures:

  • No organizational definition of a high-quality, sales-ready lead
  • No Service-Level Agreements in place to drive effective lead management
  • No feedback loop to enhance and improve the lead management process

In other words, some leads die in sales not because they weren’t ready to buy, but because there was no mutually agreed-upon definition of what constitutes a good lead. Or because there was no rule in place for when and how to contact the lead so the sales rep, busy with other tasks, missed the opportunity.

Admittedly, this is basic blocking and tackling – Lead Management 101 to most marketers – but these issues are so foundational we find they are often overlooked. For firms struggling to make the lead generation engine work, before turning to complex or expensive solutions, check to be sure you have thoroughly addressed these three root causes of failure in marketing-generated leads.

1. No definition of a high-quality, sales-ready lead
At the heart of this issue is a simple lack of understanding between sales and marketing as to what constitutes a good lead. We see this sort of thing all the time. Here’s a common example: marketing sends a list of 50 people who attended a webinar over to sales. Sales digs into the list and discovers 10% are students, another 10% are in the wrong function, 20% are junior people at current customers and so on. Marketing is thinking they scored a big win while sales is frustrated over wasted time, all because no one ever sat down to say, ‘Here are the kinds of leads we want to pursue.’

The solution is straightforward: get sales and marketing in a room to align on what a good lead looks like and when it should be handed off to the sales force. There are usually two levels to this negotiation. Level 1 is basic targeting criteria: What kind of leads does the sales force want to get? It’s important to be specific enough to drive lead quality, but not so narrow that lead quantity suffers—for instance, VP-level and above in healthcare services companies generating more than $500 million in annual revenues. This level of clarity will help marketers better target their lead-generating efforts.

Level 2 lead definition is about buying signals and deeper qualification. Just because someone fits the right targeting criteria does not mean they need your product or service. What are some of the common signals or behaviors customers exhibit before buying? There are obvious “digital” signals like submitting a quote request on the company website, but for the most part sales and lead generation staff will need to separate the wheat from the chaff by using a defined set of criteria.

Once the sales and marketing teams have a good understanding of the ideal demographic profile and the buying signals that correlate most closely with closed/won deals, it is critical to codify these inputs on some kind of lead scorecard. You do not need a complex, high-tech scoring system to be effective here. Your CRM system can easily accommodate lead scoring but if your company isn’t there yet, a manual scorecard is an adequate starting point.

2. No Service-Level Agreements (SLA) in place
Leads have a half-life, meaning that the probability of their closing decreases exponentially as time passes. It is critical that sales and marketing teams understand this reality. If someone submits quote requests to three different companies, the one that reaches the prospect first is in the pole position. It’s simply the nature of doing business in a 24/7 world where customer expectations of response times is extremely high.

This half-life phenomenon makes it vital that companies institute processes and enforceable rules that govern how and how quickly leads must be contacted. For instance: a lead passed from marketing to sales must be followed up on (and the action logged in CRM) within 24 hours of hand-off. Or, if someone downloads a case study, a business development rep must follow up within 24 hours to see if they have any questions. These kinds of rules are called Service-Level Agreements (SLA). They apply to longer-term lead handling as well. If a lead doesn’t respond to outreach, an SLA might require two more outreach efforts over the next week. If they are still unresponsive, the lead goes into an appropriate “nurture track” so that some level of contact is maintained. It is critical to measure and report adherence to these SLAs so that both sales and marketing know where they stand.

Although having guidelines seems obvious, in our experience only about one-third of companies actually have Service-Level Agreements around lead management. Putting these rules in place—and actively managing to them—is a simple way to get ahead of competitors and establish a “first responder” advantage in the eyes of your prospects.

3. No feedback loop
When it comes to sales and marketing collaboration, the old adage about the left hand not knowing what the right hand is doing applies all too often. This is especially problematic when it comes to lead management—a lack of communication can create the vicious cycle described earlier in which marketing is proud of the quality and quantity of leads it is generating, while reps in the field feel quite differently.

Defining a quality lead and putting SLAs in place will go a long way toward breaking this cycle. The final step is to establish an open and continuous line of communication between sales and marketing. While the right mechanism for doing this varies by company, there a few simple things most companies do to get started:

Create CRM functionality that enables reps to “reject” leads. The “reject” function should include a “reason” code that allows reps to choose from a list of, say, 10 reasons why the lead is not valid (i.e., “student,” “not ready to buy,” etc.). Marketing can then generate reports that show why leads are being rejected, enabling them to target more effectively.

Hold monthly meetings at which sales reps provide subjective feedback to marketing about leads they received that month. These discussions would go beyond basic “reject code” reasons to include brainstorming around what has worked and what hasn’t.

Push regular reports from marketing to field sales showing the lead volumes generated by marketing and the status of SLAs. This helps enforce compliance with SLAs and enables leaders to spot and address any problems with them.

It is important to note that taking the actions above will result in quality—not quantity—improvements in leads. By clarifying what a good lead looks like, putting rules in place for handling them and instituting a structured feedback loop, marketing teams won’t generate more leads, they’ll generate better ones. Companies who take these steps often see a 5%-10% improvement in conversion from sales-ready leads to real sales opportunities and a similar improvement in win rate. To do it right, you’ll need a CRM system but beyond that, there is no direct cost beyond time and energy.

Chris Dent is a Principal with Blue Ridge Partners, a firm focused on driving revenue growth. Chris has 10 years of consulting and line management experience in both sales and marketing across a variety of industries. Chris is also an Adjunct Professor of Marketing for DePaul’s Kellstadt Graduate School of Business. He can be reached at cdent@blueridgepartners.com.