In working with many sales organizations, I have noted that there has been great debate about how and when to follow up on marketing generated leads. While there are many theories out there about when and how to follow up on these leads, I like to let the numbers do the talking - because it is hard to argue with these numbers.
Even though there is a certain level of complexity to managing leads, there is also a set of simple guidelines that will build the optimal response strategy that will ensure success. This is regardless of the product or service you are offering. It breaks out simply as Speed, Process, and Persistence.
Speed
According to Leads360's analysis of 25 million data points, speed is the single most critical component to lead conversion. Conversion rates are 391% higher when the lead is called within a minute of their inquiry; 120% within two minutes; 98% in under three minutes; 62% in under 30 minutes; and 36% in under an hour. These findings echo previous MIT lead response research, but place more emphasis on speed-to-call. The data also suggests that the advantage due to speed is less significant after the first 2 minutes have elapsed and is greatly reduced after the first hour.
Even leads that eventually become qualifi¬ed are sensitive to initial speed-to-call. Research shows that even though the consumer may go price shopping, a sense of 'loyalty' drives them back to the vendor who called them first. By initially providing consumers with education and responsive customer service, smart companies are able to create strong social and psychological bonds that tend to override competing offers.
I have heard some ask "won't they be alarmed that you are calling them so quick?" Well if you have correctly qualified your leads then the answer is "no". These prospects are looking for answers and do not want to waste time, so talking to someone who can help actually turns into a big positive. Ultimately, receiving and reacting to leads in real-time is critical to maximizing conversion rates. The companies that do this best measure reaction-time-to-new leads in seconds, not hours. By doing so, they achieve the first contact advantage with prospects.
Process
Quickly contacting a lead is the first step to higher conversion rates, but not all leads turn into instant leads, and in many companies, they are lost or dropped. Progressive businesses have started focusing on squeezing value out of leads that do not immediately close, and have had some amazing results. According to Forrester Research Reports, companies that have implemented an effective lead nurturing process have closing rates 300% more than their competitors who fail to take a long-term view of prospects.
Many companies work on converting that 3-5% of high quality leads that immediately convert into sales. But they are forgetting the approximately 95% of leads that do not close right away; of those, up to 50% of leads will buy eventually, a figure that dwarfs the 5% of quick converting leads. To increase the likelihood that leads, both initially qualified and potentially qualified, will turn into sales for you rather than your competitors, you need to stay in touch with them throughout their sales cycle. Lead nurturing allows you to do just this.
If your lead is qualified, but not yet prepared to commit, you need a nurturing program designed to overcome any objections and build trust. The problem is salespeople tend to focus on closing deals in the short term, so they concentrate their energy on leads, which are qualified and ready to close. If a salesperson cannot overcome objections or reticence fairly quickly, they may lost interest in continued contact and discard or neglect the lead. For salespeople accustomed to high close ratios and pressure for sales this month or quarter, these leads may seem like too much work. For the business though, they represent significant real revenue.
Cost of Poor Follow-Up with Qualified, But Not Ready Leads
Total Leads | Leads Contacted | Leads Qualified | Leads Closed Immediately | Leads Potentialy Abandoned | Cost of Abandoned Leads | Value of Lost Sales |
1000 | 700 | 300 | 15-30 | 270-285 | $13,500 - $14,250 | $325,00 - $342,000 |
Based on $50 per lead, 30% closing rate for qualified leads and $4,000 revenue per sale.
Persistence
Another key factor that many organizations underestimate is the value of persistence. In a recent analysis of over 15 million sales leads, Leads360 discovered that making two calls versus just one, increases the chances of contacting a lead by 87%. The same study revealed that a disappointing 50% of leads are never called a second time. The research also found that attempting contact six times resulted in nearly the maximum possible contact rate, yet nearly 60% of sales people made less than sixth contact attempts.
Conversion rates can be further increased by properly timing contact attempts. As discussed earlier, inquiries should receive immediate response (within 5 minutes) and following a 6-call attempt approach will produce nearly the maximum conversion rate, while minimizing workload. But when those calls are made very important. Ensuring that each inquiry receives contact attempts within the time windows specified below will result in dramatically increased conversion rates versus making calls at other times.
The findings of this Leads 360 study strongly suggest that calling 3 times during the first day, once on day 3, again on day 4, and a 6th and final time on day 11 or 12, is the optimal call attempt strategy. More specifically, new inquiries should be called immediately and in two subsequent time windows during the first day until contact has been made. If contact has still not been achieved, calling on day 3, 4, and day 11 or 12 will help maximize contact and conversion rates, without requiring additional calls or time investment from agents, besides marketing automation and lead nurturing.
The process of managing leads can be extremely complicated but by keeping these 3 rules in mind, it can make it simpler and more successful. As I always say, the numbers don't lie. So test it yourself and see what the numbers and metrics are for your organization.