Thursday, April 16, 2009

Performance Insider: Are Leads Enough?

Are Leads Enough?

Five years ago, cost per lead was an emerging high-ROI solution for many B2C and B2B marketers. Qualified leads derived from online offers significantly reduced new customer acquisition costs, provided marketers followed up appropriately. In those early days of online lead gen, any ongoing communication -- targeted or not -- usually meant great returns.

With 2009's constrained marketing resources, simply generating leads with "one size fits all" follow-up is not enough. Today, companies don't just need leads -- they need sales. And they need them fast. But when budgets and follow-up personnel are limited, conversion is limited as well. Leads are only as good as the follow-up that converts a lead to a customer. And when companies have to cut back on staff, who is there to do this? Too often, marketers with sparse sales assets declare "these leads don't work" and so walk away from their highest potential ROI.

Rather than abandon lead gen, consider how to better target scarce marketing and sales dollars. We're finding that the marketers having the greatest success with performance ad programs will segment and rank their leads to use these precious resources most effectively.

How can marketers rank the value of their prospects? Then, how can you match your resources to appropriate ongoing communications to optimize the return from those prospects? Here's an example: let's say you're collecting user information on average purchase size and frequency of usage in addition to standard contact information. A prospect that is in your highest category for both attributes should have the greatest value to your business. Visualize it: think about him or her walking into to your office, asking for information and letting you know just how much business they want to do. You'd drop everything and focus on getting the deal done, right? Same thing with an online lead: This rare high-value prospect warrants a disproportionate amount of your attention and spending. Use whatever follow-up techniques it takes, whether telemarketing, email or postal, to make that sale.

Making this work in these tough times is really all about segmentation and preparation. Think of four important steps:

  • Identify the best initial offer to generate the lead and the information you want to collect: Focusing on offer is standard in lead gen, but the information you capture in addition to simple contact data ultimately determines the opportunity for segmented follow up.

  • Build a ranking system: This should be based on how valuable each prospect is to the business.

  • Match marketing and sales resources to prospect value: Is there a prospect valuable enough for you spend your own time trying to close them? Think how that translates to different levels of value.

  • Pre-determine follow-up methodologies, messages and offers: Who gets which message? Some prospects might need more education, others financial incentive. Some should be contacted through any possible media, others just through reminder emails.

    All of these are testable. It is not too difficult or time-consuming to plan out these steps. In fact, by committing to emphasize follow-up with your best potential prospects, you're actually reducing the effort.

    So, start with a qualified lead. But don't assume it's enough. Focus on leads with the highest potential value -- and make them your customers by using the right follow-up.


    Editor's note: Email Insider, a MediaPost newsletter sent out earlier today, had the wrong byline. The author is Ryan Deutsch of StrongMail, NOT Jordan Ayan. MediaPost regrets the error.

    Gary Kreissman is co-founder and president of Precision Prospects, Inc., a performance-based advertising firm.

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