August 23, 2009

Why LEADS Are Out and CONTACTS Are In!

Old fashioned lead generation dies a death.

Managers need to stop generating leads and start developing and nurturing contacts. That means nothing short of a revolution in terms of their approach to finding new customers, one that is essential to building a sustainable sales pipeline. Tomorrows sales opportunities won’t be generated by yesterday’s lead generation techniques. They will require a process of ongoing contact and nurturing.

Say Bye bye to LEADS, hello CONTACTS

We have stopped using the term leads. That is because almost everybody we know has some form of baggage when it comes to lead generation. The term leads is just simply too troublesome:

  • The number one cause of tension between sales and marketing is the quality of leads provided
  • The number one complaint managers have about salespeople is that they don’t spend enough time generating new leads
  • The number one complaint of sales managers relates to the quantity and quality of sales leads.
The term leads means different things to different people. Some people call them prospects, others call them suspects. It is all too confusing. For some leads are simply raw names on a target list, for others they are people who have engaged with the business (e.g. registering on a website, or demonstrating interest on a cold call).

More importantly the term leads and all that is associated is outdated and old fashioned. It is not longer sufficient to ensure a sustainable sales pipeline.

Quite simply, yesterday’s lead generation methods are not generating enough sales opportunities, particularly high quality opportunities. They are not enough to lure increasingly sophisticated buyers. However, not only are they inadequate of themselves, but they are being overused and abused. Typical of this is the growth in the volume of generally unwelcome cold calling and email marketing.

The Problem with LEADS…

Lead generation is the Cinderella of sales and marketing, but there is an unmistakable relationship between what goes in at the top of the sales funnel and what comes out at the bottom.

Most organizations lack a plan, budget and target for lead generation, they are over dependent on cold calling and a limited number of sources. Furthermore, there is often a lack of clarity regarding who is responsible for lead generation.

Lead generation tends to be relative unsophisticated and overly dependent on techniques, such as cold calling, that are fast going stale. It is typically short term in focus i.e. ‘we need lead this quarter to fill our pipeline’ rather than with a view to building a relationship and creating a dialogue.

The principal tools used in ths area revolve around the sales pitch and the elevator script – which are difficult to distinguish between suppliers and to tell the truth are of little real interest to buyers.

Lead generation is aimed at sniffing out where there is a demand, as opposed to shaping or creating demand where it is latent. It is aimed at selling to those with a need and a budget.

Move over LEADS…

So, what is the difference between LEADS and CONTACTS. Well, both are aimed at generating sales meetings with potential customers, however the latter is the more contemporary and sophisticated method. Some of the differences are outlined in the table below:

Leads are generated and prequalified.
Contacts are nurtured.

Leads require a campaign.
Contacts require a conversation

Leads are fed a sales pitch, or elevator scripts.

Contacts are provided with useful information, and insights.
Lead generation is typically start stop, adhoc and reactionary.

The development and nurturing of Contacts is ongoing.
Short term focus – get the meeting / sale

Long term view – relationship / dialogue
Leads go stale.

Contacts last forever
Small number of sources
Multiplicity of sources used
Typically poorly organized
Live in a database /CRM system
Traditional marketing focus
Underpinned by a relationship marketing approach

The lead is seen as a cost
Are an investment

Is often interruption based

Are permission based
Based on sources that generate lower conversion rates and less predicatable results - advertising, cold calling, etc.

Emphasis on sources that deliver greater returns and higher conversion rates - introductions, networking and referrals

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