If you want to improve your sales, you need to measure and monitor your customer leads so that you can identify where the issues and leaks in business are occurring.
Generating lead costs money, I believe your aim should be to qualify quickly and aim to convert as many as the qualified sales leads as you can.
I am a big believer in the maxim "if you don't measure it, you can't manage it" when it comes to business and this is particularly true when it comes to sales leads which comes from your lead generation activities.
If you are familiar with my Eight Pillars Of Business Prosperity coaching model you will know that I start from where you are before finding out where you want to go. Then together we work out the best way to close the gap.
Now this causes problems for two types of prospective clients:
- Those who don't know where they are
- Those who don't know where they want to go.
This article will focus on helping people in category 1 who are uncertain how their business is performing by starting at the beginning of the profit cycle.
The Profit Cycle
The theory is easy:
- You deploy various lead generation strategies (or Guerrilla Marketing Weapons)
- They generate sales leads from prospective customers
- Some of those leads are converted in orders
- In time, you supply those orders and create sales
- Those sales generate a margin
- Which is large enough to cover your running costs and the cost of your marketing activities
- You make a profit - no wonder number 7 is considered a lucky number.
Why You Need To Monitor Your Leads
Sadly there is no golden rule that says if you buy an advert or take part in any marketing activity, it will automatically generate any or many leads.
In fact the marketing advice from the very top of the profession is to test the components of your lead generation. When marketers like Jay Abraham and top copywriters can get 500% different results from ideas they are testing, it shows why the very best recognise that you have to leave it to the market to decide and there will be surprises.
If you don't measure, you can't test and adapt your lead generation strategies so that they get better and better.
Not All Animals Are Equal
In Animal Farm it was said "all animals are equal but some are more equal than others"
And just like Animal Farm, not all leads are of equal value or importance.
Leads from one source may:
- Convert at a higher rate than from another
- Place higher value orders in terms of sales and profit
- Provide longer term relationships with higher overall profit.
The cost of leads from the different sources will also be different.
How To Monitor Your Leads
I recommend that you have a procedure in place which separates leads from new customers away from leads for future business from existing customers.
With new prospective customers, you should aim to find out where they heard about your business from that very first contact - direct mail letter, telemarketing campaign, from your website or blog because they searched Google.
I uses a customer relationship management system called Act! but the Amazon reviews make it clear that ever since it was taken over by Sage, the program has been poorly developed. You may wish to still try Act!, find another low cost CRM system or create your own spreadsheet or database file.
You need to record what is happening with each lead as it progresses.
- Report the number of leads from each source every month
- Mark off each lead that converts and calculate conversion rates from the different sources
- Record initial transaction values
- Record follow up transactions
You may find that you have to jump systems as my version of Act! is fine when they are leads but isn't integrated into a sales order processing system with sales analyses.
It would be busy work to have to go back and add every transaction. See if there is a field on the customer record in your main system to record the source of the lead or if not, is there an unused field that could be adapted?
Recording The Costs Of Your Marketing
There are two costs which you need to monitor and one extra which you may want to include:
- Your Third Party Costs
I recommend that you set up your account codes with care so that you can capture the different types of expenditure easily and without having to go back and keep analysing out totals.
For example you may want to keep advertising separate from direct mail separate from PR consultancy fees...
- Time Costs For You And Your Staff
Some marketing tactics are high on third party costs but low on time (eg advertising, outsourced telemarketing) while other approaches have modest third party costs but high time involvement (eg breakfast networking clubs).
To make sensible comparisons, you need to turn your time into a monetary value.
Many professional service firms keep time sheets to record where the time is spent as a necessary element of their billing system but I'm not going to recommend that you go to that much detail.
But I would ask that you estimate how much time you spend in the different marketing areas, calculate an estimated cost per hour (either based on your actual pay and benefits, on the opportunity cost of you doing something else or how much you would expect to pay someone else to do the task - arguments can be made for each) so that you can calculate a time cost.
You could then create an extra transaction in your accounting system to book that time/cost as marketing although I would recommend that you talk to your accountant first so that it is done in a way that doesn't cause problems for the external accounting rules.
- You May Want To Track Your Sales Conversion Activities
Depending on the variation in your business, you may find that some leads require much more work to be converted than others so you may want to include that in your analysis as well.
Bringing Your Sales Lead Monitoring All Together
Your aim is to identify the best sources for your marketing budget and time and ultimately that has to be based on the long term relationship value of the customer.
By capturing the sources of leads and then tracking the important characteristics (conversion, sales / profit value, repeat transactions) you have the results or outputs of your lead generation process to compare with the inputs in terms of time and money.
You have the facts or informed estimates.
Management is about making choices and decisions. Hopefully you will find that much of your marketing provides a handsome reward but some of it won't.
When you identify these problem areas, you must ask yourself whether you are better off spending extra time and money on the areas that are proven to produce great results or whether to try to stick with the tactic and try to improve,
The Grey Areas
There are two things that you need to keep in mind:
- You want multiple sources of leads just in case something happens to your main lead generator. Jay Abraham calls this the difference between the diving board model of business (your business depends on just one main support) or the Power Parthenon (where your business is supported by multiple streams of revenue).
- One lead generation tactic can have a knock on effect on another. For example the figures may show that you get little from your website but you do very nicely from networking. When you ask a few detailed questions, it turns out that people are intrigued by your business ideas when they meet you and armed with your business card, they go online to find out more before deciding to call.
To guard against making the wrong decision, look for connections and ask a few of your new customers, how they decided to make contact.