A practical lead conversion guide
The definition of a lead is a common area of disagreement between marketing and sales. Marketing is often focussed on generating relevant response based on interest in a certain topic. But the sales team is only interested in those leads that are ready to talk business. To align marketing and sales in terms of lead generation we therefore need to look at the different stages of a lead. It’s good to realize that marketing will look at these stages in a different way than sales. As sales typically looks at the ‘leaking’ sales funnel, while marketing likes to talk about the stages in the buyer journey. But luckily both departments will have an idea of the difference between a marketing qualified lead (MQL) and a sales qualified lead (SQL).
Lead stages in the leaking sales funnel
In order to manage the conversion process from ‘market’ to ‘customer’, a tool known as the ‘sales funnel’ is often used. This is the ‘funnel’ of potential customers that have been identified within the sales process. The following classification can be used here:
- Market: the entire market the that organization is focused on.
- Suspects: the companies that are potential customers within the target market, because they, for example, fulfill a number of specific criteria.
- Leads: marketing qualified leads includes companies in the category of ‘suspects’ that have indicated that they could be interested in the products and services of the organization.
- Prospect: sales qualified leads are prospects in the sales funnel. These includes companies that have shown a serious interest in the products and services of the organization.
- Customers: companies with whom there is a customer-provider relationship.
With each step in the conversion process, the likelihood that a lead becomes a customer increases. More and more companies, however, drop out of the sales process, this is called ‘leakage’. This leakage is caused, for example, because the company:
- has no need for the service or product
- doesn’t seek contact with the organization
- opts for a different provider or solution
When there is a good overview of the percentages of this leakage, sales management can better adjust the sales process through KPI’s: for example, when it’s known that 50% of prospects opt for something else, or 50% of qualified leads do not seek any serious form of contact, or when the quality leads are required to generate one sale. The organization can take steps to improve these conversion ratios, modern marketing can play a role in this. Depending on the specific situation, sub qualifications can be added to the sales funnel management.
The sales funnel is mirrored as soon as the sale takes place. Conversion takes place with existing customers: positive conversion with repeat business (another sale) or additional services, and negative conversion when the customer breaks the customer-provider relationship. Satisfied customers can be converted to fans. The ultimate scenario then is that they promote the organization and recommend products and services actively.
- Repeat: the number of customer that repeat-buy.
- Churn: the number of customers that cut ties.
- Fans: the number of customers that reach a particular level of customer satisfaction.
Lead stages in the buyer jouney
The sales funnel is language from the sales team. However, marketingpeople think in terms of a Buyer Journey. Business investment decisions are generally not made overnight. Decision-makers undergo a process known as the buyer journey. Before making investment decisions, people first discover a challenge, problem or idea. For example, the current situation is no longer sufficient or external developments created the possibility for new opportunities – or threats – which need to be dealt with or anticipated. Subsequently, different scenarios are considered for which improvements can be made and implemented. Finally, the various options are assessed and decisions are made. This journey can be divided into the following stages:
- Discovery: The starting point is the recognition or acknowledgement of a problem or challenge. Following that is acceptance that a solution must be found.
- Consideration: Next it’s necessary to find solutions. Internally, the wishes and requirements are reviewed and externally all the possibilities are lined up. This search generally ends with the preference for one, or a limited number of, suppliers.
- Decision: Finally, you move toward the execution of a choice. The chosen option must be justifiable and give the feel-good factor.
- Implementation: After the actual purchase, the product or service needs to be implemented or put into use. As supplier, it’s key to optimize this process.
- Usage: Lastly, the service or product is put into use. Now it’s essential to turn users into fans!
Lead nurturing to convert MQLs to SQLs
There’s often a long way to go to get from incoming leads to a sales qualified lead. As modern marketing uses as a starting point the buyer journey of the customer, the first contact (or conversion) can happen at an early stage of the buying process. When a suspect downloads a trend report, it can be a signal that in the coming year there will be significant demand for certain products or services. At this early stage of the buying process however, it can still take a long time before the leads is sales qualified and interested in a quote or contact with an account manager. The follow-up on modern marketing leads needs to take into account the lead status.
In this early stage of discovery, the potential customer can still be busy trying to figure out their actual need in the situation. Content that helps them along in this process is relevant. A good modern marketing program can help the potential customer, for example via a newsletter, whitepaper or webinar. The structures development of potential clients, without the need to currently buy, is also known as lead nurturing. In this nurture process, somewhere in between generating a lead and a the readiness to talk to sales, the lead passes from the marketing team to the sales division. In order to determine the timing, a division can be made between marketing qualified leads and sales qualified leads.
- Marketing qualified leads (MQL) – These are leads with a low account score, for example because they are in an early phase of the buying process. This pool of leads lends itself to lead nurturing initiatives, it’s the marketer’s primary responsibility to develop these leads further. When the lead- or account score reach a certain point, they are taken over by sales.
- Sales qualified leads (SQL) – When there is an actual need, the function is relevant and the lead fulfills the necessary criteria, it’s a case of a sales qualified lead. This is the moment the lead is passed on to the sales department.
The coordination between marketing and sales is crucial for good conversion. Therefore, it should be clear to everybody when a lead is pass on from marketing to sales. Aside from that, the follow-up by the sales division needs to be in place and tightly managed. Leads can cool off quickly and evaporate.
The theory, however, is less manageable than in practice. The trend report that was aimed at business decision makers in the discovery stage, could be requested by a technical decision maker in the consideration phase. Or organizations that are regarded as prospects can suddenly delay the procedure or, even, call the whole thing off. The reverse can also happen, where unfamiliar parties suddenly convert to hot prospects: they had informed themselves elsewhere, but want to see what alternatives there are out there and display an actual need for a service or a product. In short, what appears to be a structure one minute, can be completely out of date the next. Lead management is a dynamic process, in which an actual insight into the lead status of potential customers is essential.
MQL lead scoring and account scoring
There are certain ‘lead scoring’ techniques to gain valuable insight into the lead status. Lead scoring is a method that rates potential customers against a sliding scale in which the value of the lead for the organization increases. Depending on this lead score, subsequent steps can be determined within the commercial process. If the score is low the leads can be qualified as MQL, then a program of lead nurturing can be implemented and the lead can be invited, for example, for an event or a webinar. If the score is high, then the leads is sales qualified and the sales team can be called upon.
The best techniques for lead scoring make use of explicit, as well as implicit, information. Explicit scores are based on information about the lead, for example the size of the organization, the industry or role. Implicit scores are based on the behavior of the lead, for example the websites they visit, ’email opens’ and whitepaper downloads. A new lead score is based on activities of the leads on social media, the so-called ‘social score’.
Many investments involve more than one decision maker within one organization: the decision making unit. Therefore it can be relevant to make known the activities of individual leads from the same organization surrounding the same themes. When a marketing manager for example, downloads a whitepaper about the integration of email marketing and CRM, and the IT manager in the same organization downloads an article about ‘CRM as a service’, this can indicate that a CRM project is taking place with the company. Account scoring brings all these signals at an organization together in the account score.
KPI’s and ROI in modern marketing
In summary, it can be said that the choice in KPI’s whereby the modern marketing initiatives can be measured, depends on the modern marketing objectives. Aside from that, the KPI’s differ per phase in the buyer journey. The table below gives an overview of the most common occurrences.
In an ideal situation, the ROI of the modern marketing initiatives is steered in the mid-long-term, in financial terms. A basic formula can be, for example, the costs of modern marketing as a percentage of the achieved revenue.
Direction in the (too) short-term ROI objectives within the modern marketing process is not always sensible, as the following aspects need to be taken into consideration:
- Modern marketing activities are aimed at the entire buyer journey. When, in the initial period, marketing leads are being generated that are at an early stage in the buyer journey, but there are relatively little sales qualified leads or customer conversions, the turnover cannot yet be measured. The period for measuring turnover should therefore be aligned with the buyer journey.
- When setting up modern marketing, there will be a limited amount of content in the start phase. In subsequent periods previously created content can be capitalized upon, which has a positive effect on the ROI.
Finally, it should be taken into account that turnover cannot always be assigned to one channel. A modern marketing lead, after all, could have converted to a customer by recommendation from another customer, or a customer that enters upon recommendation could have regularly read a particular blog without this being included in the methods for measuring. The method and the timing of measurement, therefore, are somewhat arbitrary if no foolproof systems and definitions are used, for measurement purposes.
Which leads from your last campaign are valuable and which ones aren’t? To determine the sales readiness of leads, marketers increasingly use lead scoring functionality in their marketing automation system. Lead scoring is a way to measure the likeliness of a commercial opportunity for a potential customer. The lead score helps determine the next best step such as transferring a lead to the sales department or triggering a certain nurture flow.
Lead scores on the different conditions of a profile can typically be categorized as “critical,” “important,” “influential” or “negative.” A more positive condition will typically receive a higher score. Negative criteria have a negative score. Critical conditions can also be set as a condition. For instance, when a company is not based in the U.S., it’s not considered a lead at all.
But a flat “overall” score isn’t very intelligent. Although easy to use and better than nothing, a unified score doesn’t say much about interest in specific topics, the type of persona or the phase a lead is in within the buyer journey. How can you determine the real “DNA” of your leads to take the next best content step? Let’s take a look at five key dimensions in lead scoring.
Dimension 1: Individual Explicit Lead Scoring
The most traditional lead criteria are explicit scores. These are based on specific profile characteristics that are generally available. Think of insight about buying authority, position or the presence of social media accounts. Explicit criteria don’t say anything about personal interests or current challenges, but they can be first indications on whether a profile shows parallels with your buyer persona. For instance, content targeted at marketers can have scores like these:
Dimension 2: Company Explicit Lead Scoring
Explicit lead scoring can also be done on a company level. Scoring is based on information like the organization size, industry or region. Together with individual explicit scoring, company explicit scoring makes up the “L=lead grade.”
|Organization Size||1,000+ Full-Time Equivalent Employees||35|
|200+ Full-Time Equivalent Employees||20|
|IT SaaS and Software||30|
The lead grade presents a qualitative rating of all explicit profile information. For example, someone who sells CRM software to retailers and has more than five stores and launches a campaign with e-books, webinars and blogs. It will probably apply a high explicit lead score to download profiles from retail companies. There may be an even higher grading for profiles of larger retailers with multiple locations and profiles with relevant positions. However, a download by a major IT service provider will get a low (or negative) lead score. Thus, the lead grade actually indicates the extent to which a profile meets the ideal customer.
Today, explicit scores are frequently embedded in cost per lead campaigns you create with publishers and marketing agencies. For instance, you can pay $50 per lead when your white paper is downloaded and the “lead” profile meets a certain set of conditional criteria.
Dimension 3: Individual Behavioral Lead Scoring
Lead score techniques in many marketing automation systems use both explicit and implicit information. This is where lead scoring becomes interesting. Implicit scores are based on lead behavior such as website visits, email opens and white paper downloads. Here’s one example of these scores:
|Reads a relevant blog||5|
|Opens an email||10|
|Downloads a white paper or e-book||20|
|Joins a webinar||25|
|Checks pricing information||35|
This singular way of scoring behavior is logical when your company sells one type of product such as a CRM system. But when you sell both CRM and ERP systems it makes more sense to set up a behavioral score per product line or, even better, per area of interest. For this, your content and/or campaign assets (like landing pages, emails and webinars) need to be tagged per topic or proposition. Also, your marketing automations system needs to support multiple lead scores.
Together, implicit and explicit scores can give a good indication of the interests and characteristics of an individual person. This provides a great opportunity to determine your next best step communicating your content.
Dimension 4: Account Scoring
However, in many B2B investment decisions, multiple stakeholders or buyer personas are involved in an organization. They are the decision-making unit. Therefore, it’s relevant to know whether multiple employees from the same organization are captured in your lead database and whether these individuals have interests indicating a certain need. For example, when a marketing manager from a retail company downloads your e-book on the integration of email marketing and CRM and an IT manager from the same organization downloads an article about CRM in the public cloud then that may indicate a CRM project within that organization. Account tracking brings together these signals from one organization into the account score.
Dimension 5: Buyer Stage Scoring
Successful B2B marketing departments have a seamless process to transfer sales-ready leads from the marketing department to the sales organization. MQLs are now SQLs. It’s necessary to define these clearly with a service level agreement. The lead score can provide a solid criterion for this action.
- Marketing-qualified leads (MQLs) — These are leads with a low lead and account score because they are in an early phase of the buying process. This pool of leads lends itself to lead-nurturing initiatives. It’s the marketer’s primary responsibility to further develop these leads. When the lead or account score reaches a certain point, the leads are taken over by sales.
- Sales-qualified leads (SQLs) — When there is an actual need, the position is relevant and the lead fulfills the necessary criteria, it becomes a sales-qualified lead. This is the moment the lead is passed to the sales department.
The reconciliation between marketing and sales is crucial for a good conversion. But lead scoring can also be explicitly linked to other phases in the buyer journey. For this, your content must also be related (tagged) to the different phases in the purchase process. For example, when we go into a buyer journey model with simple “discovery,” “consideration” and “decision” stages, the content must also be scored in that way. Here’s an example of a simplified behavioral scoring model:
|Reads a relevant blog||5 points||Discovery phase|
|Opens an email||10 points||Discovery phase|
|Downloads a white paper or e-book||20 points||Consideration phase|
|Joins a webinar||25 points||Consideration phase|
|Checks pricing information||35 points||Decision phase|
Because content is tagged per buyer stage, the lead in the buyer’s journey can be derived from the lead score. Journey stage scoring is progressive, so if a profile scores high on the “consideration” phase but higher on “discovery,” you can assume that “consideration” phase has actually begun since this phase is closer to the moment of purchase. An interesting article and video about this methodology can be found on this ETUMOS blog.
Determine the DNA of Your Leads
Finally, it would, of course, be ideal to develop a lead DNA in which all scoring information is displayed visually. Taking into account the lead score and lead grade dimensions, matched to “proposition” and “buyer internship,” a the DNA of an this lead could look like this:
The lead in the “DNA” visual above is theoretically in the market for CRM software and may eventually be interested in call center solutions. For call center solutions, the “grade” profile has an even better match. Finally, the profile has shown some interest in an ERP system but it is not significant enough to act upon.
Getting Started with Lead Scoring
A DNA profile based on all lead scoring dimensions would be ideal for every marketer, and this ideal gets closer as tools mature. To get started with lead scoring, however, get the basics right first. Current best practice shows us that marketing automation systems in the field of lead tracking functionality still differ widely. But within a well-oiled marketing machine, clear insights into the DNA of your leads should be top priority.
The return on modern marketing is rooted in the conversion from unknown vistor, to customer relationship. There are many stages in between however, such as subscribers, followers, leads and prospects. In order to properly measure the performance of the modern marketing process, it’s important to define KPI’s.
By steering according to KPI’s, you can improve the performance, for example, in the form of click and conversion ratios. Improvements can be made in the titles, user interface, alignment with the target audience, response to the device and the use of visuals.
Different types of conversion can be examined depending on the objectives, including;
- Clicks, views and visits
- Likes, fans and followers
- Engagement ratios
- Response and leads
Research shows that content creation is seen as one of the biggest challenges for content marketing. It’s not just authors who suffer from a ‘writers block’, complete organizations face this problem. Creating content in itself is challenging, however, due to the rapid growth of content marketing initiatives, distinctive content is becoming more and more important. When content becomes a repetition of previously published knowledge or facts, the added value is limited. Providing content of high quality, with unique characteristics, increases its appeal. Here is what to create and where to begin.
Which content formats can best be applied, is of course an interesting question. The Content Marketing Institute 2016 carried out relevant research on this subject matter. Approximately 1500 B2B marketers that took part in the survey, were questioned as to the effectiveness and the use of different content marketing tactics. The tactics that are perceived as most effective, are shown in the figure below.
The effectiveness of a format depends very much on the message and the audience, but also, of course, on the quality of the content and reach of the audience. It’s impossible to single out one format or offer advice on the best application thereof. It is possible however, to logically link content formats to the buyer journey. In order to stimulate the discovery process trend analyses, vision and infographics can be suitable. The consideration phase, however, lends itself to formats that can transmit more in-depth messaging, for example, whitepapers, checklists and demos.
Furthermore, the chosen content formats must be suited to the DMU (Decision Making Unit) member they are targeted at. When establishing the framework for the use of online messaging, the DMU members and the phases of the buying process should serve as the starting point. As such, downloadable research reports and vision documentation can be interesting for executive board members, and whitepapers about organizational issues for line managers.
Here, individual content items are not standalone entities, but rather combined in order to reinforce one another. In the example above, research can be combined with roundtable sessions. But that same research, can give rise to, among other things, blogs for blogsites and infographics to be applied on social media. The same basic content is then used in a different context, aimed at different DMU members.