trends and challenges of lead generation in 2011

2011 Lead Generation Trends and Challenges

J. David Green Director of Best Practices, MECLABS #b2bleadgen

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• Audience Poll

• Challenges and Trends

• Economics of Demand Generation and Lead Management

• Sales costs and a cost-avoidance argument

• A revenue capacity argument

• Metrics

• Summary – Key Takeaways

Agenda

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#b2bleadgen

Today’s speaker

J. David Green – Director of Best Practices, MECLABS

• Case study: $1B pipeline in 20 months

• Author and co-author of numerous white paper, blog posts, articles, and the book, The B2B Refinery®

• Speak at MarketingSherpa, DMA, and other events

• 25 years of wide ranging B2B lead generation experience

• Working with large Cisco partner on lead nurturing projects

• Consultant on technology channel marketing

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MECLABS: A science lab with a consultancy

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• More than 10 years of research • 1,300+ major experiments • Over 1 billion emails • 10,000 sales-paths tested • Hundreds of publications and

conferences

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Audience poll

• How many direct or indirect sales full time employees do you support with leads?

• 500+

• 100-499

• 50-99

• 20-49

• Less than 19

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Audience poll

• On a scale of 1-5, how advanced would you say your lead generation practices are today? (5=best)

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Challenges & Trends

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What is the biggest worry of innovative B2B marketers?

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• In 2009, 68% of marketers saw generating high quality leads as their number one business challenge.

• In 2010, the percentage rose to 75%

Source: MarketingSherpa 2010 and 2011 B2B Marketing Benchmark Report

The challenge

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For the last three years, marketers have focused increasingly on lead quality. This focus, in turn, has placed greater emphasis on:

• Data hygiene and enhancement

• Lead nurturing

• Lead scoring

• Funnel metrics

• Alignment

The current economy intensifies C-suite demands on marketing for ROI

The challenge

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What are the content implications of lead nurturing and lead scoring?

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• More segmentation for relevance (personas, stage of consideration, verticals)

• Low-production value content (e.g., blogs, raw video)

• More employee writers/thought-leaders

• More re-purposing/multi-purposing

• Content aggregation services through web-crawling and linkage/summary

• Integration of social media into lead nurture streams (as well as a demand generation tool)

Based on trends in 2010 and projected for 2011, nurturing and scoring depend on content

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What are data implications of lead nurturing and lead scoring?

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• Less-end user data capture at the top of the funnel

• Incremental, optional, conditional end-user data capture

• Great focus on data hygiene

• Data appends (account, contact, triggers)

• Account-level modeling (propensity to buy and buying potential)

• Content extrapolation of problems, function, level, depth of interest

Based on trends in 2010 and projected for 2011, relevant content-nurturing requires data

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Economics of demand gen: The cost of sales follow up

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How does sales leadership see the economics of lead generation?

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Eight out of ten marketers hand raw leads straight to sales

Source: MarketingSherpa 2010 and 2011 B2B Marketing Benchmark Report

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Decline in lead population through the funnel’s early stages.

@ up to 5 attempts/lead & @ 10 dials/hour

Sales-ready leads Lead scoring, tele-qualifications 4 - 7

1.6 – 2.8 hours

New leads Filled out web form, called toll-free number, visited booth,

attended webinar, etc.

100 40

hours

Valid leads Insufficient info, bogus info,

not in target market

70 - 85 28 - 34 hours

Mountains of leads, molehill of sales

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So what should those funnel numbers mean in terms of expense?

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Assumes 1,960 hours per year and 19,600 dials.

“Cheap” leads cost a lot of money

Annual cost Hourly cost

Loaded cost/ Field sales rep $ (200,000) $ (102)

Leads Hours Cost/Hour

New leads 100 40 $ (4,082)

Valid leads 70 34 $ (3,469)

Sales-ready leads 7 2.8 $ (286)

100

70

7

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Economics of demand gen: The cost-avoidance argument

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What financial yardsticks exist in your company for measuring lead generation effectiveness?

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• How much time do your sales people spend prospecting?

• How much is that prospecting time costing your company?

Sales prospecting costs more than a CFO might expect

Generating leads/researching

accounts, 18.70%

Account service calls,

15.20%

Administrative tasks/meetings,

18.00%

Selling: Face-to-face or over-the-phone meetings,

11.50%

Other: Travel, training, etc,

36.60%

Source: CSO Insights “Sales Performance Optimization” report, 15th edition: over 1,800 companies surveyed. Copyright © 2009 CSO Insights. All Rights Reserved.

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In this example, the entire marketing budget equals the portion of the sales budget allocated to prospecting.

Sales prospecting cost ≥ Marketing budget?

Sales prospecting scenario

Revenue $ 1,000,000,000

Profit $ 100,000,000

Marketing budget $ (50,000,000)

Sales budget $ (250,000,000)

Other expenses $ (600,000,000)

Sales budget line item

Time prospecting $ 1,000,000,000

Prospecting allocation $ 100,000,000

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Given that $50m budget allocation to sales prospecting from the prior slide, a $200k loaded cost/field resource is the equivalent of 250 sales people.

($50m sales budget allocation) / ($200k/rep) = 250 reps

Sales prospecting equals a lot of FTEs

Annual cost

Sales budget $ (50,000,000)

Loaded cost/field sales rep $ (200,000)

Sales FTEs 250

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Economics of demand gen: The revenue capacity argument

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What revenue capacity can lead generation unleash?

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Sales & Marketing Resource Allocation & the Buying Cycle

Prospecting Selling

Allocated percent of

sales resources

0%

100% These reallocated sales resources result in increased revenue capacity/higher sales productivity

More efficient

sales resources

Less efficient

sales resources

As much as possible, replace these sales resources with lower-cost methods of marketing & telemarketing contact

Nurturing

Buying cycle stages

Lead generation scales sales

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Sales-ready leads increase revenue capacity, profits and growth

Sales prospecting scenario

Scalable lead gen scenario

Revenue $ 1,000,000,000 $ 1,100,000,000

Profit $ 100,000,000 $ 190,000,000

Marketing budget $ (50,000,000) $ (60,000,000)

Sales budget $ (250,000,000) $ (250,000,000)

Other expenses $ (600,000,000) $(600,000,000)

Sales budget line item

Time prospecting 20% 10%

Prospecting allocation $ (50,000,000) $ (25,000,000)

• 10% more selling time

• $10m increase in marketing budget

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Economics of demand gen: Key pipeline metrics for forecasting and analysis

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What funnel metrics can improve sales and marketing planning, forecasting and efficiency?

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Source: CSO Insights “2010 Lead Generation Optimization” report. Copyright © 2010 CSO Insights. All Rights Reserved.

For the first time in the seven years of this report, a slim majority (51%) of responding firms now track the ROI of their marketing campaigns.

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• Complex sales make forecasting, analysis and funnel-tuning difficult

• Discrete funnel conversion stages improve forecasting accuracy and narrow problem identification

• Feedback loops can improve upstream and downstream stages.

Copyright © MECLABS 2010, all rights reserved.

Bu

ying cycle

New leads

Registered leads

Rules-validated leads

Phone-ready leads

Phone-validated leads

Sales-ready leads

Sales-validated leads

Sales outcomes

Sales-forecasted opportunities

75% to

95%

Measuring discrete funnel stages improves forecasting and operational efficiency

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Key takeaways

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• Lead quality concerns are driving initiatives in lead nurturing and lead scoring, which both are driving numerous marketing changes

• Sales prospecting offers marketers a financial yardstick for measuring lead generation effectiveness

• The cost avoidance argument:

• Sales qualification is very expensive

• Sales prospecting is very expensive

Key takeaways

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• The revenue capacity argument: lead generation can improve the sales and marketing expense-to-revenue ratio (sales scalability and sales productivity)

• The right metrics can improve forecasting and drive continuous funnel improvement

Key takeaways

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Contact information

Dave Green Director of Best Practices, MECLABS Co-Author of The B2B Refinery® dave.green@meclabs.com 409-770-0710 MECLABS.com ∙ MarketingExperiments.com MarketingSherpa.com ∙ StartWithaLead.com

StartWithaLead.com/LinkedIn

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