Few marketers will question the value of sales leads generated by direct mail and other direct response methods. However, a poorly integrated lead generation programme can actually reduce the overall productivity of a salesforce.
This is a true story and only the company name has been changed
The case of Newco & Co. illustrates the phenomenon. Newco manufacture a range of specialist industrial washroom equipment; they offer service contracts to maintain the equipment and supply their wide range of hygiene disposable products.
The market combines extreme competitiveness with a marked lack of glamour; therefore Newco have chosen to dedicate a specialist salesforce to concentrate on opening up new accounts – to be subsequently serviced by their operations division. Their objective with this structure is to obtain the widest national distribution for their equipment (which includes dispensing machines). The bigger the ‘population’ of their equipment, the more they sell of consumable hygiene products – the major profit opportunity for their business.
The salesforce of 50 specialist equipment consultants and key account executives is divided into eight geographical regions, each managed by an area manager under the control a national sales manager. In the course of many years’ experience in direct marketing Newco have explored most techniques of combining brand-building with lead generation, to support their salesforce and large distributor network.
Direct mail has long represented a sizeable proportion of their advertising and promotion budget; and they are now confident of their ability to generate leads very cost-effectively. Maintaining a high level of salesforce productivity remains an essential ingredient in staying at the top of the hygiene market.
Nevertheless, about two years ago, Newco began seriously to question the role of sales lead generation in their marketing mix. The basic problem was that they had become too good at generating leads. The overall cost per lead was fine, but this was not being matched by a correspondingly economical cost per sale. Indeed, cost per sale was initially rising due, it has been assumed, to poor feedback of results by the salesforce. Dissatisfaction with the lead generation came to a head when senior sales management began to re-structure the salesforce and to devolve greater accountability to sales managers at area or first line level. Sales managers complained that the influx of leads was actually reducing sales force productivity. Their careful work-plans to maximise the time salespeople spent face-to-face with prospective customers on which their high performance depended were being disrupted by the sheer quantity and often random geography of the enquiries demanding their attention.
At the same time leads were accounting for an unduly high proportion of total new business. The other two main sources of the Newco’s sales consultant’s new business were:
Unchecked, undue reliance on leads generated by the marketing department would leave the salesforce vulnerable to the vagaries of the market and take control away from the salesperson.
Finally, Newco’s excellent sales training programme notwithstanding, lead-dependence could also impede the development of salespeople into the account portfolio managers the company needed as the salesforce moved more and more into national and major account selling.
To restore the balance between self-generated and lead-generated sales, Newco set about creating a situation where leads would result in a net increase in sales productivity: if the maximum benefit was to be derived from Newco’s direct marketing activities, they had to be integrated with the sales management.
What was required, in short, was a flexible and dynamic database, geographically structured to the individual sales territories and regularly updated as the customer base grew.
Both the salesforce and the marketing department would contribute input. On the salesforce side there was the traditional problem. Each consultant would keep prospect records in his own unique filing system. When he was promoted or left the company, there was little organised prospect data to hand over to a successor who had, time-consumingly, to build up an entirely new prospect bank. Clearly, a method was needed of recording prospect data centrally.
In addition, the rapid success of the national accounts function required a database to accept a great deal of account information, e. g. subsidiary companies and trading terms, in order to coordinate account management.
On the marketing side, there was the need to build and regularly update the unqualified lead element of the database. Most mailing lists contain little prospect information and generally age at between five and 15 per cent per annum. For Newco’s database considerably more information than name and address was required for each listed company: e. g. Telephone number, key decision maker, number of employees and existing products/brands used. This degree of detail effectively doubled the potential for decay.
Setting up the database and its management systems required a great deal of investment in specialist software. Hardware was not a problem: the company already had sophisticated computer hardware and had invested a considerable amount on computerising its internal systems. However, setting up an interactive database need not involve a huge investment in hardware or software. Some particularly effective systems have been set up using entirely manual controls. The skill lies in developing simple, logical systems which lend themselves to the gradual transfer to computerisation.
A re-evaluation of the role marketing could play in supporting the salesforce concluded:
o Mailing should be capable of distributing leads evenly across the sales territories in such quantities as to enable salespeople to plan their follow-up.
o To improve the value for money of each mailing, prospect lists should be made available for telephone follow-up (which has been proved to double the appointment rate).
o The central database (primarily a list of unqualified prospects) should be made available to sales people to coordinate their own prospecting and feed-back of data to the central file.
Newco still have some way to go to complete the new integrated system, but there has already been a general increase in sales productivity.
The strength of the system lies in its flexibility. It is capable of accepting large amounts of data from a variety of sources bought-in lists, market research, tele-sales agencies and the company’s own salespeople in order to personalise it to the specialist needs of the hygiene market.
A key benefit is the constant improvement of results from direct mail, as feedback and analysis of each mailing is used to amend the database and refine future target audience selections.
The marketing department can now provide much improved guidance to the salesforce. For example, analyses of the existing customer base by type of industry and commercial business, as well as analysis of direct mail responses, can direct sales effort into particularly responsive market sectors.
A further benefit of the central database to the sales consultant is that it can now regularly provide him with updated hard copy of customers and prospects sorted geographically. This helps the planning of sales activity to ensure efficient prospect follow-up. Fewer opportunities are lost, and the face-to-face time can be optimised.
However, the greatest benefit of this integrated approach has come from the restoration of control of the sales effort to the sales manager.
Sales managers have observed that a more balanced supply of leads, coupled with training in the techniques of appointment-making and lead qualification, has enabled salespeople to develop the important skills of self-sourcing new business and of managing existing accounts – skills that are essential to the key and national account salesman.
Internal promotions within the salesforce are at an all time high. There has also been an increase in assignments of marketing managers into the sales division and vice versa. This has resulted in a cross-fertilisation of ideas and an overall improvement in cooperation and understanding.
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