YOU ARE MISSING MARKETS
What we learned from three years of B2B lead optimisation. An e-book by RealTime Lead Group
YOU ARE MISSING MARKETS
What we learned from three years of B2B lead optimisation
At RealTime Lead Group, we help all kinds of organisations make optimal use of their data. Over the past decade, we have helped B2B businesses such as Bol.com, Gamko and ING Real Estate optimise their sales operations.
By combining company data with external data sources, we can help sales and marketing departments pursue only the most relevant and valuable leads and markets. The result? Lower costs and higher revenue.
What is lead optimisation?
Lead optimisation involves taking a large number of leads from the database of our client or the Chamber of Commerce and having a self-learning algorithm compare these to the most successful leads from the previous period. We combine data from the client, such as transaction data and information regarding sales efforts, to external data. The latter consists of e.g. text analyses of company websites, where we determine what words are used most frequently on the websites of your best customers. This helps us predict what segments and individual prospects are likely to be the most promising and/or profitable.
In recent years, we were able to optimise the sales operations of a large number of businesses in the industrial and service sectors. In many cases, our input resulted in more sales, lower costs and a higher customer lifetime value. In this e-book, we will share our best practices from these successful projects with you. Truth be told, some of our efforts did not pan out entirely as expected – although there is plenty to be learned from that as well. We will therefore also share a number of pitfalls we encountered along the way, so you can avoid making the same mistakes.
Successful lead optimisation
10 LESSONS LEARNED
1. Optimisation also means taking a hard look at your own sales organisation
In the traditional sense, sales are often about going through as many leads or prospects as possible. The salesperson with the most energy – the one who makes the most calls in a week or decides to visit one more customer at the end of the day – is usually the one who brings in the most business. The first thing we learned when we began applying the principles of lead optimisation is that this way of thinking will change and even largely disappear. At some point, a company that uses lead optimisation will ask its sales staff: “How successful are you really?” This may lead to some awkward conversations or even internal conflicts. In the end, however, it is a win-win situation. As the quality of leads increases, it will become easier for your salespeople to bring in new business and your company’s margins will go up as well. Note that this does require your sales staff to switch their focus from quantity to quality and take a hard look at their own approach.
2. Your cost structure will change
Following on from the first lesson, how you think about the costs of acquisition and retention is also going to change. Since your sales costs and efforts are important inputs for lead optimisation, it is paramount that you set up your accounting in a way that gives clear and realistic insight into these factors. This means that any costs that used to be grouped together into poorly defined overhead cost items must now be broken down per lead, per prospect or per new customer. Even for us, this may at times lead to some shocking revelations. It turns out that many businesses focus their sales efforts on customer segments that are hardly profitable at all within their current business model. In other words, lead optimisation is not merely about what leads to pursue, but also about what leads to write off your list.
3. Young businesses have a greater chance of success
Newly established businesses have a natural focus on growth. Furthermore, they have fewer ingrained patterns, relations and traditions. This gives them the flexibility to utilise data-driven sales quickly and effectively. However, you do not have to be a startup to have a young mindset. In this sense, even a centuries-old family business can be young. We are talking about being willing to constantly and critically assess how things can be done better. These businesses are out to constantly improve and the people working there have a growth mindset. The directors of such businesses often focus on growth, innovation, sales and business development.
4. The costs of advertising will go down as well
The goal of lead optimisation is to lower the costs of acquisition and retention. Furthermore, we noticed an interesting side-effect during each successful implementation: the costs of online advertising went down as well. The underlying logic is clear: with better insight into the types of businesses you should be approaching with your proposition, you can target more effectively online as well. This means the costs of clicks by people who ultimately prove to be a poor match for your proposition will decrease significantly.
5. The value of content will increase
We see a similar effect when we look at inbound and content marketing. Most of the value of marketing content stems from its context; no matter how amazing your content is, it is worthless without the right context. Let’s say you sell coffee machines with a four-year life cycle. In that case, it is a good idea to send customers who purchased a coffee maker circa 3.5 years ago a report on innovations in the world of coffee over the past four years. The same report would be worthless to customers who purchased a coffee machine only recently – and it may even rub them the wrong way. Since lead optimisation makes your content more effective, you will start to generate more and more leads of higher quality with your inbound marketing campaigns.
6. You learn to recognise the value of data
Much of data collection is heavily focused on the here and now. Data about your website, social media and email marketing are reported on a weekly or monthly basis. The same goes for revenue and new business. With lead optimisation and the use of Big Data in general, however, data cannot always be utilised effectively in real time. In some cases, you have to gather data across a longer period of time and it will only contribute to your company’s success in the future. Especially in the world of B2B, where multi-year contract periods are no exception, this moment may be quite a ways off. Lead optimisation shows people that data can make a difference and thereby fosters a willingness to truly invest in data collection. A sales organisation where everyone understands this concept and is therefore willing to fill out forms today that may not be useful straight away will be reaping the rewards in the future.
7. The benefits of mobile data collection
Once you begin to understand the value of data, you will start to see new opportunities to gather more data everywhere around you. Your sales and service staff visit customers every single day. The things they see there can be valuable information to you. What types of machinery does your customer use? How old are the machines? How well maintained are they? This kind of information is invaluable for lead and retention optimisation, provided that your people have an easy way to share these data. Using mobile apps can lead to some excellent results, but it does require cooperation from the IT department. They are the ones who have to roll out the apps and modify the ERP system to facilitate this innovation.
8. A well-organised CRM saves a tonne of time
Lead optimisation works its magic before leads end up in your CRM. In practice, this means there is far less clutter in your customer databases. Your sales staff will no longer have to work through endless lists of everyone you ever sent a flyer or who ever attended one of your gatherings. Working with a CRM filled with only sales-qualified leads saves your salespeople a tonne of time and frustration.
9. Virtually all businesses miss some markets
Most B2B organisations use focus segments and dedicate their sales efforts to the segments they believe to be most promising. These choices are based on past experiences, which can become dogmatic as time goes on. Lead optimisation, on the other hand, teaches organisations to look at their market from a much broader perspective. Oftentimes, we end up discovering segments that our clients never thought of or looked at. The reverse is also true: focus segments that have always been part of a company’s core operations turn out to be less profitable than expected. In other words, using the principles of lead optimisation results in a different, fact-based perspective on market segments. This had led many of our clients to change their marketing strategy or even their entire business model.
10. Some churn is okay
The old sales adage teaches us that “existing customers are the best customers.” After all, it is easier to sell to customers who are already familiar with your company and its products. Most B2B businesses therefore invest heavily in the retention of existing customers. However, lead optimisation also takes the costs per sale and the costs you incur after making a sale – e.g. service and warranty costs – into consideration. If it turns out that certain customers are not very profitable (or even loss-making!) in practice, it is not such a bad thing if your partnership ends once their contract period is over. It may sound counter-intuitive, but it is quite a common occurrence nonetheless. In other words, lead optimisation certainly has its uses in customer retention as well.
CONDUCT THE DATA MATURITY SCAN YOURSELF
Is your organisation ready for lead optimisation?
Lead optimisation requires a professional sales organisation backed by a mature IT department. To determine whether lead optimisation can be successfully deployed in a given organisation, we conduct a so-called Data Maturity Scan for potential clients. During a brief consultancy project, we analyse a business’ systems and organisation by asking and answering ten key questions.
If you want to know whether your organisation is ready for lead optimisation, you can ask yourself these questions as well:
1. How many new customers do you want?
Lead optimisation is a tool for B2B businesses that want to grow. It is designed for organisations that can scale up their operations and which are consciously working to increase their market share. Ask yourself how many new customers you want. If the answer is “As many as possible, of course,” you are ready to start using lead optimisation.
2. Do you have sufficient sales capacity available?
In many companies, a typical week for the sales team ends how it began: with a lengthy to-do list full of prospects. Following up on and reporting about leads is an integral aspect of the optimisation process. If you do not have time for that, e.g. because you spend all your time on account management, you will not be able to achieve optimal results.
3. What is your maximum CPA / CPL / CPS?
Lead optimisation is not cheap, so it is best suited for businesses with a high customer value. Such businesses can afford to pay the relatively high costs per sale because they deliver long-term contracts or capital-intensive goods. It should be noted that lead optimisation can ultimately result in a significant reduction of these costs.
4. Do you have a mature CRM in place?
Having a mature CRM system that supports the entire sales process is an important requirement for lead optimisation. Without such a system, it would be very difficult to gather the right data and feed the generated leads back into the system.
5. Are all your data centrally stored?
Having data is one thing, making it accessible is quite another. Oftentimes, data are distributed across multiple different systems, making them less accessible for algorithms. This is the case when different departments or product teams have their own systems, for example, or when sales and marketing use separate databases. Have you not yet gathered all your customer data together in one place? Your IT department still has some work to do before lead optimisation can truly start paying off.
6. What variables do you have available at the customer level?
Besides its maturity, the contents of your CRM system are also important. Lead optimisation becomes more effective as more variables are used, so it works best when you have a wealth of data at your disposal at the customer level.
7. Can you link your data to external databases?
The core of lead optimisation is the interface with the Chamber of Commerce’s database and – through that – myriad other external data sources. Having a COC number or other variable at the customer level is therefore of critical importance.
8. Do you have transaction data available?
Any form of sales optimisation requires vast quantities of data regarding order history, order volume and revenue per customer. Lead optimisation is no exception in this regard.
9. Do you possess data on customer value, customer revenue and customer margins?
Additionally, it is important to be able to calculate what a new (or retained) customer will bring in. As mentioned previously in the section on lessons learned, some sales departments dedicate a tonne of time and money to acquiring new customers who then turn out not to be as profitable as expected. To avoid this issue, it is important to know the value and margin of each customer type.
10 Do you already have data on prospects and lost accounts?
Data based on experience is invaluable for lead optimisation. If you already possess detailed information on which prospects you (un)successfully reached out to in the past, you are off to a great start.
Four pitfalls of lead optimisation
1. Incomplete insight into data
Successful lead optimisation requires transparency. Without complete insight into costs and margins, you lack an important component with which to assess leads and prospects. As we mentioned in the lessons learned, lead optimisation is more than just a tool. Your salespeople’s job description and their remuneration structure will drastically change. This leads to resistance within the organisation and some projects we worked on were deliberately sabotaged by people withholding information. It is therefore of the utmost importance to listen to the objections of the various stakeholders. Include everyone in the change process and modify the financial stimuli if necessary to ensure everyone benefits in the end.
2. No process for continuous improvement
Lead optimisation requires feedback from the sales team. Every lead provided must be evaluated and data on results and sales efforts must be recorded. The system cannot learn without this feedback, which means you would miss out on the most important benefit that lead optimisation offers: increasingly relevant leads. Implementing the necessary feedback loop requires effort at every level of the organisation. The IT department has to set up the technical infrastructure. Salespeople must provide feedback on every lead. The finance department must supply transaction and cost data and upper management must approve the necessary activities and investments. A reorganisation on this scale will inevitably lead to the reassessment of many existing processes and relations.
3. An uncooperative IT department
There is a major technical component involved in lead optimisation and data collection.
We conduct most of our technical operations together with our partners. However, the IT changes within a client’s organisation must be implemented by their internal IT department. If they lack the budget, knowledge, manpower or willingness to think along and cooperate, the lead optimisation project is doomed to fail.
4. Lack of commitment from upper management
Our experience teaches us that lead optimisation has a significant impact on the structure of a company’s sales and marketing departments. This may lead to feelings of uncertainty and unrest among the various stakeholders. These feelings can only be managed properly if upper management unequivocally supports the changes and talks to employees about their concerns. Without this commitment from the organisation’s upper echelons, lead optimisation can never reach its full potential.
WHAT CAN YOU DO RIGHT NOW?
Our experience with lead optimisation shows us that its success is largely dependent on a company’s willingness to change. Traditional sales processes, bonus schemes and customer philosophies are re-evaluated and data provide the answers that used to come from intuition or tradition. A transition to data-based lead optimisation also requires serious technical measures, but there are certain things you can do right now to look at your sales operations from a data-driven perspective.
Sort your customers by revenue
Take some time to create an export of all existing customers in your CRM. What do you see when you sort the list by revenue? Chances are that the five or six biggest customers generate 80% of your revenue. What do these customers have that others do not? Do you have any leads that are very similar to these top earners? Looking at your customer database in this manner is the first step towards adopting a data mindset.
Honestly calculate your acquisition costs
The next step is to take a critical look at your acquisition and retention costs. Are they partially filed as overhead cost items? When you take an honest look at the costs of acquiring a new customer, the results are often shocking. If a salesperson visits a prospect three times before finally closing the deal, this can easily cost as much as €2,000-3,000. The margins you realise with such customers must be worth the effort and expense. After going through these two steps, you will already have a far more objective overview of your sales operations. You can then make fact-based choices about which prospects and existing customers to prioritise and which are perhaps best ignored.
Would you like to know more about lead optimisation?
Would you like to talk more about lead optimisation with one of our specialists? Are you interested in the Data Maturity Scan? Contact us via our website: www.realtimeleadgroup.com
About RealTime Lead Group
RealTime Lead Group offers B2B businesses solutions that help them generate more and better leads and improve their sales performance. We do this by cleaning up and enriching our clients’ data and linking them to our own online international company database. We use both structured data, e.g. from CRM and transaction systems, and unstructured data, e.g. online texts. We also help our clients with data analysis and database maintenance and offer sales and marketing advice using our in-depth data expertise.