Sales Trap #2: Banking Too Heavily on Lead Generation
“I just need more leads.” If you hear yourself saying this often, then I wrote this for you.
Pretty much everyone hates cold outreach.
But I’ve made millions for companies from deals that came from cold calls. This approach is not dead. It works, but the malpractice in the industry is significant and runs from script readers calling from India to home-based sales burnouts dialing for dollars without a coherent strategy or team working with them.
Four times out of five, the lead solution doesn’t work because problems in other parts of the business ruin opportunities at the lead attraction, conversation and proposal stage. For now, let’s assume your focus on lead generation as the sole problem is justified, and talk about these services for a minute.
If you have a nuanced or niched offering, a generic, templated approach is going to bring you crappy leads — unless your provider can translate what’s special about you in an effective, compelling way. Somebody putting your name on the same sales-y crap that everyone else is blasting at people might even hurt your brand image and company.
If there is just one other piece of the sales support spectrum missing, the leads are worthless. For example, poor pipeline management means you have leads — but no idea who on the vendor side talked to them, if at all, or when you should step in.
Lead generation is often a tactical solution to a deeper strategic problem. A lead generation or telemarketing company may produce leads, but none of this matters if your offering is mis-positioned or you don’t have outstanding people to convert leads to revenue.
You won’t get to the right people. It takes a sophisticated and nuanced approach to design a program that must reach a particular decision maker. Following up with a bunch of people who have no decision-making authority when you need the C-level is a waste of your time.
The “best of the best” in this category will offer strategic support to design sales campaigns, help you think carefully about your segments, provide seasoned sales support and give you insight into response data and coordinated follow-up. But if all you’re buying is leads, good luck.
The Importance of Tailored Strategic Thinking in Lead Generation
So, story time: We took on a client who did B2B branding and lead generation for technology companies. I’m pretty sure that their clients would have found the fact that they reached out to us pretty interesting.
When I started cold calling for this client, the prospect list included everything from wine companies to software startups. The messaging strategy was simple:
Only senior people work on your accounts.
We are full service.
Our expertise in your industry is deep.
Unfortunately, this was all useless information. Do a quick search and review websites for small agencies and consulting firms. They all make these claims. We had to find a better way.
My first step was to segment the lists. We decided to go after software companies that had at least received a Series B round to make sure they had enough money to hire our client. That was a decent start.
Next, we came up with a message around our client’s ability to create a brand for companies in this sector. They had a lot of great case studies in this area and it was a credible message. We fleshed out some ideas around market dynamics to create differentiation and an explanation of when to hire the agency. The target market was the CEO and not the head of marketing. Now the message became:
Talk to us at those moment of truth when the company is ready to scale or you want to position for sale.
You need a better marketing capability when new entries in the market create differentiation problems.
Sales needs a usable message platform, brand presence and marketing communication plan — often not available when the company is in an earlier stage.
After a few months a nice branding project closed. The CEO we converted in the course of the campaign had a solid knowledge of the value of positioning and great design. Timing was good. We were extremely persistent in calling, which was necessary as she was busy and did not return calls.
In my experience, companies built only for execution — most appointment setting companies and the like — don’t do messaging. The good ones at least identify market segments and customized sales campaigns.
I know today that it’s not enough. Without a core message platform or analysis of product/market fit, everyone goes in their own direction, which is rarely the right one. Even more important is a rigorous and honest evaluation of product / market alignment. This article explores what to us is the single most important thing that we tackle with our new clients. It’s so important that we will devote an entire article to it later in the series.
Doing all this work avoids confusion and also falling into the execution with limited strategy lead generation and telemarketing trap. Consultants do this work, but don’t execute. Appointment setting companies don’t and therefore even solid execution plans suffer.
The lead generation company described above didn’t attempt this exercise. Clients suffered as successful lead generation should be supported not only by segmented sales campaign strategies but also messaging that supports the sales cycle throughout the entire buying process with relevant content shown on the website, content program and sales conversations.
Make sure any lead generation company that tells you that they run strategic messaging campaigns actually knows how to do strategy and doesn’t confuse sales campaign strategy with positioning and core messaging.
Better Medicine
It’s exciting when you discover in exploratory conversation and through market research that a customer has something unique and compelling. This was the case with a software client of ours who offered telemedicine services.
Before finding us, they worked with a lead generation company that successfully offered up a lot of demos to the sales team. After a year of this? No sales. Cold-calling volume was tremendous — often 3-4 meetings were scheduled weekly with benefits directors in self-insured companies who struggled with escalating costs. They were successful in reaching the CEO, but always got pushed down to the HR group after an initial conversation.
The lead generation company thought they were successful, as the client measured cost per lead and scheduled demos as their KPIs. But after a year the client was not happy despite the lead generation vendor delivering what they said they would. On one level, the prospecting campaign was working. So, why no revenue?
We immediately identified the problem and came up with a solution:
This software company did not understand what business they were in and how they impacted the financial picture for their clients.
The sales team thought they were supposed to give prospects a successful demo.
A core message platform exercise clearly identified in a positioning statement what the company really did, for whom and why it mattered.
This isn’t rarefied IP. Almost every agency in the world has some sort of structured method (often branded as a proprietary process) for distilling a core proposition centered on:
• Who you serve (target market)
• What you offer/Who you are (frame of reference)
• Why, when triangulated with the other three W’s here, you’re the best at it (differentiation)
• Why your differentiation claim is valid (justification)
To get there, these are the kinds of questions you must answer:
• What are the core market opportunities as determined by a product/market diagnostic?
• How do you segment opportunities into executable, discrete campaign options (industry, geography, business challenge, etc.)
• SWOT analysis: Which campaigns are likely to be most successful?
This all gets you to more specific questions, whose answers will differ by segment and campaign:
• What are the most significant executive conversations and greatest buying motivations for your prospects in each segment?
• How can you positively impact the situation faced by the prospects in your segments?
• Can you prove it?
• How do you justify your value claim?
• What are the critical pain points faced by the prospect? What are his or her aspirations?
• What is your proven solution in regards to that situation?
• How do you typically manage conversation at the needs discovery and proposal stages?
• What low-cost or complimentary assessment offer will bring dimension and value to the prospect?
• What editorial (not sales) content will bring your unique perspective to the market?
In the case of our friends at the telemedicine company, the target market was the CEO/CFO who runs self-insured companies who struggled with escalating benefits costs caused by employee absenteeism. We had to shift the perception that our client merely served companies that wanted to improve their benefits package.
Frame of reference was also important. Many telemedicine companies had entered the market, as is common in the software industry once money is made from technology innovation. The answer to the “Who We Are” didn’t need to change. It was still easy enough to anchor a discussion by telling people that this was a telemedicine company. A frame of reference gives your prospect an easy identifier to wrap their head around. (Tip: Avoid jargon and fancy talk here. Plainer is better.)
Differentiation followed the frame of reference: Our client increased profits by lowering the cost of claims borne by self-insured companies because employees took less personal and sick days.
All this said, the justification part took minimal work. The lead generation company that our client had previously worked with already supported a campaign messaging strategy that successfully communicated how telemedicine lowered benefit costs and should be offered as an enhanced benefit to help employees as well as the employer.
Once this was clear, the sales campaign approach shifted. CEOs started to respond. The sales team was no longer invited to attend the initial call and a demo was not offered until the CEO was ready to further explore the concept because they agreed with the value exchange.
Our cost per lead skyrocketed, fewer meetings and demos were scheduled, but we closed a deal in the first few months after making this shift. The point is to measure what really matters: Cost per lead is important to eCommerce and payday loan companies, but not the right yardstick for our work.
I will eat my hat if you can find a lead generation company that offers that entire suite of services to do what I did for that company. If you’re considering a lead generation company that approaches you with claims like, “We get you sales-qualified leads and guarantee you at least two meetings each week,” you’re almost certainly looking at critical gaps in strategy and execution.
If you have a major brand name like Oracle, HP or IBM, the dynamic is quite different. You can get away with pure lead generation because you have 50+ years and many billions in brand equity. The prospect targets know your company and the marketing department provides more content and process approaches than anyone could ever need.
Otherwise, you’re going to need a lot more than leads — stuff like deep positioning/messaging work and outstanding people/processes to convert those leads into revenue.
Takeaway
Unless everybody in your target market pretty much already knows who you are and believes you have value, front-loading your sales process with tons of leads is going to get you tons of nothing.
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