If you're a Marketer for a B2B SaaS company, then you're probably really familiar with the process of obtaining leads and qualifying those leads into opportunities to sell. But if you aren't well versed in the area of leads, opportunities, and conversion, then this post is dedicated to you. I'll seek to make the explanations as simple as possible. And if you're looking for more resources, I recommend reading the book "Maximizing Lead Generation" by Ruth P. Stevens. It's a great guide for getting started.
Let's start with some definitions:
- Lead: Someone who expresses interest in your product or service by providing information about their business - usually at an Event, through your Website, or through an inbound channel, such as Email or Phone.
- Opportunity: Also sometimes referred to as a qualified lead, this is when a lead is followed-up on by a Sales representative and meets a set criteria that means there is an opportunity to sell your product or service.
- Conversion: This is the mathematical equation that compares the number of leads that come into your organization versus how many become opportunities to actually sell your product or service.
You may be wondering why conversion is important. Afterall, if you obtain a ton of leads and your Sales Dev team can qualify enough to satisfy your Sales team, then why does it matter? If you recall in my previous post "Demand Gen 101" I briefly touched on different types of leads (paid, owned, and earned). At some point, you need to get smarter in the types of leads you bring in. And you need to measure what actually converts. Do you use a CRM system to track what you spend on your paid channels, and how those leads convert compared to what comes in organically from your website or from prospects calling or emailing? I would bet almost anything on your owned channels converting at 3x of your paid channels. Why? Because you can't buy your way to success. Sure, paid channels are great to obtain an audience - but those coming in from advertisements likely stumbled upon your product or service. Whereas if a prospect searches for a keyword or term and lands on your website, or requests a demo, or picks up the phone and calls for information - they are putting in effort and looking for something you offer.
- You obtain 100 leads from an Event (paid channel) that cost you $10,000. You convert 3 of those leads into qualified opportunities which results in a 3% conversion rate. 6 months later, one of those opportunities closes for $15,500. That sounds pretty good, right? Afterall, you made $5,500 on the Event. But did you really? You took 3 of your top Sales reps out of the Field to work a tradeshow booth, you paid for hotels and meals, and you gave away a free iPad to try and drive traffic to your booth.
- You updated your website (an owned channel) with a new product whitepaper that showed screenshots and was guarded behind a lead capture form. Over the course of a month, you obtained 320 leads from this whitepaper. Of those 320 leads, you converted 28 into qualified opportunities, resulting in a 8.75% conversion rate. Over the course of the next 3 months, you closed 4 deals resulting in $45,000 and several more active opportunities are being worked by Sales. The whitepaper and website update cost you nothing except time from a copywriter. And better yet, the prospects came directly to you.
The answer here may seem obvious. Of course you want your prospects to come to you. Of course it seems ridiculous to "buy" leads when you could obtain them for free. So why do companies do it? Paid channels will likely always be a part of your Marketing strategy - and there is absolutely nothing wrong with that. Paid channels are excellent for branding and ensuring your name is out in the market. However, don't fall prey to buying your way to success. Building out your owned channels like your website and blog and inbound is hard work. But in the long run, it's more than worth it, and you'll be amazed at the increase in your conversion rate and close rate.
So what's the first step in measuring conversions? Make sure you measure and track everything through a CRM or database. Yes, everything. Track the campaigns you run, track how much money you spend on the campaigns, ensure you capture which channels your leads are coming from, if they convert into an opportunity, how long the Sales process is, how much money they close for, and if they renew as a client.
I guarantee once you start understanding your conversion rates across all channels, you'll be able to invest more wisely, tighten up your internal processes, and pass more qualified opportunities to your Sales team - ones that they will actually spend time pursuing.