We all need new business and we want it now. In most companies, the pressure is on to bring home the bacon. Sales and Marketing people are judged by the revenue and the profit that they generate.
Given the nature of the lead generation work we undertake for our clients, I’m often asked what a reasonable timescale is for revenue to flow. Clients want to know how long it will be so that they can justify any expenditure. The answer to the question is of course that it varies based on any number of factors including:
- The method of lead generation (e.g. referrals will be warmer than cold calls and more likely to convert)
- The nature of the target audience (size of the company, type of decision-maker etc)
- The quality of the marketing database
- The strength of the proposition
- The level of need experienced by potential buyers
- The number of marketing channels chosen (e.g. email or mail followed by a call)
To gauge the likely effectiveness and speed of any business development, I usually start any client strategy session with a list of questions that are aimed at determining the route to market and the likelihood of conversion. These questions include:
- What sector is the target?
- What is the job role of the person that needs the service or solution?
- Who makes the buying decision?
- How shielded is the target buyer?
- How differentiated is the proposition and what level of competition is in the market?
- What level of pain does the solution alleviate for the buyer?
- What is the value of the sale?
There are many more questions that play a part but answers to the above often determine the viability of using certain channels and the likelihood and speed of success. The reality is that if the proposition is commoditized and the buyers are CEOs of the biggest companies, we already know it’s going to be a challenge before we start. We will probably need to spend more money to reach the buyer. It’s also likely to take longer and we may need to adopt a multi-channel approach. On the flip side, whilst it may take longer, the ROI could be fantastic.
A prospective client called me this week. He runs a management consultancy and advised that his value of sale could be anything between £250k- £2m. Clearly, the ROI could be enormous if we land a new client for him. But how long should he allow for revenue to flow? How much should he invest? And in which channels?
Simply put, he has a business to run and needs to evaluate the viability of different marketing approaches. Availability of funds dictates the amount of investment in lead generation and the choices of the route to market. The problem is that lead generation is generally not a quick fix or a precise science especially when the value of sales is high. Gestation periods can take many months. It’s possible to hit lucky but that doesn’t happen too often.
And turning the tap off after month 4 or 6 can mean that a lead generation campaign falls short just when it was gaining the required momentum. Likewise, a campaign that relies on email or telemarketing alone may be blunted by low open rates or low decision-maker contact ratios. Yet if a number of tactics were utilized, it may be that one method reaches its target or amplifies the effect of another method resulting in success.
The above perhaps sounds like a plea for companies to spend more money. In many ways, that’s true but they shouldn’t do so in an indiscriminate fashion. Yet lead generation isn’t generally a quick fix. When embarking on a business development activity, you need to ask yourself the following questions before determining the best route to adopt.
- What ROI are we looking for?
- What is a typical/reasonable gestation period to convert to business?
- What is our conversion rate from opportunity to the sale?
- What is the likely value of sale?
- What’s a realistic budget to invest against the opportunity?
- How are we going to assess ongoing progress and success?
- What methods is our target customer most likely to respond to?
- Is one marketing single method sufficient to drive leads and opportunities?
- How long should we give the tactics to work?
For most businesses, it’s a difficult decision to make. Whatever, the answer, one thing is for sure. Higher value sales don’t happen overnight and it’s more likely to be a marathon than a sprint.
If you’d like to find out how GSA Business Development can help Generate Growth for your Business or book one of our new business development and marketing strategy workshops, contact us now on 0845 658 8192 or use the form on this site.