What level of qualification is really appropriate for a bona fide sales lead? Too broad, and the salespeople will feel their time is being wasted. Yet many salespeople err in the opposite direction, judging any lead that doesn't close right away as useless. If a sales force is closing too high a percentage of their sales leads, be concerned. If your close rate is too low, it's time to re-examine your approach to lead prospecting.
All this talk about lead qualification these past few weeks has focused on using a salesperson’s time efficiently by providing some likely suspects to pitch.
But what level of qualification is really appropriate for a bona fide sales lead? Too broad, and the salespeople will feel their time is being wasted (and may stop using supplied leads at all). Yet many sales people err in the other direction, judging any lead that does not close right away as useless. That may be the more damaging error of judgment, and the one that costs the company (and the salesperson) the most money.
Remember, we call the job “sales” for a reason. If every prospect showed up ready to sign an insertion order, we’d call it “order taking.” Or “transaction processing.” Not sales.
Salespeople are responsible for turning attention into interest, interest into action. Converting a prospect into a customer – and from there into a repeat, loyal customer – is a process that takes time, skill, brains and instinct. Sometimes it takes persistence; other times, great listening ability. What it always takes is the gift of persuasion. Good salespeople close a lot of sales, but anyone who closes everyone they talk to is not likely to be putting all those skills to work.
If every sales lead were pre-screened to the point where all that’s necessary is simply processing the paperwork, sales skill wouldn’t be needed. That might be every executive’s dream, but it’s not what great salespeople hope for. First, because it means there is no challenge, no pride in the big wins; and second, because order processing can be done by anyone, and companies in that situation won’t be hanging onto highly skilled (and expensive) sales talent.
No, if a sales force is closing too high a percentage of their sales leads, be concerned. It may be that the team is too small, with no time to handle any but the best leads. The problem here is that other providers are likely to discover your uncovered market, adding unwanted competition. This solution means a profitable operation in the near term, but unwanted troubles down the line.
It may be that your lead-generation efforts are pulling too narrow an audience, which won’t allow for much growth. Your prices may be so low that you are leaving margin – and profits – uncollected.
Sometimes, rarely, you just have such a unique offering that everyone wants to buy. This is the dream outcome, but be suspicious. It happens far less often than we want to believe; and even then, the competition is likely to swarm in and steal your accounts if the opportunity is that good. Broader coverage, allowing for better service, is a good preventive tactic in this case.
While every market is different, we’d advise wariness if your team is closing more than 75 percent of the supplied leads. A 40-50 percent close rate is more desirable if you are in an early-stage market (as Internet advertising surely is) and if you intend to show aggressive growth in the quarters and years to come.
If your close rate is well below that 40-50 percent mark, it is probably time to re-examine your approach to lead prospecting and invest in a more committed ad sales program! More on that next week.
