It can cost 6-7 times more to acquire a new customer than retain an existing one – Bain company
Generating new business can be expensive. But why is that? If you have a good product and happy customers, shouldn’t the reputation of your company and the word of mouth automatically generate new business? If it was only that easy – in today’s economy with information overload the consumers have taught themselves to be very selective in what type of messaging they pay attention to. They know what banner ads to ignore, which phone calls not to answer to, and which type of people to stay away from. This does not mean they no longer have need for products and services, but rather they have become very selective in whom to listen to.
The reason it is so expensive to acquire a new customer is because of the many steps you have to go through to move a potential buyer from the awareness stage to the decision and conversion stage. It can take 20 calls to get two new appointments and you need about 10 appointments to get two new sales. With this approach you will spend the majority of your time trying to build up your pipeline with potential buyers, while only 1-2% will actually result in a sale.
Generating leads can be a great way to build up a pipeline for sales teams. A lead is a potential sales contact – an individual or organization that expresses an interest in your goods or services. So for sales professionals that have monthly sales quotas and spend the majority of their time prospecting, a lead should be very valuable. However, research has shown that companies generally don’t respond fast enough to leads. On average it takes 46 hours and 53 minutes for sales teams to pick up the phone and respond to a new lead. The sales rep, on average only makes 1.3 call attempts before giving up, while 80% of sales conversions happens on the 6th to 8th contact.
So how many leads does it take to close a sale? It depends on the time it takes to respond. The amount of contacts you made with the lead can drastically increase the probability that the inbound lead will convert to a sale. The life of a sales professional can be hectic, with all the phone calls, meetings, networking events, golf outings, etc. It can be challenging to keep them on task with lead lists and to keep them motivated so that they can make the sale.
The goal is to create a process in how to handle inbound leads and set a priority in managing these ASAP. There are several marketing automation tools such ask Marketo, Hubspot, and Eloqua that can help with the lead management and lead nurturing so that when the sales person reaches out, they are ready to buy. The process of lead management involves several stages. First you have to attract potential buyers that are able, willing, and ready to buy. The next stage is to convert these visitors to request more information, in this stage you have to continue to educate the prospect so that you can move them to the decision stage and close the sale. The final stage, which is very important is the delight phase. When you have a new customer they can provide new hot leads by being your promoter.