B2B Sales Lead Management: A Bird in Hand is Worth Two in the Bush

Posted by Dan McDade

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on Aug 28, 2012 7:59:00 AM

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This is the second in a series of four blogs about B2B sales lead management, marketing and sales metrics, and proverbs.

Not all proverbs (or expressions or sayings) are well understood. Something else not well understood in marketing and sales circles is the importance of certain metrics.

This second blog is about the importance of valuing qualified inbound and outbound marketing prospects and the proverb “A bird in hand is worth two in the bush.”

The origins of this proverb may date back to the Bible (Ecclesiastes 9: “A living dog is better than a dead lion”). Or, it might date back to a book published in 1530 called “The Book of Nurture or Schoole of Good Maners” (“A byrd in hand – is worth ten flye at large”). Or, it may simply date back to 1670 and John Ray’s “A Hand-book of Proverbs” (“one bird in hand is worth two in the bush”). Regardless, there is a law that should be set in stone that says “a qualified company in hand is worth a lot more than a large list of email addresses that may or may not have clicked through the last time you sent them an email”.

In the last blog we talked about lead rates. This time we are going to talk about the importance of the qualified rate and how the qualified rate of inbound leads compares to those of outbound leads:

Lead Rate Chart

        • Based on over 60,000 completed company dispositions per year (annualized for 2012).
        • Leads and expected metrics are defined in carefully created client program plans and lead rates are impacted (particularly in 2010) by the mix and quality of inbound dispositions.
        • Qualified Rate includes leads, pipeline (specific action required by PointClear) and nurtures (qualified companies with no immediate pain/need or interest).
        • No Response means we completed a multi-touch, multi-media touch cycle without reaching the prospect or their reaching back out to us. As info, 20-30% of opportunities or leads developed for clients are as the result of a call or email back due to our outbound voicemails messages followed by outbound emails.

Regarding the qualified rate, the statistics in the table are remarkable if for no other reason than the consistency between inbound and outbound qualified rates.

However, there are three key takeaways (with details to follow):

  1. Qualified inbound leads are generally MORE expensive than qualified outbound leads.
  2. The cost of the qualification process and the potential value of that process is ignored by many if not most companies.
  3. Over time, the cost to drive inbound leads goes up because more and more of the inbound leads have previously been disqualified—driving up the cost per inbound lead.

Qualified Inbounds Leads are MORE Expensive than Qualified Outbound Leads

For many, this is a remarkable takeaway. Inbound responses are no more qualified than carefully selected outbound targets. Due to this, outbound prospecting is less expensive than inbound prospecting assuming that you paid at least $.50 for the inbound response.

Here’s proof:

Source Quantity Cost per Company Cost per Qualified
Inbound 1000 $25.00 $300
Outbound 1000 $.50 $202 
        • Assumes $50 per company to qualify the total qualification cost for both inbound and outbound are the same
        • Increasing the cost per company on outbound to $1 would increase the cost per qualified to $204
        • Paying anything more than $.50 per company on inbound causes inbound to be more expensive than outbound—and you can’t find many inbound leads for less than $.50

Companies Ignore the Potential Value Resulting from the Qualification Cost

Unfortunately, most companies tend to dispose of anything other than leads generated from marketing campaigns meaning that the cost to qualify companies is repeated each time a new campaign is run. Many companies using marketing automation are slightly better off because they keep messages in front of their prospect universe. However, exclusive use of marketing automation to qualify leads will end up driving smaller deals with lower level decision makers; and will leave the larger, more strategic deals on the table—open to the competition—while you wait for those prospects to score more points. Want me to prove it? Who are the most aggressive outbound prospectors in the industry today? Marketing Automation companies!

Inbound Lead Costs Increase over Time

One client used webinars extensively to drive leads. After about a year, many of the new “leads” coming in were duplicates—many already disqualified. As a result, the cost per net new, unduplicated lead almost doubled. Balancing the marketing effort with proactive outbound increased deal size and left the client with more control over results due to the predictability possible with carefully structured outbound campaigns.

The important things to do are:

  1. Carefully compare qualified rates on inbound vs. outbound.
  2. Compare cost per qualified lead from all sources and you will probably be surprised at what you find.
  3. Segment qualified companies (from both sources) into “Enterprise”, “Named” and “Other” accounts and market to them differently—but do market to them—don’t ignore the value of qualification. If just one out of four suspects is actually a prospect, treat the prospects like gold.

The definition of a proverb is: a short and expressive saying in common use, which is recognized as conveying some accepted truth or useful advice. If you want to read more about proverbs and their origins, click here.

Contact us to learn more about Optimized Prospect Development

 

B2B Sales Lead Management, Marketing and Sales Metrics, and Proverbs—The Four-Part series:
Part 1: B2B Lead Generation: Are You Killing the Golden Goose?
This blog is Part 2: B2B Sales Lead Management: A Bird in Hand is Worth Two in the Bush
Part 3: Lead Generation: A Watched Pot Never Boils
Part 4: Sales Leads: Don't Look a Gift Horse in the Mouth

 
By Dan McDade 


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Topics: Lead Qualification, Lead Management


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