Effective Pipeline Management –
You Cannot Manage What You Do Not Measure
Lee Levitt
Managing Director
Back when budgets were larger and the key
goal was to “get big fast”, marketing efficiency wasn’t so important.
Companies spent lots of money on marketing, never knowing what activities
brought in customers and revenue, and what didn’t.
Today, with marketing budgets limited…and
customers’ budgets even more limited, you must squeeze the maximum benefit
from each marketing dollar. In our article
Marketing on a Budget, we discussed the need to test each marketing
initiative to ensure maximum ROI.
The marketing organization must work
arm-in-arm with the sales organization to achieve success. Only by
tracking prospects through the selling process will the organization know
whether it is attracting the most profitable prospects. Sure, the
marketing organization can claim that 4,678 prospects received direct mail
pieces last month, and of those, 12.3% had a discussion with the sales
organization. But only the sales organization can provide the feedback
that of these, 82% were looking for a product with different features, or
that 65% needed international support capabilities not offered by the
company.
Marketing and sales must work together to
ensure a constant flow of information such as this so that marketing
investments can be tweaked to improve the eventual close and success
rates.
In so many companies, marketing and sales
are at odds with one another…each blaming the other for dismal corporate
performance.
If only the sales organization could
close a prospect…
If only the marketing organization
could deliver us live prospects…
In many more companies, the two
organizations coexist, but don’t work together…and as a result, the
company cannot be successful.
There’s no magic elixir that will get the
two organizations to work together…however, we’ve found that by giving the
two organizations a common goal and structure for achieving their goal,
they indeed will work together.
The goal is simple – higher revenues and
customer profitability.
The structure is also pretty simple – a
series of measurements along the sales pipeline…the key is to select the
right measurements, to actually collect the information on a regular
basis, and then modify the marketing and selling activities to positively
influence these metrics.
We established the following metrics for
one client:
- # of prospects into
the sales pipeline
- Source of prospect
(advertisement, direct mail, call-in, web, referral, repeat customer,
etc)
- Date prospect
entered sales pipeline
- Cost of each
acquisition activity, where possible. (for some sources, such as PR and
the web, the cost per prospect was estimated).
- # of prospects
talking by phone with sales person
- # of prospects
meeting with sales person
- # of prospects
meeting with sales team
- # of prospects
requesting next step (initial quote, proposal, etc)
These metrics must be tracked as the
prospect moves through the sales pipeline. Basic sales force automation
systems can provide all of the tracking necessary…but the information must
be put into the system!
Using this methodology, we identified for
one client that their likelihood of closure dropped by 75% if they waited
more than 7 days to call a prospect once an initial contact was made. For
another, we found that an inexpensive multipart post card direct mail
campaign brought significantly better results than an expensive
advertising program. For a third, we were able to show that a new value
statement yielded far higher interest and sales activities.
In addition, this methodology allows both
marketing and sales management to manage their activities more
intelligently. The marketing organization will be able to evaluate
expenditures in public relations or trade shows, rather than just guessing
that these are “good things to do.” Similarly, the sales organization will
be able to evaluate the performance of the sales people on behaviors (time
to follow up, resources brought in, etc) rather than on results…and we all
know that only behaviors can be modified.
Adding measurement to your existing sales
and marketing activities requires a commitment on the part of your
management. After all, this is largely about people and processes…and if
the people aren’t committed to the processes, the effort will fail.
. . .
Comments on this article appreciated
Article Copyright 2002,
The Acelera Group. All rights reserved.
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