I had a revelation yesterday morning when I was speaking with a prospective client for my services. He was asking me why he should use companies such as mine to generate leads when he could simply buy access to a database. A comment made/question posed by a reader a few days ago had started me considering the same question, but I hadn't come up with an actual answer.
Why should a company that has an active sales force pay more for 'leads' when they could buy 'leads' for a smaller amount from a database company?
The answer? They shouldn't.
After much consideration, I believe that it is more prudent and effective to separate prospects into three different categories instead of a mass of information. It may be semantics, but it makes the difference between able to explain why a client should retain the services of companies such as mine and losing them to a database. I realize that this is a slight change in terminology from my earlier posting.
"Leads" – Basic information that you've gained through some fashion whether this is through lead databases or some other data mining company. Contacting these prospects includes cold calling and un-qualified contacts. Leads are the hardest to turn into a customer and require significant work. Based on the Direct Marketing Association (DMA)'s numbers, less than 8.5% calls made in a telemarketing campaign succeed. This is a game of numbers — the more you call, the more likely you are to gain an interested party by virtue of luck or skill. These would be called "cold prospects" on every call.
"Referrals" – Warm contacts that have been gained through companies such as mine, associates from current customers and re-touching base with past customers. These are prospects that have been given a reason to be interested and could be interested in doing business with your company. Referrals are strong possibilities to turn into sales. Good sales staff and a good product can turn referrals into customers. Generally, a company only calls a prospect a referral if an existing customer sent them over – why? Perhaps you were passed over by person X because they had something else or did not need your services, but they felt that their friend could stand to gain by doing business with you. A referral. Perhaps a referral generation company contacted them while still a lead and brought energy and interest to the table, enough that they’re interested in speaking to your sales team. A referral again! Gaining referrals is the second best way to gain new customers. These would be called "hot prospects" on most contacts.
"Proactive" – These are customers who have initiated contact with you because they are interested in your services. These are prospects who are a making the effort to get a hold of YOU. That is the best way to gain new customers. If you can gain a true referral network, then there will never be a nead for companies such as mine or database generating customers. These would be called "sales", more often than not.
If you can get "Proactive" contacts, you are doing a great job and your company is probably earning money without significant lag time; The epitome of a marketing success. "Leads" are the most difficult to deal with and require specialists in the 'art of cold calling' and converting people into referrals or sales. It is a difficult task and, without a staff geared towards it, your best choice is to outsource to a company that is focused on converting 'cold' into 'hot' for your sales team. "Referrals" is what you want most of your time to be concentrated on. A customer who gave you a number to an associate of theirs so you could contact them; a list of referrals that you've received from a Referral Generation company — these are both ways to get strong prospects which you have a good chance of turning into a customer.
And that’s the goal. Isn't it?