If you’re frustrated because you’re not meeting your revenue goals, it may be that you need to change your mindset and your approach to generating sales. You may be getting site traffic or phone calls but no sales. You may be asking yourself, “Why is my conversion rate so low?”
In working with a variety of companies and agencies of different sizes, we find that many of them focus on maximizing the number of leads they generate rather than sales.
One reason this happens is that it’s easy to connect the money that is invested in lead generation with the outcome. Everyone wants to be able to calculate the value of their activities, and the math is easy when you’re focused on lead generation.
But, there’s a problem with that mindset. Leads are just an intermediate goal. Leads don’t show up anywhere on your financial reports. Your real goal is increasing revenue and profitability. Those only come when there’s a sale.
This is the first in a series of five articles that will discuss a new mindset and process you need to adopt if you want to increase your conversion rate so that your leads help you maximize sales. This installment defines problems you most likely see in your organization that make it difficult for you to maximize sales.
Why Change Your Mindset?
Focusing on increasing leads leaves out one key factor, which is the quality of your leads. Not all leads are created equal. You may generate a huge number of leads and all you’ll really do is keep your sales team busy trying to convert them.
For example, you may generate 1,000 leads and end up with a 1% conversion rate. On the other hand, if you focus on the quality of the leads you generate, you may end up with 500 leads that convert at a 4% rate. Which scenario would you prefer to have?
In the second situation, you’re being strategic in the way that you generate leads to leverage your lead generation budget. And, your sales team will be much more motivated (and compensated) when their efforts produce better results.
In short, you need to concentrate on the quality of your leads rather than the quantity. Change your mindset to highlight the bottom-line impact of your sales efforts. When you maximize sales, you maximize your return on investment.
4 Common Obstacles that Prevent Sales Maximization
Every situation is different, and there are many reasons why an organization can’t maximize its sales. However, these are the four most common issues we’ve encountered.
1. Activities Aren’t Tracked Properly
When the data you collect to drive your sales and marketing isn’t accurate, you end up making decisions based on bad information. As a result, you’ll make the wrong decisions for marketing, sales, and your business.
For example, if you’re not accurately tracking the result from the media channels and outlets you use, you can’t optimize your activities. You’ll end up wasting your budget and missing opportunities to grow.
If you’re not tracking sales activities properly, it will be difficult to judge the quality of the leads you’re giving to your sales team. You won’t be able to tell if a lack of success is due to your team or the input they must use. Further, your sales team won’t be able to give feedback to your marketing team on the quality of the leads they’re receiving. The data you collect will be flawed and you won’t have the data you need to maximize sales.
2. Marketing and Sales Don’t Coordinate Their Efforts
It’s very common for organizations to experience a communication gap between the marketing and sales departments. The reasons for this are many, but they include things like:
- Marketing and sales have different goals and end up competing vs collaborating
- Marketing and sales use different terminology making communication difficult
- Marketing and sales get different amounts of attention from senior management
- Marketing and sales don’t talk to each other
As a result of this lack of alignment, many sales opportunities are missed. First, marketing and sales must agree on the definition of the ideal customer. If there is no agreement, marketing will be busy driving leads to sales that won’t convert. And, sales will waste their time with the wrong leads. Those unqualified leads will bog down the entire sales process.
3. No One Knows Their Numbers
This is especially common when the tracking of sales and marketing activities aren’t coordinated and set up well. But, the issue is further complicated when your organization doesn’t have common goals based on Key Performance Indicators (KPIs).
Once you set benchmarks for KPIs, you’ll know whether you’re meeting those goals or not. Here are some examples of the KPIs that you’ll need to track.
KPIs for Media
- Number of clicks from media to the website or landing page
- Conversion rate on the site/landing page from a visit to lead
- Cost per lead (CPL)
KPIs for Sales
- Number of Marketing Qualified Leads (MQLs)
- Number of Sales Qualified Leads (SQLs)
- Number of opportunities
- Number of sales
- Cost per sale (CPS)
KPIs for the Business
- Target revenue
- Lifetime Value of a customer (LTV)
When you look at all those KPIs together, you can see how they relate to each other. If you track the success of the various media you use to generate leads, you’ll be able to work to improve those figures by optimizing your media choices.
KPIs for sales start with Marketing and Sales Qualified Leads. In short, an MQL is a lead that the marketing department has identified as being likely to buy, but one that needs more nurturing to make a final decision.
An SQL is a lead that Sales sees as one that has shown an intent to buy and one that meets the Sale’s team’s lead qualification requirements. Naturally, the more MQLs you identify, the more SQLs you’ll have. Those SQLs lead to opportunities.
An opportunity exists when a salesperson identifies an SQL lead as a high-value lead or one that is likely to turn into a customer. You’ll also want to optimize the sales process, so tracking your cost per sale will help you work to reduce that cost.
Business KPIs focus on meeting a target revenue and calculating the LTV of the leads that turn into customers. The entire business is involved in some way in retaining customers, and you’ll need to review your customer’s experience with your business to find ways to improve it and extend the time a customer stays loyal.
Setting benchmarks is something you’ll need to monitor closely. When you first start setting benchmark numbers, you probably won’t have all the information you need. As you gain experience with how you manage your sales and marketing process, you’ll get better at setting goals that make sense for your organization.
The key takeaway related to knowing your numbers is this: Without setting KPIs and benchmarks, you can’t optimize the media you use, you can’t maximize your sales, and your business focus may not support your success.
4. No Feedback System is Established
Successful leaders know that sales and marketing are both required to meet their organization’s goals. The roles of the two departments are different, but they must work together to achieve success. Your organization needs to provide an environment that supports the type of collaboration that is required.
It’s not helpful for the marketing department to think that the salespeople aren’t capable of effective follow-up, or for the sales team to think the marketing department always sends them bad leads. There needs to be a formal feedback system that runs from marketing to sales and back again. Once the two departments start working together to meet the agreed-upon and communicated KPIs, the traditional rivalry between sales and marketing will often dissipate.
There are a couple of critical factors that stand in the way of an effective feedback system.
Software Systems Aren’t Connected
A very simple example of this problem is when marketing uses a lead database to nurture leads and the sales team uses their own Customer Relationship Management (CRM) system to track the status of leads they’re working with directly. The salespeople don’t know what information the lead has already received, and the marketing department may well continue to send emails to a lead that a salesperson has already contacted.
In addition, the marketing department doesn’t have access to information as to which leads became SQLs and the sales department doesn’t know how marketing is segmenting leads. It causes confusion and eliminates the opportunity to optimize the sales process. A holistic view of the process as represented in integrated software systems is the answer.
Information Sharing Processes Aren’t Defined
Vital information can be lost if there is no established method for marketing and sales to interact such as joint weekly collaboration meetings. Besides that, there is no formal way for the two departments to discuss issues like refining MQL and SQL criteria. Marketing should be an iterative process, and without direct feedback from sales, the marketing department is limited in its ability to adapt.
This article covers the most common obstacles that organizations run into when trying to maximize sales. The next installments in this series will get into more detail concerning the issues of sales and marketing collaboration, MQLs and SQLs, marketing and sales funnels, and the feedback loop.
If you’re working toward maximizing your sales, Symphonic Digital can help. Call us at 888-964-3498 or send an email for more information.