Why the 80% are not buying from you
The sales and marketing ‘black hole’
We all know that not every opportunity or identified prospect will result in a sale. Relationships, features, service, price, indifference, and a hundred other reasons, are why we do not commit to making a buying decision. The one thing most sales and marketing people fail to realize though is that a decision NOT to buy today does not mean a decision to NEVER buy.
Sure, some people will fall into that category, but the vast majority will make a buying decision sometime in the future.
Without any way of continuing a ‘conversation’ with these potential buyers of the future, we leave the market wide open to anyone of your competitors that will. These potential buyers fall into what we refer to as the ‘sales and marketing black hole’.
The diagram to the right illustrates the various marketing activities in a typical business. For small companies, these functions may be conducted by one person, but the same rules still apply.
Direct sales (outbound) people are sometimes necessary but sometimes expensive overhead if they are not meeting their sales targets. With the correct tools and strategy, they should be focusing their attention on the target market (B) most likely to buy their products or service.
Whatever their tactics to generate business opportunities and prospects, if they are not directing their efforts in the right place, then results will be greatly diminished.
We have all heard the rather unhelpful marketing saying of “we know 50% of our marketing efforts are wasted, we just don’t know which 50%”. The justification for this weak excuse is no longer valid, if it ever was.
Your marketing teams should be directing their efforts at the same target market and be utilizing any and all tools that your budget allows. Direct mail, email marketing, mobile messaging with MOBIT, banner ads, SEM, SEO, these are just a few examples of the types of things at a marketers disposal.
Regardless of the tools though, marketing expenditure takes up the lion’s share of a company’s cost of sales, and as such, are always under pressure to deliver a return.
Telesales is a much maligned function of sales and marketing but it really doesn’t have to be. Permission marketing is rapidly taking over from what is general considered to be the most invasive form of marketing, the dreaded cold call!. Cold calling is often referred to as ‘interruption marketing’, as most of the time, we find our work periods or evenings ‘interrupted’ by sales people trying to sell products, services or appointments. Regardless of what we think about telesales, if they too are not prospecting and calling into the right target market (B), then they are wasting their time.
90% of your sales and marketing efforts are wasted
Whether we like it or not, our sales and marketing efforts will only produce 10% - 20% of leads to the business. That’s a phenomenal amount when you sit back and think about it. Sure, some companies achieve higher averages than this, but in general, most sit around this mark. Without any follow-up mechanisms, manual, ‘handdraulic’ or automated, 80% of our target market will be delivered to the sales and marketing ‘black hole’. Our efforts, time and expenditure will be all for nothing.
Without attention, these ‘prospects of the future’ will be picked off one-by-one by your competitors as they find a conversation point that triggers the buying process. The good news though is that is does not have to be this way, but more on that later.
Congratulations, you have prospects
With the 10%-20% of leads now generated (C), the job of sales is then to nurture these highly prized prospects through the sales pipeline stages and hopefully secure the business. If you are lucky enough to have a process for managing the various sales stages or better yet, a CRM system that enables this, then consider yourself to be one of the fortunate few. A good proportion of companies (believe it or not) do not. If you are reading this and know this to be you, then do something about it today. You are wasting 50 % of the 20% of leads already, before you even start.
Even the best sales people and sales process in the world will not convert every prospect to a sale. On average, companies have a sales success ratio of 40% – 65% for B2B and 30 – 45% for B2C .
Without further attention and follow-up, those that do not buy, buy from someone else, or defer their decision, are left to the ‘black hole’ of sales and marketing. Yep, over 70% of those valuable leads that we have spent time, energy and money on are left for others to pick over, and find a conversation point sometime in the future that triggers the buying process. Unless you are there, you will probably not be invited to be part of that process.
Change your lead to revenue ratios
Whether you are a team of one or a company with departments of sales and marketing specialists, unless you are already on your way with sales and marketing automation, then your acquisition ratios will be far higher than they need to be.
If you continue with the same levels of activities in the same way, then you will achieve less, year on year.
The reason it is less and not ‘the same’ is that your competitors whom are adopting new sales and marketing automation strategies will continue to erode your potential market and worse, be starting to take your hard earned clients away from you as well. You can no longer afford to stand still in this day and age.
With only 10% of leads coming from your sales and marketing efforts and a sales closing average of 30 – 40%, you can see how out of proportion the acquisition spend and effort is in relation to sales. The diagram above represents this quite well. So why continue to do the same thing? Why indeed.