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How Lead Nurturing Affects Your Lead Metrics and ROI

Posted on Feb 12, 2008 by Kathy Rizzo, Vice President Marketing

We are frequently asked how lead nurturing will affect key metrics such as lead rate, cost per lead and ROI. The following data offers some insight based on our experience.

Since nurturing activities are focused on “warm” opportunities, the percentage of conversations, which result in “sales-ready” leads is higher when compared to a teleprospecting (cold-calling) program. Additionally since all contacts, which are moved into a nurturing program, have been profiled (including critical contact data), the rate in which prospects are reached is higher. In other words, the number of conversations that agents are able to have, per day, with nurtured prospects is higher than with cold-prospects. Consider the following comparison:

Tele-prospecting – A typical tele-prospecting program may result in an average of 8-10 conversations with decision-makers per agent, per day. Of those conversations, 8-10%, on average, are deemed “sales-ready”. During the course of a tele-prospecting program, the rate in which leads are uncovered is typically a bell-shape curve. The first part of the program is spent cleansing the list and getting to the “right person”, followed by an increased period of leads (finding the low hanging fruit), followed finally by a period in which the leads slow down as diminishing returns are met.

Nurturing – An average nurturing program may result in an average of 10-15 conversations with decision-makers per agent, per day. Of those conversations 10-15%, on average, are deemed “sales-ready.” A lead-nurturing program does not resemble the bell-shape curve as described above. Instead, a nurturing program typically resembles a slow incline – the lead rate increases overtime as prospects are provided relevant information and pushed into the sales funnel.

Therefore, based on the above, when a nurturing strategy is added to your lead generation approach, your overall number of leads increases, which does drive down the cost per lead.

However…What’s Really Most Important?

Although Cost per Lead metrics may be of interest, the most important measurement should be Return on Investment of the activity. Therefore, anyone considering a nurturing program, should know the following:

Tele-prospecting – Based on feedback from our clients, typically 15-25% of leads generated by a tele-prospecting program are ultimately “won”.

Nurturing – When relationships are started in the beginning of the sales cycle, as with a nurturing program, the closure rates are increased. Based on historical feedback from our clients, the “won” opportunities increase by an average of 10% when examining nurtured leads.

Ensuring Success

To ensure success, there are three critical components, which need to be considered when implementing a lead nurturing program…

1.) You must be committed to providing relevant content in order to develop and maintain a nurturing marketing matrix. Without relevant content, a nurturing approach will not result in the desired number of leads.

2.) Don’t stop your teleprospecting activities. You need to maintain a continual stream of newly qualified prospects to “feed” into the nurturing program.

3.) Engage your sales team and implement a closed loop process. Nurturing programs are most effective when sales is bought into the program, process and most importantly in aggressively pursuing the “sales-ready” leads.

Tagged: nurturing, teleprospecting, content, lead nurturing metrics

Comments

Anabel said:

In my experience with marketing and sales, I have always seen measurable long-term results when prospects feel that a sincere effort is being made to keep up the relationship. This effort is often costly to manage in-house; an expert marketing partner who can deliver meaningful messaging until the contact is “ripe” is critical when strategic lead generation efforts are made. Sourcing a skilled marketing partner keeps the inside sales force focused; it also keeps the target market satisfied that sales don’t just come around when there is no one else to call on. Nurturing is meaningful relationship development and enhancement. TeleNet does this seamlessly…I have heard it directly from the clients.

Michael A Brown said:

Kathy, you wrote a terrific article. May I please add some thoughts about its increased importance during tough economic times. Every recession, I see two self-defeating phone phenomena arise. First, some businesses believe that with enoguh calls, opportunities will appear and business will materialize. The m.o.: lots of calls to multiple lists, sometimes even to present customers whose account history is unknown to or ignored by the caller. It does not work. Second, Business decisions take time. And because of the economy, even after “yes” many purchases are delayed or canceled. Ignoring those realities, some marketers nevertheless want to pressure prospects and customers not only to make decisions, but to do so immediately! The result: arrogant, inappropriate lines like: “Sure we’re in a slump, Mr. Brown. But you’re a business owner who can’t afford not to have this database now.” Click.

Troy Bingham said:

I feel like lead nurturing is also starting to hit its 2.0 phase. It should encompass ongoing efforts in conjuction with lead qualification and sales teams. Done on behalf of an individual within the organization and should only benefit the prospect. www.insidesales.com

Vaibhav said:

Here I am also adding few good tips based on my understanding. We should have a proper strategy for the Lead generation. what we are looking for and Sales wants to know what we have to get. Target leads when sales are ready. Assign different values to each kind of touch. For example, a conversation had by telemarketing that better qualifies a lead might get a score of 10 while an opened email might get a 3. Once a lead reaches a score agreed upon by Sales, then the lead is ready to be passed on. http://www.callcentersindia.com India’s one and only end to end CISCO based IP network.

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