Currently viewing the tag: "lead generation"
The word “prospects” has been a part of the sales and marketing vocabulary for a long time. Just about everyone uses the word to describe “all of the people that they would eventually like to do business with” but currently are not. Putting everyone into one bucket like this is a little sloppy, and we recommend that our customers do it a different way.
We like to break down this pool of people into Suspects and Prospects:
Suspects are anyone that meets the demographic criteria of someone we would want to spend some sales and marketing effort on – size, industry, location, revenues, etc. As far as we know, however, these people have never heard of our business, and have never indicated any interest in buying from us.
Prospects, on the other hand, meet the demographic criteria mentioned above, but have also met one or more of the following criteria:
- Engaged in some sort of conversation with us
- Have indicated interest in what we have to offer, although the specific time frame and budget is not yet clear or even short term (that would make them an opportunity)
- Have agreed to have us keep in touch with them
- Have in the past or are currently purchasing similar products and services from a competitor of ours
As you can see, there is a real difference between Suspects and Prospects. Suspects are the greater universe of potential customers that could be a fit, whereas Prospects are further along – they have some strong indicators that they should be a fit.
Why is this distinction important to understand in your sales and marketing process? For the following reasons:
- The message that you should use with Suspects is different than that of Prospects. With Suspects, it’s all about finding out if they have any interest, whereas with Prospects it’s about stoking the fires of that interest and trying to move them into opportunities.
- The media you use to reach Suspects and Prospects may at times be different. The universe of Suspects is often times very large, so you need to reach them in a very cost-effective manner – making email and search marketing a great choice. Once you’ve narrowed down to a smaller list of Prospects, you may choose to do larger direct mail pieces, or make calls from senior business development personnel.
- The budget you apply to Suspects should be different than that toward Prospects. You can and should spend much more on a qualified Prospect than you should on a Suspect, as you know they have indicated some real interest in your products and services. If you over spend on Suspects, you’ll spend yourself right out of business!
- The expectations of your marketing should be different with Suspects and Prospects. Marketing to Suspects will just get the sales and marketing process started – you can’t expect them to jump out of their seat to buy services from you on the first email they receive. It takes time! You also shouldn’t expect that every Suspect is going to become a Prospect – only a relatively small percentage will every raise their hand to say “I’m interested”. For this reason, you need to keep refreshing and building the list of Suspects in your marketing funnel to give you a new and larger pool to market to. That being said, once you have a good list of Prospects that you’ve nurtured, you should expect to start to see measurable movement and progress in your sales pipeline.
Understanding the difference between Suspects and Prospects will allow you to better fine tune your sales and marketing approach, and give you the right expectations for your efforts.
Mike
0
One of the conversations I have often with MPS’s is getting them to understand the cost of getting a new lead in the managed services business. Expectations vary across the board quite wildly:
Some believe a lead shouldn’t cost more than $25.
Others believe $2500 is ok, because they close 100% of the people they get in front of (oh yes…I hear this one. I also hear that you’ve NEVER lost a client).
Both of these expectations are way off. You WILL NOT acquire leads that cheaply in this industry, and you WILL NOT close 100% of the prospects you get in front of. This is an important thing for you to get your hands around, as you can’t possibly plan on building a scalable business without understanding what a normal sales and marketing pipeline looks like.
So what does it cost to acquire new leads and customers in the managed services business? My experience in the business – which includes having spent well into the seven figures on sales and marketing – has consistently resulted in the following:
New leads: $175-275 per lead
New customers: $1,500-2500 per customer
A report I read recently suggests that the average cost per lead for a broad swath of industries is $143-373 per lead, so I don’t think my experience is far off.
Keep in mind, that this is a measure of leads/customers per ACTIVE marketing dollar I am spending, as in money spent on actual campaigns, advertisements, direct mail, telesales reps, etc. This DOES NOT include the dollars that I spent on internal marketing personnel, tools, etc.
The good news for everyone is that these are perfectly fine numbers for building a great business in this industry! Customers in this industry are very valuable, so these numbers clearly work in your business model.
The problems comes when you believe that you should be acquiring leads and customers much more cheaply than this. If you fool yourself, you will not make the necessary investment in marketing and sales to acquire customers as quickly as your competition. Believe me when I tell you that there are now plenty of sophisticated operators in the managed services business that will gladly spend these amounts all day long, and are eating your market share for lunch.
Here are common ways I hear MSP’s fool themselves:
- I grow my business 100% from referrals, so leads don’t cost me anything. Actually, they are costing you a ton. You are not growing nearly as quickly as you could, and your “non-investment” model will put a cap on your total growth potential. Every business has a cost of acquiring new leads and customers – yours is not the exception.
- I got three leads and didn’t close a deal, the leads were bad. Perhaps they were “bad”, if there is such a thing. Statistically, you will probably only sell about 1 out of 10 leads you get. That’s not “bad”, that’s the normal sales pipeline. If your numbers are worse than 1 out of 10, it’s much more likely that you need sales training than it is that all of those leads are “bad”…FYI.
- I closed the customer, but they only did $700 in business with us this month, so it wasn’t worth it. Again, you probably need more sales training and a better plan to follow up with these customers. Not everyone signs a big recurring revenue contract the day they meet you – put a follow up plan in place and build trust over time!
In the direct marketing industry, they teach you that knowing your cost per lead and cost per customer are two of the fundamental numbers you must understand about your business and your industry. Otherwise, you will never really know whether you are on track or not versus the competition.
Same goes for the managed services industry – know your numbers if you want to compete!
Mike
Are you a small business based in Colorado? If so, we want you! 
We are officially launching our Local Accelerator program to the Colorado public. Designed to accelerate online lead generation and sales for Colorado small businesses, this program promises to offer a complete Internet marketing makeover to one lucky local business every month!
The program combines fulfillment services with access to Kutenda’s Internet marketing tool-set and training to get your company successfully marketing online. We’ll be choosing one lucky company every month … Selected companies will receive over $9,000 in services at no cost and 3 months of free Kutenda access.
If you’re based in CO, submit your company here: http://kutenda.com/accelerator.html
According to new projections from Outsell, Inc., digital/online marketing will overtake print in 2010. Companies are projected to spend $119.6 billion on online and digital strategies. For small businesses, marketing online is a known challenge due to the intense learning curve, budgetary constrictions and the lack of available software. Kutenda has set out to change that with it’s Internet marketing tool-set for small businesses and the Local Accelerator program is making the extra leap locally by offering tools, services and training for free.
The Local Accelerator program includes all of the foundations for a comprehensive Internet marketing strategy that will drive leads and sales. We begin by creating a website or optimizing your existing website for lead generation and search engine rankings. Companies walk away with a list of campaigns, content and the tools, training and support to pick up where Kutenda’s fulfillment process ends.
Specifics include:
• Promotional landing pages with automated response emails
• A prospect-focused email marketing campaign designed to convert
• Customizable email templates
• A search advertising pay-per-click campaign
• Live local search listing
• Optimized keyword list for specific products / services
• A knowledge base of Internet marketing best practices
In order to qualify, companies must be based in Colorado. We’re accepting submissions at http://kutenda.com/accelerator.html via a short form. Each monthly winner will be contacted directly by Kutenda’s director of training, Alex Ross. We are allowing companies to resubmit monthly for another chance to win.
Suggestions for increasing your chances of being chosen:
1) cross your fingers
2) grab your rabbit-foot key chain
3) send your intern on a hunt for the perfect four leaf clover
4) maybe eat a bowl of Lucky Charms… whatever it takes…
GOOD LUCK!
It’s always nice to get to know your neighbors — We here at Kutenda love doing just that! Our very own Online Marketing Coordinator, Emily Thompson, has a guest blog post on the Affinity Track Internet Promotion Blog! Affinity Track is located just around the corner from us here in Colorado.
Affinity Track focuses on providing quality search engine optimization and marketing services to their clients. By utilizing both organic SEO and effective paid search campaigns, they help businesses improve their performance online and get real results.
Emily’s guest post focuses on some of the key components needed to create a successful local online presence. From local listings to on-page techniques, the tips are designed to be bite-sized pieces to help you begin right away. Check out the post and get started with your local search campaign today!
Follow Emily on Twitter: @ekthompson
Affinity Track logo
The second of two posts covering how managed service providers (MSPs) can benefit from using the features of Kutenda to enhance their use of the ConnectWise PSA. Read the first post here.
At the ConnectWise Summit, I spoke to many MSPs who use ConnectWise to manage the sales process. As I mentioned in my post last week, ConnectWise is really helpful for managing and tracking tasks for your sales team during the last 20 percent of the sales cycle. Kutenda helps with the first 80 percent.
That still begs the question: How the heck can you generate more and better leads for your managed services business? I had a conversation with Larry Walsh from Channel Insider just last week about the same thing. He basically told me that what he hears from MSPs is that yes, you need more leads. But you also need better leads. So lets talk about how Kutenda helps you generate more leads—of higher quality.
