Sales & Marketing Effectiveness

Why Some Companies Mismanage Their Sales Leads

In follow-up to my last post, “The Sorry State of Lead Management”, a big question remains.

Why, after spending huge sums on generating sales leads, do some companies mismanage those leads? Or, even worse, have no lead management system at all? 

My experience shows that, in many cases, faulty lead management stems from company confusion over the basic difference between sales and marketing functions. This uncertainty often results in sales and marketing being grouped together, with sales usually coming out on top and being put in charge of marketing.

When a company becomes sales-focused only, marketing is usually reduced to the role of marketing support. Actually, this equates to sales support, but most marketers won’t admit that.  Marketing then does little more than hand out literature, create ads, produce sales brochures and make list purchases.

Big mistake!  While sales and marketing need to operate both independently and in concert, for the good of the company as a whole, there is a critical difference between the two functions.  When that difference is not recognized, lead management suffers dearly or simply becomes nonexistent. 

At the most basic, sales and marketing functions differ in the following ways:

* Sales takes a short-term view: this month
Sales is focused on the present – today – what sells now.  Their jobs depend on reaching quotas for the month or quarter.  They need to be closing new deals, maintaining key customer accounts, and working on current customer cross and up-selling opportunities.  Anything and everything that helps them generate commissions and immediate company revenue.  Sales doesn’t have the time, resources or experience to create and oversee marketing campaigns, generate and qualify leads, or chase after tire kickers.  They need to sell now!

* Marketing takes a long-term view: this year
Marketing, on the other hand, is more centered on the longer view.  While marketing understands the importance of what sells now, they realize it is far more important to build on who buys now and later.  Their jobs depend on providing sales with the right opportunities and tools to sell now and in the future.  Real marketing - not sales support - position their companies to identify both current and future opportunities, and enable sales to convert those opportunities into profitable revenue in order to grow the company. 

Failing to make a distinction between the roles of sales and marketing, makes successful lead management next to impossible. 

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The Sorry State of Lead Management

Getting new leads is great, but turning them into lifetime customers is what counts.  The biggest challenge facing companies today is the art of turning prospects into lifelong customers and those customers into company advocates.  And, the first critical step in that process is how you manage your sales leads. 

Unfortunately, a recent study from the Sales Lead Management Association (SLMA)  shows that many companies are ignoring their sales lead management.  Their 2nd annual Sales Lead Management Study, conducted with 144 businesses in Southern California, revealed the following results:

• 68.8% don’t qualify leads before sending them to their sales teams
• 52.4% have no formal process for compiling sales forecast reports
• 82.8% don’t track ROI for lead generation investments
• 55% rated low satisfaction with their SFA/CRM system, at 5 or less on a 10-point scale
• 52.1% use no SFA/CRM system to track the lead process

If 52% are not using a CRM system, is anyone surprised by the survey results?  One would think that with all the CRM technology and sales lead management expertise available, that numbers like those above would be a thing of the past.  However, after all these years, it is still the norm and not the exception. 

Aren’t marketing efforts and dollars spent, whether it is direct mail, websites, trade shows, branding, or advertising, for the purpose of generating leads?  How much money do companies lose by not managing those leads?

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