Let’s have an honest conversation about what defines a lead. Part 1 of 2 in a series about improving your lead generation strategy.
The phrase “We need more leads” or “How can we get more leads” is the #1 concern we hear from our clients. Leads can come in a variety of ways, from phone calls, form fills, people through the door, to referrals from friends, family, and employees. We’ll define it as the first step of human interaction regarding a possible purchase from your company.
Let’s be clear – without leads, there is no business and we have no clients. What we want to unpack is what does “more” even mean and is there an alternative strategy that could improve your bottom line?
“These Numbers Can’t Be Right….”
Often, we review key client KPI’s such as lead counts, web traffic/conversions, sales, closing ratio, average ticket, advertising expense/ROI, etc…
Nearing the end of the year, I was looking at lead count for a home improvement client who was having a great sales year, up 35% from the previous year. Every sale is preceded by a prospect calling to set up an in-home free estimate with a representative from the company. So, if the numbers are consistent, surely leads/appointments were up at least 35%.
To my shock, leads were DOWN 8%!
As a marketing partner, there is some trepidation here! Just think what could have happened if we WERE UP 35% in lead count. But then it hit me – not all leads are created equal.
(Here’s the actual screen shot of 2019 vs. 2018 appointments)
What Changed? From my perspective a few things changed in their marketing strategy from the previous year. Here are my biggest takeaways:
#1 Qualify Your Lead First, Set the Appointment Second
To start, we are going to take the huge leap that you know the difference between a good and bad lead for your company. Since the exercise of finding your “ideal client” has thousands of books, online workshops, and consultants already dedicated to this topic, we’re going to save that strategic blog series for another day.
This home improvement company sells a higher-ticket item that homeowners might buy once in their lifetime. The product itself is first-class and can be considered the “Mercedes” of the category. Leadership recognized they may have been chasing every lead and started an initiative to qualify each call, by letting the homeowner know a “range” of pricing (since this is the most requested question) as well as asking a series of questions about their current situation. This ensured that all parties were on the same page before a representative was sent to give a quote.
Here are two key action items that you can implement today for lead quality improvement:
- Don’t bury your head on the price – if you’re a retailer or service provider, show the price. If it’s a customized solution, give a range. Here’s how this played out in the real world with our client:
Previous Inquiry About Price – I’m sorry but I can’t answer that as I’m just setting appointments. Your sales representative will give you a quote during your free estimate.
New Inquiry About Price – While every home is different, the typical investment is somewhere between $2K and $10K. It just depends on your home and the problem you’re trying to solve.
- Ask the caller questions about their current situation to see if your product is actually a good fit for them. Never just set the appointment.
Previous approach – Get basic information and set the appointment.
New Approach – Ask questions and note their responses – “So tell me about the problem you’re having with……?”
#2 Understand the Costs Associated with “Expanding” Your Geographic Footprint
This company had the rights to sell in two states and had invested marketing dollars in geographic territory covering over 400 miles. The strain on marketing investment can be understood, but it also took a toll on sales reps who often would spend hours in the car.
Look at where you are SELLING
Geographic sales data is one of the most powerful indicators in tightening up where to spend your marketing dollars. A simple spreadsheet of dollars by zip code (or even better, mail-route) will often reveal a limited number of areas that generate the most of your revenue.
In the case of this company, we saw a handful of zip codes within their backyard and a small market less than an hour away that accounted for over 80% of their revenue! It was a classic 80/20 situation.
If you’re investing in any platforms where the geographic targeting can be reviewed or updated – Pay Per click and shared mailers (Valpak, etc) are a few big ones – make sure your “zones” align with where you are selling. This quick strategic change can yield nice returns, often with no change in budget. You may even end up saving a few dollars.
#3 Having the Courage Not to Chase Every Lead
At this point, you may be saying, “But we’re slow and it doesn’t hurt to run that lead,” or, “If I don’t run that lead, there’s no way they will buy. Who knows, it may turn into a $10K project!”
Be honest, how many leads that weren’t a fit really ended up closing? Let’s explore the other side and talk about what you can gain by not running those poor leads.
Improved Marketing/Advertising ROI – As discussed, the gain by shifting dollars geographically to the areas generating sales or cutting non-performing areas can lead straight to bottom line improvements. Our client cut their marketing budget by almost 30%!
Increased Rep Morale – Let’s make it a goal for you to never have to hear “that was a terrible lead” again from one of your reps.
Higher Closing Rates – Since you’ve set the stage when setting the appointment, you’ve earned a higher trust in the eyes of the consumer. The company we used as our example increased closing rates from 29% to 40%! This is incredible in the home improvement category.
Higher Average Tickets – Trust builds confidence to ask for higher tickets. Average tickets rose 10% for our client.
Less Cancels/Returns – Trust and upfront expectations reduce the possibility for cancellations. Our client reduced cancelled projects by 25%.
In conclusion, for most business and marketing leaders, a lead constitutes a KPI on a spreadsheet – a tracking and planning metric to gauge advertising performance. But in reality, a “lead” is a human being with their own unique set of goals, dreams, and desires. Sometimes those align with a problem you can solve, sometimes they don’t. Take the next step in understanding that distinction in your business and then work with your marketing partners to leverage that understanding. Your customers and non-customers will thank you for the clarity.
In part II, we’ll talk about how marketing itself plays a role in your lead generation strategy.