Lead Management Software? Hmmm, what’s that?
It is always interesting to ask a person what kind of lead management system their business has. Some have absolutely no system in place, while others have some pretty nice ones in place. The ones I am thinking about right now are the ones who have some type of system in place and say they track everything!
Not so long ago I was at a trade show. There I met a business owner who told me she tracks everything! (Now imagine her head nodding and then shaking as she says, I track everything…EVERYTHING!) I agreed that it is a wonderful thing, and figured that since she tracks everything, she would be able to pop an answer to my following question right off the top of her head: What percent of gross revenues go to pay for marketing? In other words, how much does it cost you to get a sale? She looked at me with a confused look.
A lead management software system that does not calculate the cost of getting a sale is not a good system.
Let me explain. There are so many beautiful lead management systems out there. There is not even a price tag attached to many of them. Others are very nice and have a nice price tag as well. Some of them show beautiful charts and graphics and all kinds of interesting data. But few, very few, show the exact numbers a person needs to run their business effectively without having some extra programming done to tie some important numbers together. This was one case like I just described.
A lead tracking system that tracks simply the number of leads along with names and addresses is pretty much just a contact management system, and should not be mistaken for a lead tracking system. A lead tracking system that only tracks the number of leads and where they came from is pretty much worthless when talking about profitability. Sure, it plays a part in the whole scheme of things, but alone it means nothing.
Any lead tracking system ought to follow the life of the lead, from the onset of marketing for that lead to the lifetime of that prospect or customer. If we take the life timeline of a lead, a good system will tell you where the lead came from, what was paid to get the initial call, to whom it was assigned, what service or product that person was seeking, whether or not that lead turned to a sale, and the time period it took to become a sale.
Once that lead became a sale, you should be able to easily see what the acquisition cost was for that sale, or in other words, exactly what the advertising ended up costing your company to get a sale. Most companies have marketing and advertising as a line item in their annual budgets. Are your sales in sync with your marketing budget? If not, can you see exactly which marketing is bringing in sales with an acquisition cost within budget? How do you adjust the marketing that is not? An effective system will tell you this.
In continuing, your lead system should track all sales and lack thereof to each individual salesperson. Now you can follow along and see who is strong at selling which lead sources, which salesperson is good at selling certain products or services and who is not, which lead sources are never closed even by your best salesperson, and which lead sources are closed by most everyone.
Not only should your lead management software tell you the cost of getting a sale, but you should be able to see the cost per sales rep AND per lead source.
Your lead tracking system will also track the lifetime of the customer, any product or service sold to any certain person. As is the case with most CRMs, you should be able to filter your mailing lists so you have ready marketing lists when you are offering a service complementing one you have already sold to your people, or a way to pull the information for any type of mailing list you may ever need. This also includes mailing lists to those prospects with whom you have spoken but not sold. This is a goldmine for your business because these people have already had exposure to your company, and so they are no longer a completely cold lead. Use that to your benefit!
Above all, most important and going back to what was talked about before, is the sales acquisition cost. Your lead system is worthless without this, in the sense of business effectiveness and profitability! This is one number that many business owners or managers do not realize to be so important. It could be that they have had strong hunches that more information is needed, but they have never understood how to pull the numbers together.
Acquisition cost can make or break your profits. Let’s say you are a company offering a service. As an example, your annual budget consists of 55% cost of sale (labor & materials to perform the service), 10% commissions, 10% overhead so you can keep the trucks on the roads and lights on in the office, and 10% marketing. That leaves you at 85% for performing any service. Anything over 85% eats into your profit margins.
For the most part, you cannot change cost of sale, commissions, or your overhead. Those costs are pretty much fixed. What can and very often does change because of lack of an effective lead tracking system is the marketing. Any sales acquisition cost over the 10% you budgeted for marketing/advertising eats into your profit margins. As we all know with marketing, the sky is the limit as far as how much a person can spend. If you don’t have a way to track what is effective and what is not, you will eat your profit margins, guaranteed!
In order to grow your business or even maintain at a profitable rate, you absolutely have to have an effective lead tracking system in place. And you do not have to recreate the wheel; those systems are out there!
WINNERS KNOW THEIR NUMBERS!