How Many of the Leads You Generate, Buy?

March 9, 2015

The other day I re-visited an article written by Jim Obermeyer entitled The Rule of 45: Predicting Sales Results From Inquiries which confirmed and put some analytics to our long-standing belief that proper nurturing of leads will ultimately result in more sales.

This sounded like a “duh” statement to me, but in re-reading this article with Jim's nearly-clinical treatment of data, it really validates and supports our statement above.  And in today’s climate, with the rising cost of generating qualified leads, lead management and nurture is more important than ever.

What this article does is articulate the value-proposition very succinctly: poor and/or inconsistent follow up of leads will result in revenue of just 25-33% of what “could have been”.

Taking the most intriguing pieces from Jim's article, on average, the following “Did they buy” rules apply:
  • Within 3 months 10%-15% of B2B / considered purchase prospects will buy someone's product or service.
  • Within 6 months, 26% will buy.
  • Within one year 45% will buy.

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But the big question remains: Will it be from you or your competitor?

Sales representatives love to work on the first bullet, the 10%-15% of potential new leads because it means close to immediate personal gratification typically associated to their commission.  The remaining requires follow up and tedious work.

For business owners, here is what inconsistent or missing follow up can mean to your bottom line. 

Let’s assume for the moment that year-over-year you receive 1000 new leads of which you apply the Rule of 45, meaning within one year 450 of these leads will purchase from someone over the next 12 months.

  • Follow-up of 100% and you still have 450 buyers
  • 25% market share = 112 buyers
  • ASP (average sales price) of $10,000 = $1,120,000 in revenue

Now apply the lack of follow up, meaning that sales representatives only follow up on 25% of the leads, you can apply that to the revenue number and it generates $280,000 in annual revenue.  That is a big delta.

What we historically hear from most new clients is what we refer to as “terminal uniqueness”.  "My business is different"... "you can’t apply marketing tactics to our sales process"... "we rely on personal contact and follow up to get a sale". 

While we respect and appreciate that, historically what that means is that internally people are stuck in how they have always approached sales and their channel and are not open to new ideas or approaches.

Working for you 24/7

With today’s tools, marketing can be set to work for you 24/7, always working to move the lead further down the sales pipeline.  All it really takes is some involvement from internal sales and marketing personal to understand your sales pipeline and what type of messaging has been used to move the lead along. However, the communication should not be generic. 

How many times have your sales representatives used the following line?

Hi <Potential Customer>,
Just following up with you to see how things are going…

This is truly just interruption marketing that really provides NO VALUE to the potential client. 

Imagine the difference if the email was written like this: 

Hi <Potential Customer>,
I noticed you were interested in our [product or service A and B], and thought I would forward a whitepaper and a case study that explains the process and value…

The Big Difference is in the impression this leaves with your prospective customer, hopefully they read that your organization is trying to add value.  You combine this approach with a solid platform, such as the new HubSpot Sales Platform, you can automate these messages based upon the leads behavior.

If your organization feels like revenue is slipping or stagnant, it may be time to revisit your sales approach and enact a lead nurturing initiative to capture the 2-3X gains in revenue that are available to you and your organization.


What's your experience with lead nurture and follow up?

Leave us your comments (or question) below.

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