Lead validation plays an important role in small business success. People contact businesses all the time for a variety of reasons, not the least of which is to buy a product or service. Those sales leads come from a range of sources: phone calls, website forms, email marketing campaigns, and social media. But the money-generating leads lay hidden among the avalanche of inquiries that have nothing to do with sales. Lead validation is the process of separating sales leads from everything else.
[Improve conversion rates: Conversion Rate Optimization for Small Business]
Lead validation can help you easily identify people who are ready to buy your product or service, increase your sales, and save you valuable time and resources. Aaron Wittersheim, COO of StraightNorth, an Internet marketing company, defines non-sales leads thusly:
"These calls include people who are looking for a job or trying to sell you something. They might even be competitors snooping for information. Non-sale leads also include robocalls, misdials, survey callers, and others," says Wittersheim. "Internet marketing firms typically count all calls, forms, and other contacts as sales leads—but roughly half of them don't qualify as such."
All Sales Leads are Not Equal
Surprisingly, many small businesses respond to these calls as if they were all valid sales leads. This shotgun thinking assumes that getting the sales information "out there" may eventually lead to a sale. But all it really does is cost you time and money.
"It's important to separate sales leads and non-sales leads in your month-end and year-end reports, because lumping them together creates an inaccurate view of your campaign success," says Brock Murray, co-founder and COO of SeoPlus+, a digital marketing agency. "It actually impedes the performance improvement measures of both your current and your future marketing campaigns."
Murray adds that inaccurate campaign performance takes an especially serious toll on the marketing budgets of resource-strapped small businesses.
Leads Validation by the Numbers
For more than 18 months, StraightNorth conducted an analysis of 373,000 business inquiries, consisting of more than 135,000 online form submissions and more than 237,000 phone calls (totaling more than 1 million minutes). The study rejected 23,000 of them as unsuitable, leaving 350,000 inquiries to go through the entire analysis. Of those 350,000, about half—178,000—were actual sales leads.
The report revealed a lead generation waste count of roughly 50 percent. Such a high waste count can significantly mislead you when it comes time to evaluate your marketing campaigns. It can also throw off your future marketing efforts.
The analysis uncovered another surprise finding that can help small businesses increase their sales lead generation efforts.
"The visit-to-lead statistics really stood out," says Wittersheim. "Everyone always talks about how people visit websites multiple times before they generate a lead—filling out a form, engaging a chat, emailing, or calling—but our analysis found that 85 percent of website site visitors generate a lead on their first visit."
In other words, a potential buyer may find your business on a search engine, go directly to your website, and will most likely generate the lead during that initial visit. How can you take advantage of that? "The first impression that your website makes matters the most. It's your one shot at making a sale, and you better have all the right conversion elements in place," says Wittersheim.
Lead Validation Increases Revenue and Profits
Don’t waste valuable time chasing leads that don't plan to buy from you now—or maybe ever. Doing so costs more than just time (and frustration); it also prevents you from talking to the prospects who really do want to buy your products and services.
Here's an effective strategy: validate your sales leads, and then prioritize them. Next, allocate the amount of time and number of resources you can devote to closing each particular sale. "Lead validation is a crucial, time-saving step for our company. Preparing proposals for potential clients is already a substantial task," says William Torres, owner of KeyForge, an Internet marketing services company. "We don't want to waste time on leads that won’t convert."
The company sends a questionnaire to everyone who contacts them after a marketing campaign. The answers help KeyForge determine whether the prospect is a good fit. "It helps us decide how much time we'll use to respond to a particular lead," says Torres.
Closing a sale is already a long, arduous process in some industries, which makes weeding out non-prospects early on even more important as Jeff Kerr, CEO of a legal technology startup called CaseFleet, explains.
"In a law firm, lead validation can be multi-layered. For example, a firm might have a multi-step screening process in place before a lead ever gets in front of a lawyer," says Kerr. His company uses Hubspot to create a custom work flow based on specific lead properties.
"For example, we have rules in place that prevent a person with either a Gmail or a Yahoo email address from automatically starting a free trial. We found that leads with those email addresses—as opposed to accounts with a unique business domain—correlate with being a lower-quality lead," says Kerr. "We stop and ask for more information at this point. This lets us focus our on-boarding and free-trial resources on prospects that are most likely to convert."
For other small businesses, validating sales leads in smaller test campaigns helps determine which marketing campaigns will work well on a bigger scale before taking on that expense.
"I do a ton of lead validation because it synthesizes the marketing process, and it saves money and time," says Matthew Mercuri, digital marketing manager at Dupray, a company that sells steam cleaners and steam irons on six different domains in six countries.
"We validate incoming leads before ratcheting up operations on a larger scale. The process helps us determine our advertising effectiveness. If we see leads within an audience that traditionally turn into customers, then we're on the right track."
[Read more about conversion rates: Product Filtering Tips to Improve Ecommerce Conversion Rates]
Mercuri suggests validating leads by looking at "their browser patterns and then pairing them against their demographics," he said. "Whether it's age, gender, income, or geography, checking up on inbound interested parties can tell you whether you're getting colder or warmer."
However you decide to use sales lead validation to improve your business, it offers solid data that will lead you to the right conclusions and actions. Neglecting the data cleanup work on the front end leaves you misled and broke on the backend.
Pam Baker has written for numerous leading publications including, Institutional Investor magazine, CIO.com, NetworkWorld, ComputerWorld, IT World, Linux World, Internet News, E-Commerce Times, LinuxInsider, CIO Today Magazine, NPTech News, MedTech Journal, I Six Sigma magazine, Computer Sweden, the NY Times, and Knight-Ridder/McClatchy newspapers.
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