Download Roberts_IM3e_IM_ch10_rev - Dr. Robert Davis (Ph.D) FCIM (UK)

Chapter 10
Lead Generation and Conversion in B2B Markets
Learning Objectives:
By the time students complete this chapter they should be able to
 Define and explain the importance of a sales lead.
 Explain the difference between sales lead generation and demand generation.
 Describe the B2B buying cycle.
 Discuss the steps in the sales lead generation and management process.
 Identify channels that can be used to generate sales leads.
 Discuss the issues in defining conversion.
 Explain the meaning and use of customer personas and buying scenarios.
 Discuss the use of landing pages and the importance of testing them.
Chapter Perspective
This chapter is new to the third edition, although it has strong roots in material from Roberts and
Berger, Direct Marketing Management. It clearly was needed, both for the conceptual material
on lead generation and management (often called “nurturing” these days) and for the emphasis
on B2B marketing on the Internet. Lead techniques are also used in B2B markets, usually for
major purchases like real estate and automobiles. That point is made in the text, although you
could add additional examples to emphasize it if you wish. However, most students need the
exposure to B2B perspectives, including the continuing existence and importance of the field
sales force.
The chapter begins by reminding students that, after several chapters on tools, many of which are
acquisition oriented, we are turning to the second major marketing strategy—conversion. The
“basic strategies” graphic from Chapter 4 introduced the chapter to reinforce that point.
What Is Lead Generation?
This section assumes that most students have little familiarity with the concepts and tools of lead
generation and management. It points to the roots in B2B direct marketing and the importance of
the long sales cycle and the need for good sales leads for the (expensive) field sales force. Figure
10.1 again reinforces the importance with the top 2 management challenges for 2010 being better
sales leads and more sales leads and the lengthening of sales cycles, which puts more pressure on
the lead management process. Figure 10.2 is included to make the B2C point early in the chapter
and move on to the B2B material.
The section also includes a brief discussion of demand generation—a term that is often loosely
used in the trade press—and lead generation. When you dig into the meaning, demand generation
is nothing more than creating demand for a product and lead generation can be part of that
process.
The Juan Eloqua case history makes a number of points about good B2B marketing, including
that it can be creative and interesting. Most of your students probably don’t remember the Juan
Valdez commercials for coffee produced in Columbia that was the creative inspiration for this
campaign but you can find it on YouTube if you want to play it. The Juan Eloqua video is more
to the point. It’s posted on Joe Chernov’s introductory blog post:
http://blog.eloqua.com/introducing-juan-eloqua-the-grande-guides. The link to the Grande
Guides library is also on the PPT slide. I find it impressive that they have had the discipline of
sticking to/expanding upon a campaign that their original metrics showed was working well. It’s
a good example of content marketing in action. Figure 10.3b introduces the important concept of
a landing page, which will come up several times in later chapters. Marketing automation is
something we do not place emphasis on, so this is a time to explain what it is and why it is a
long-sales-cycle product if you wish.
Interactive Exercise 10.1 is takes the student to the Eloqua site. It could be used as an out-ofclass assignment, but it is good material to use live in class.
The next section portrays the sales cycle, Figure 10.4. I find it important to stress the similarity
of the concept to the more familiar consumer decision process. Understanding that the process is
essentially the same seems to make it easier to point out the key differences; the length of the
B2B cycle, which is key to the lead process, and numerous participants and participant roles
which is not discussed in the chapter but which can add interesting but manageable complexity
to the lead nurturing process.
The Lead Generation and Management Process
The process itself is portrayed in Figure 10.5 and immediately moves on to a discussion of the
lead generation process. It is longer than the discussion of qualification, distribution and follow
up, but that should not be taken as representative of greater importance, and that is worth point
out to students. There is just a lot to say as the first step in the process is covered.
Figure 10.6 makes an important point about the number of channels that are available to
generate leads. Students understand that the strategic challenge is to decide which ones work
best, including which are most cost effective, not to use everything. My students do marketing
plans and I have a lot of trouble getting the concept of disciplined selection of tools across to
them. That has led to a number of blog posts including this one for my social media students; if
you find it useful, use it in any way you like: http://diymarketing.blogspot.com/2011/06/marketers-could-but-should-they.html. Figure 10.7 is
important in that context. The question is which of the several channels/tools listed does a given
target audience use. That question focuses the thinking.
I also like to tell students that I can produce leads for any firm/any product if they’ll just give me
enough money. Who wouldn’t take an incentive of, say, a weekend at a luxury resort, but will
that produce quantity over quality? Almost undoubtedly.
That rather old-fashioned perspective of “buy them with incentives” leads smoothly into the
subject of inbound marketing. It’s all the rage at present and the reason is clear; many firms find
the cost of inbound distinctly lower than outbound. HubSpot is a strong spokesperson for this
point of view with its own excellent content strategy, but it is definitely not the only marketing
services agency in the space. They illustrate traditional mass media channels (the hammer)
against inbound (the magnet), which are all Internet-based in Figure 10.8a. Then they go on to
identify three components which are essential for inbound. Content, propagated as widely as
possible around the web) is the first building block. Then SEO and social media can draw
attention to the content, and drive people to the website. Assuming this is part of a lead process
the marketer needs to offer an incentive—likely to be more content—to get the visitor to register
giving email address and other essential data to qualify her as a lead.
The discussion then moves to the subject of content marketing. Joe Chervov’s Content Grid
inforgraphic is excellent, but too large to be seen well on the screen. You can get the concepts of
useful in the awareness state vs. the consideration stage and centralized (essentially meaning
available on the website) to decentralized (available on other platforms). You have to go to the
original blog post to get the detailed channels http://blog.eloqua.com/the-content-grid-i-all-someta and I think it’s worth it.
I’m fond of the paragraph that ends this section; it’s something that students have a surprisingly
hard time getting their arms around:
It is no longer about fluffy or even persuasive advertising messages. It is about
informational content in the brave new world of Internet marketing. (p. 266)
The question “how much does it cost?” is the one usually asked. However, the more important
issue would be what sales would cost without it. That issue was pretty much settled by the late
1980s when some large tech firms tried to limit customer access to their field sales forces
because it was costing so much. Sales lead programs are the only viable alternative, but that
doesn’t mean that cost is no issue. The costs given are the best and most recent that could be
found, but they are only vague norms for individual companies. They need to track their
programs, focusing on how much it costs to generate leads in various channels and the quality of
those leads (the variations between channels can be huge) and how much it costs and how long it
takes to convert leads to sales. With data like that in hand, the company can focus on managing
the lead flow and its costs.
The two case studies in this section are interesting, but perhaps not for the reason intended.
Cloud Marketing Labs, whose 2010 program was a rousing success by the metrics, seems to
have disappeared from the scene. Doyenz, which tried something innovative that didn’t appear to
work very well, appears to be going strong. If you want some other examples you will find good
case study articles from time to time at http://www.btobonline.com. Marketing Sherpa has many
good ones, but they go behind a subscription firewall after a month. If you react soon enough,
you can subscribe to their newsletter and make copies of the ones you might use:
http://www.marketingsherpa.com.
The topic of purchasing sales leads was not even included in the PPT because I believe it’s such
a bad idea. All you are buying is directory listings, perhaps with some directory data attached.
That’s different from services firms that are in the business of programs to produce leads for
specific clients. Most agencies do sales lead programs and there are some firms that specialize in
them.
Qualifying is the next step. The DAMN acronym is generally used to explain the process. In the
B2B market individuals are generally quite willing to answer these questions, on the phone or in
an email registration form like HubSpot’s. Students can relate to the process of being qualified as
a car buyer or perhaps as a buyer of real estate. It’s exactly the same issue, just in consumer
markets where the purchaser is an individual or a household, not a corporate buying center. The
cost data in Figure 10.12 is a variant of the typical sales force work load analysis and it shows
just how quickly the costs mount up. Again, there is the warning about data from other firms or
industry data. The point of measurable marketing is to track your own data and improve your
own results.
Lead scoring and distribution. Firms with even moderately sophisticated lead programs use a
scoring model. It has important variables specific to their product/situation, but generic variables
include:
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Online activity of the prospect
Customer relationship, if any
Title, more importantly, role in buying center
Match the prospect profile to the ideal customer profile.
Give it a score (think credit score) that will show where it belongs in the distribution system.
Figure 10.13 shows a distribution system. It could have more “buckets” but it should not have
more than the firm has resources/strategies to handle. The EDGAROnline case history is a good
example of these activities in practice and how much they can increase performance.
Conversion. The steps that can be taken to improve (optimize) the conversion process itself
include:
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Identify goals (more precisely specific objectives) and KPIs for the system.
Define the ideal customer profile.
Organize/optimize site structure.
Develop a compelling message. We would hope that the firm/brand/product already has a
compelling message. That message should be examined to see that it has all the elements
that are necessary for conversion.
Use effective calls to action.
Make sure your processes work, including the information capture forms and metrics
platforms and the shopping cart.
TEST, MEASURE, REFINE.
The lead > conversion process offers many opportunities for testing alternative approaches and
improving them or adopting new ones. Figure 10.16 illustrates a landing page test. Would
anyone guess why the (b) landing page works better, although it makes perfect sense when
explained?
This is the time to talk about how to define conversion. It has to end in a sale to be considered
effective, but some members of the marketing team will be judged on intermediate results. Social
media is a good example and this is a useful post that ties social media to sales while showing
that it is not a direct leap: http://www.socialmediaexaminer.com/5-tips-for-moving-social-medialeads-into-the-sales-funnel.
The text points out that there is no single definition that fits all organizational structures/ all
situations. There are likely to be multiple “conversion” points in the lead > sale process. Figure
10.14 illustrates the channels that can be used based on the readiness stage of the prospect.
Interactive Exercise 10.2 can be used to illustrate the importance of return on marketing
investment in generating and converting sales leads.
Finally in this section, the text points out something that cannot be overemphasized. Good lead
generation/conversion programs are not a matter of technology. There is plenty of that around. It
is a matter of organizational will and discipline to track and measure a multiple step process that
occurs over (often considerable) time. Both the will and the discipline are often missing, so
marketing just runs sales programs without having to prove that they work. And sales goes on
complaining that they get poor quality leads from marketing.
Lead Generation and Management Issues (Important Topics)
Customer Personas are one useful tool. Think of it as putting flesh on the bones of data profiles.
The subject is also taken up in Chapter 12 because personas are a useful tool in website
development. The example in Figure 10.15 is a B2B example in keeping with the theme of the
chapter and the questions on p. 278 are B2B questions. You may want to use the YellowTail
wine example in class: http://www.slideshare.net/Paris_d/yellow-tail-wine-consumer-persona.
Purchasing scenarios are another useful tool that can apply in settings from developing
marketing communications to website development. They are scenarios, stories, in the strategic
management sense. GrokDotCom has written extensively about the subject. Here is a recent post
on their blog that brings some organization to the process and has an interesting graphic:
http://www.grokdotcom.com/2012/02/13/which-type-am-i-thoughts-on-personas-personalitytype.
Landing pages are key in any multiple step process. Even if you direct the click-through of a
new prospect to the correct product page you won’t get contact information unless you overlay a
landing page. That’s simply a waste of marketing dollar.
Conversion paths will also be discussed in the metrics chapter and illustrations given.
Unfortunately these are uniformly too small to read easily because of the number of paths
visitors actually follow. Consequently I developed a hypothetical example that explains the
generic process and hopefully prepared students for the complexity of the real world process.
Discussion Questions
1. The chapter states that the discipline of sales lead generation and management was
developed by direct marketers and later adapted to the Internet. Why do you think
direct marketers, and not traditional advertisers, originated the practice of sales lead
generation and management?
It’s all about measurability. Traditional mass media don’t lend themselves to tracking, absent the
inclusion of some direct marketing features like tracking codes. Direct marketers are the
specialists in measurable marketing and sales lead programs are a natural.
2. True or False: Sales lead generation and management is a discipline practiced only by
B2B marketers. Why or why not?
The answer is False and the BMW page (Figure 10.2) should have make the point. A more
interesting question is where it is practiced in B2C marketing. Ask students if anyone has visited
an automobile site recently and how deep they went before they received a registration request.
On the “design your own” pages it is invariably immediate. Is this because these pages are
frequented by seriously interested prospects?
3. Why do you think B2B marketers consider producing an acceptable quantity of high
quality sales leads one of their most important challenges?
It’s because of my “I can produce sales leads for anyone” braggadocio. I then go on to point out
that if I have enough money to offer incredibly attractive incentives I can get people—even those
who have no real interest in/need for the product to register. Lots of quantity, poor quality. The
real track is balancing quality with the number of sales leads needed by the field sales force.
4. True or False: The B2B buy cycle has roughly the same steps as the consumer purchase
decision process, is carried out in much the same way, and takes about the same length
of time. Explain your answer.
Clearly a trick question. True, it has steps that are similar to the familiar consumer decision
process. The rest is false, however. It usually involves a buying center with multiple participants
who have well-defined tasks. As the text indicates, the B2B process can take many months/ a
year or more.
5. What is your understanding of content marketing as a strategy? How does it differ
from the kind of marketing or marketing communications that you are accustomed to?
It seems to me that content marketing differs on most dimensions (understanding your target
market is one clear commonality). Content involves the creation of informational and engaging
content. In B2C markets you might want that to be “informational and entertaining.” But the
content is never hard sell. There should however, be a call to action, perhaps an offer of more
information, perhaps just contact information. But it is soft sell throughout; anything else
severely damages the process. There is also a lot online about how “storytelling” is the
underlying approach. Think customer testimonials, client case histories.
6. Describe the four steps in the lead generation and management process.
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Lead generation—getting people to respond in a way that captures contact information.
Lead qualification—answering the DAMN questions.
Lead distribution—passing the qualified lead on to the team best qualified to handle it in
a cost-effective way. That is usually marketing/internal sales for qualified leads that are
early in the sales funnel and a sales force (could be internal as well as external) for leads
that are sales-ready.
Follow-up—engage in a planned program of communications, acquisition of additional
information and transferring a sales-ready lead to sales.
7. Identify two or three online and two or three offline channels in which sales leads can
be generated. Which channels do you think are likely to be most effective in generating
leads? Which are likely to be the most expensive to use?
There is some element of “it depends on the audience” here but in general real-world events like
trade shows are very expensive. They can produce a lot of low-quality leads—your basic
“business card in the fish bowl” strategy. However if well managed, which includes some onthe-spot qualification, they can produce high quality leads.
At the other end of the spectrum might be client referrals. They tend to be low to no cost, but to
be the highest quality leads of all. They are rarely high in quantity, however.
A bit of discussion along these lines should make obvious that marketers must use multiple
channels to balance cost vs. quality and quantity.
8. What are the basic criteria that are used to qualify a sales lead?
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Desire for the product
Authority to make the purchase
Money in the budget (or in an expected budget) to make the purchase
Need for the product, the benefits it offers
9. Explain what is meant by sales lead distribution and why it is important.
“Not all sales leads are created equal.” Some are low probability to ever purchase, but worth
keeping in touch with in a low-cost channel. Some are higher probability but not close enough to
a purchase decision to warrant a high cost channel. Some are nearing a purchase decision and
need an active closure attempt. And you can think of more variations. Students should also step
and realize that various groups may need different marketing messages. Nurturing can become a
complex process all by itself.
10. What are some of the issues marketers should consider when trying to make the
conversion process on their websites as effective as possible? How can personas and
purchase scenarios be helpful?
Basically this is a usability issue, to be covered in Chapters 12 and 14. But the generic answer is
that each target segment should be able to find the information they are looking for and to
consummate a transaction if that is their desire. Personas and scenarios can be helpful in
understanding each key segment, what they are looking for, and examining the website to make
sure it meets needs.
11. Why do you think it is hard to come up with a single, concise definition of conversion?
Can you give at least two examples of different definitions of conversion and explain
why the different definitions are needed?
Perhaps the most straightforward is that the job of the sales force is to make sales. Sales are the
measure of conversion for the sales force. At the other end of the spectrum is social media
marketing which is really a precursor to lead generation and often many steps from a sale.
Consquently, SMM needs different objectives, which could include number of fans on the
Facebook page, or better, the number of Facebook fans who click-through to the website, or still
better, the number of Facebook fans who click through and then register. All this takes serious
thought.
12. What is the importance of the landing page in a marketing campaign?
The landing page can be used to mirror/expand upon the message of the ad that brought the
prospect there. Most important, it is the vehicle for capturing contact information that can be
used to qualify and nurture the contact.
Internet Exercises
1. Internet Career Builder Exercise.
2. Using the four steps in the lead generation and management process, develop a scenario
that describes how a company of your choice might go about a lead development
marketing campaign.
The first thing to consider is whether the student has chosen a product that really lends itself to a
multiple step process. Buying a book on Amazon can lend itself to other marketing activities like
recommendations and re-targeting, but that is different from a multiple step process.
Beyond that it is a matter of logic in developing a “story” that is realistic and is told in a way that
could be of use, not only to the marketing department, but to other departments like IT.
3. Go to the website, blog, or Facebook page of one of the companies you are following.
Think about how conversion might be defined on this platform. Then identify the steps
in a path that would lead from your entry point to the defined conversion activity. Can
you think of any ways to make the progress along this path more persuasive?
See the examples given in Discussion Question 11.
It would be good to ask students to actually click through and see what happens (if anything).
From some of the SMM-savvy B2C firms, registration will result in an immediate deluge of
promotions, probably the ones on the Facebook page, but brought more directly to the fan’s
attention. In other cases, nothing will happen—for a long time or not at all. What a waste! Why
does the brand have a Facebook page?
Key Terms
buy(ing) cycle process a customer goes through in deciding to make a purchase.
content marketing creating and distributing content across the web that users find valuable and
relevant, driving visitors to the website.
demand generation entire process of developing customer demand for a product or service.
hard lead highly qualified sales lead.
inbound marketing creating visibility on the Internet that brings visitors to the website or blog.
inquiry customer request for information that identifies the person or firm as a potential
purchaser.
KPI (key performance indicator) a metric that has been identified as an important measure or
benchmark of business performance.
landing page a web page designed to receive visitors who are coming to the site as a result of a
link from another site.
lead distribution dividing leads into categories based on their purchase readiness stage.
lead generation identifying sales prospects.
lead qualification determining whether a prospect has the characteristics necessary to make a
purchase.
microsite (or minisite) a collection of web pages, often created for a particular subject or for a
temporary period of time that has a URL different from that of the parent site.
permission marketing marketing to customers who have given explicit permission to be
contacted.
persona a way of describing different groups of customers by giving them a unique personality.
QR (quick response) code a scanable matrix that links to a location on the web.
scenario essentially a story about how a customer goes about purchasing a product.
soft lead sales lead that meets few if any of the qualification criteria.