The Sales Funnel Pipeline: Grow Revenue From Funnel Leaks

Interim marketing executive, Chuck Besondy, explains how to take advantage of the opportunity of leads that leak from the sales funnel pipeline. This simple sales funnel step can significantly improve sales.

I was speaking with an executive the other day who repeated the concerns of her management team that their existing market was too small to sustain their growth.

Expanding into new markets may look enticing, but there are large risks and costs associated with this strategy. As it turned out in this case I was able to show the company that their market was large enough to provide growth opportunities for the next 3 years.

A little back of the envelope math indicated a bleak picture at first. Considering the size of their available market and their current conversion metrics for demand generation they simply couldn’t reach their revenue target. They were burning through too many prospective buyers and before long every prospective customer in the market will have been contacted and perhaps even placed into their sales funnel.

Their conversion rates were respectable, too. Only incremental improvement could be expected. It was when I asked about buyer recycling (lead recycling) that the answer started to emerge.

Many marketers and salespeople put all their energies into generating leads and working to progress these buyers through the funnel. But, a percentage of buyers always leak from the funnel at every stage. If your conversion rate at one stage in the funnel is 40%, this means 60% have leaked–they haven’t progressed. For whatever reason they weren’t willing or able to move to the next stage in the funnel at that time. Later a portion of these leaked buyers will be ready to re-engage with you (if you let them).

Sadly these buyers who leak for whatever reason are frequently forgotten by marketing and sales.

The company I was speaking to wasn’t actually ignoring their leaked buyers, but had a procedure in place to follow up with leaked buyers every 6 months. Ah-ha!

Using a sales funnel calculator from MathMarketing (click for lite version of this calculator) I was able to show the company that by recycling their leaked buyers at every stage after 4 weeks rather and after 24 weeks they’d need 7,000 fewer fresh names over a three year period.

This meant the market was large enough if they could execute effective marketing and sales strategies for recycling the leaked buyers back into the funnel–certainly a much easier and less risky proposition than expanding into new markets.

This article can also be viewed at Chuck Besondy’s blog, The Sales Funnel Fanatic.

Photo by steved

How Much to Spend on Lead Generation

How much of your marketing budget should you spend on lead generation? According to marketing executive Chuck Besondy, the magic number is 42%. See the following article to find out why.

One of the first duties of an interim marketing executive starting a new engagement is to assess the marketing budget. How much is being spent on what activities and what is the expected result?

Within the marketing programs budget there should be three categories of investment: Environmental, Lead Generation and Channel Readiness. Research has shown clearly that B2B companies that invest at least 42% of their budget on Lead Generation grow revenue faster than companies in their industry that spend less than that level.

The definitions are straight-forward.

Environmental programs are for branding and letting the market know your company is in a particular category.

Lead Generation are programs that place buyers into the funnel.

Channel Readiness programs are those that make the direct and in-direct sales channel effective.

The research (1400 companies around the world) didn’t reveal any patterns in the sample for spending in the Environmental and Channel Readiness categories, but it was clear that spending too much in Environmental or Channel Readiness at the expense of Lead Generation was harmful to revenue growth.

Before making changes to a marketing budget the smart interim marketing executive will first assess for each product the stage of the market (per Geoffrey Moore), what the appropriate go-to-market strategy is for each market, and then what percentage of budget should be allocated to environmental, channel readiness, or lead generation activities to support that go-to-market strategy.

Take a look. Are you spending less than 42% of your marketing programs budget on lead generation? If so, this is probably restricting your revenue growth.

This article can also be viewed at Chuck Besondy’s blog, One Riot One Ranger.

Photo by malamantra