Companies are spending a significant amount of their marketing budgets on tools designed to increase their ability to generate leads over the web and optimize their sales representative’s ability to close those opportunities.
However, companies often use intuition to generate, capture, route, manage and respond to the leads that marketing organizations generate through the web. Intuition is often incorrect. As such, there is an opportunity to help bring science to the field of lead response management.
To understand what is currently happening in companies today in this new area, Dr. Oldroyd performed a survey of marketers and sales manager to identify which organizations are having success and how they are achieving it.
Over the course of four months (June to September 2007), Dr. Oldroyd received 495 responses from companies that drive web leads to their web sites. The surveyed group represents over 40 industries. The survey was primarily responded to by sales or marketing managers/executives and represents a broad distribution of every company size (ranging from “under $10 million in annual revenue” to over “$1 billion in annual revenue.”) The survey audience consisted primarily of companies that are headquartered in North America (USA, Canada, Mexico).
22 survey questions focused on the following issues:
Generally speaking, the study was focused on identifying WHEN the best time was to efficiently contact web-generated leads, and HOW to generate, contact, and handle web leads for optimal success.
Several interesting patterns emerged from an analysis of the data that offer clues on how best to generate, capture, route, manage and respond to web-generated leads in order to optimize lead qualification rates and sales close rates.
HOW do you generate web leads to qualify and close at optimal rates?
To answer this question, Dr. Oldroyd conducted an analysis of which antecedents to generating leads drive the highest qualification and close rates and which processes are most effective in distributing the leads to sales and lead generation representatives.
The study design allowed a focus on both positive and negative relationships between the antecedents and processes, and their correlation on qualification and close rates of the companies in the survey. The table below summarizes some of the key findings and their correlation with qualification and close rates:
In the table below, a ‘+’ sign indicates this method increased qualification and close rates, a ‘-‘ sign indicates a negative effect on qualification and close rates, a ‘~’ sign indicates this data bordered on just barely being statistically significant. If nothing is indicated there were no statistically significant relationships in that data. (The appendix has the list of methods we surveyed.)
Antecedents to generating leads:
Processes to distribute leads to sales and lead generation representatives:
WHEN does a lead go cold? How does efficiency in contacting impact qualify and close rates?
Companies intuitively understand that speed is likely to improve qualification and close rates. Moreover, they understand that greater efficiency in responding to web-generated leads allows them to contact more leads with less effort. A portion of the study sought to find evidence for these effects.
The effect of time and efficiency on both qualification and response rates was striking.
In addition to the when question addressed above, The Lead Response Management survey also sought to answer how companies generate, respond and route leads. In doing so, the study identifies which methods of demand generation marketing are more effective and which are less effective in both qualifying and closing leads. In particular, the survey linked each process ( 1) demand generation, 2) offer type, 3) techniques to capture the lead and 4) lead distribution strategies) to the qualification rates and close rates from the same respondent.
The first area of analysis is that of demand generation. This section examined the stages involved in generating a web based lead, and what techniques correlate with an increase or decrease in lead qualification and close rates.
The following table represents the Lead Response Management Survey questions related to generating demand and processing leads. Respondents described how often they used the methods or criteria described in the specific questions by using the seven Response Tiers in the right box.
On a technical note, Dr. Oldroyd regressed each demand generation process on the company�s qualification rates and close rates using OLS regression with robust standard errors. A cut off of 95% confidence was used for most analysis; however, some relationships with a lesser confidence interval are also reported (and noted with an � *�.) A listing of all potential responses is indicated in the order in which they appear in this paper in the Appendix for context.
NOTE: Each question will be represented by the letter bolded throughout this summary.
Question asked to respondents: “To what extent do you use the following methods to DRIVE visitors to your company's website?”
Effects on lead qualification rates: ‘Social Networking’ had a positive effect on qualification rates, while ‘Public Relations’, ‘Cold Calling’, ‘Telemarketing’, and ‘Online Advertising’ had a negative effect.
Effects on close rates: ‘Blogging’ and ‘Social Networking’ correlated with positive effects on close rates, while companies using ‘Pay-per-click (PPC)’ to drive leads correlated with a negative effect on close rates.
Question asked to respondents: “To what extent does your company use the following OFFERS on its website to incentivise a lead to fill out a web form?”
Effects on lead qualification rates: ‘Price Quotes’ and ‘Proposal Request’ have a strong positive relationship with increased qualification rates, while ‘Newsletter Subscriptions’, ‘Webinars’, ‘White Paper Libraries’, and ‘White Paper Offers’ decreased qualification rates.
Effects on close rates: Offering an ‘eBook’, ‘Proposal Request’, and ‘Price Quotes’ have a strong positive relationship with increased close rates, while offering ‘White Paper Offers’ decreased close rates.
Question asked to respondents: “To what extent does your company use the following methods to CAPTURE lead information from its website?”
Effects on lead qualification rates: Capturing lead information by ‘Email (“mail to” link)’ and ‘Web form to Phone’ were statistically significantly correlated with a positive increase in qualification rates.
Effects on close rates: ‘LiveChat’ and ‘Click-to-call’ as a means to Capture leads both increased close rates. None of the other methods of capturing lead had a statistically significant effect on close rates. Capturing leads by ‘Local Phone’, ‘Toll Free Phone’, ‘Web Form to Email’ or ‘Web Form to Database’ had no relationship to qualification rates or close rates.
*’Click-to-call’ and ‘LiveChat’ were notable but not quite statistically significant as correlating positively with higher qualification.
Question asked to respondents: “To what extent does your company use the following criteria to DISTRIBUTE leads?”
Effects on lead qualification rates: The criteria which leads are distributed are the ways decisions are made as to who gets the leads. Distributing leads to the ‘First available sales rep’ and by ‘Skills-based distribution’ have a statistically significant relationship to higher qualification rates. Distributing leads by geography or sales territories has a notable decrease in qualifications rates but was just beyond the margin of error for validity. Distributing by ‘Discretion of sales manager’ and ‘Round robin (evenly)’ was an insignificant relationship either way.
Effects on close rates: Distributing leads to the ‘First available sales rep’, by ‘Skills-based distribution’, or by ‘Company size’ all were significant predictors to increased close rates. Distribution by ‘Vertical market (industry/company type) was marginally linked to increased close rate but was not significant. Distributing by geography, fairly, or at the discretion of the sales manager had no correlation.
Question asked to respondents: “To what extent does your company use the following criteria to ROUTE leads?”
Effects on lead qualification rates: Routing leads by ‘Phone (ACD)’ correlated to higher qualification rates, and directly into a ‘Database Record’ was marginally significant to higher lead qualification rates.
Effects on close rates: ‘Paper’ routing of leads correlated to higher close rates, and routing by ‘Phone (ACD)’ stood out but wasn’t significant*. Routing by ‘Email’ and ‘Phone’ had no effect on close rates.
Question asked to respondents: “To what extent does your company use the following methods to CONTACT leads received from its website?”
Effects on lead qualification rates: Several methods used to contact leads like fax, chat, and email all increased qualification rates. Contact by phone and direct mail had no correlation.
Effects on close rates: Fax and chat increase close rates. Phone and direct mail had no meaningful relationship to close rates.
The next area of analysis is that of lead response timing and efficiency. Once again, Dr. Oldroyd regressed responses from these questions on the qualification rates and close rates. This is the examination of when and how frequently a sales or lead qualification representataive should attempt to call a lead they gave their information in a web form.
One area that is different and interesting here is Dr. Oldroyd also compares those that responded to those that did not respond to the questions in this section. He calls those that did not respond the ‘Don’t Knows’, and he uncovers some additional relationships that are statistically significant in their correlation to qualification and /or close rates.
The following table represents the Lead Response Management Survey questions related to lead response timing and efficiency. Respondents ranked how often they used the methods or criteria in answering the specific questions by the response tiers in the right box.
Question asked to respondents: “To what extent are the following time blocks effective for contacting leads (i.e. speaking on the phone with the correct person)?”
This analysis looks at the answers of all respondents to understand when they think different the time blocks of the day are best for contacting leads. It then regressed these responses on qualification rates and close rates as reported by the same respondents.
Effects on lead qualification rates: The following correlations were found for the time blocks listed below:
Calling at this time block correlated to a 5.56% increase in qualification rates over other times.
|� 10:00am�11:00am||Calling at this time block correlated to a 5.43% increase in qualification rates over other times.|
|� 11:00am�12:00pm||Calling at this time block correlated to a 4.16% increase in qualification rates over other times.|
|� 2:00pm�3:00pm||Calling at this time block correlated to a 3.99% increase in qualification rates over other times.|
|� 3:00pm�4:00pm||Calling at this time block correlated to a 3.24% increase in qualification rates over other times.|
|� 4:00pm�5:00pm||Calling at this time block correlated to a 4.34% increase in qualification rates over other times.|
As demonstrated in the chart, there are two time periods that marketers and sales people feel is more effective to call in order to improve qualification rates. They are mid to late morning and the afternoon.
NOTE: Compare the survey data to the more significant LRM study on the same topic.
Question asked to respondents: �To what extent are the following time blocks effective for contacting leads (i.e. speaking on the phone with the correct person)?�
There was no statistically significant data from day of week with qualification rates or sales rates. This does not mean that there is not a best day of the week to make call in order to qualify and close lead. Rather, it implies that people DO NOT KNOW what day is best to call web leads and or there is significant heterogeneity in their responses as such were not able do indicate and pattern in their answers.
Question asked to respondents: “On average, how much TIME does it take before a first call is attempted?”
Effects on lead qualification rates: The first bar on the chart shows a decrease of -4.13% in qualification rates for every tier of time taken to first contact. See Appendix for response tiers.
Effects on close rates: The second bar on the chart shows a decrease of -2 % in Close Rates for every additional tier of time to first contact.
Question asked to respondents: �On average, how much TIME does it take before reps in your company make their first contact (i.e. speaking on the phone with the correct person)?�
Effects on lead qualification rates: The first bar on the chart shows the correlated decrease of -2.31% in qualification rates for every tier of time taken to first contact. The right section of the first bar shows the �Don�t Knows� who correlate to a significantly higher -7.29% decrease in qualification rates. This means that sales and lead qualification organizations that don�t track when they first contact their new webgenerated leads have a significantly larger decrease in their lead qualification rates for every delayed tier in the question.
Effects on close rates: The second bar on the chart shows a decrease of -1.51% in close rates for every additional tier of time to first contact. There was not a significant effect on close rates for the ‘Don’t Knows’.
Question asked to respondents: “On average in your company, how many ATTEMPTS does it take before a rep make first contact (i.e. speaking on the phone with the correct person)?”
Effects on lead qualification rates: The analysis demonstrates a decrease of -5.05% in qualification rates for every additional call attempt companies make in order to first contact their web leads.
Effects on close rates: The analysis demonstrates a decrease of -2% in close rates for each additional call attempt in the process of first contacting a web lead.
Question asked to respondents: �In your company, what is the average number of phone conversations (CONTACTS) needed to QUALIFY a lead? (Qualified = a lead that enters the sales process.)�
Effects on lead qualification rates: The analysis demonstrates a decrease of -3.72% in qualification rates for every additional contact companies make to qualify a lead. The next bar shows the effect of not knowing or measuring the number -11.31% decrease in qualification rates.
Effects on close rates: The analysis demonstrates a decrease of -1.46% in close rates for every additional contact companies make to qualify a lead. The left side of the second bar shows the ‘Don’t Knows’ high have a significantly higher decrease of -11.92% in close rates.
Question asked to respondents: �In general, how many call ATTEMPTS does your company suggest sales reps make before they ABANDON a lead?�
This section of the survey analysis is particularly interesting. Respondents were asked how many call attempts they suggest that a sales rep make before they give up trying to contact a lead. This is not asking how many are actually made.
60.4% of respondents that knew or measured this say they recommend a sales rep quit calling at 4-5 attempts or less.
Effects on lead qualification rates: The analysis demonstrates that there is no relationship observed between increasing the additional ‘# of Attempts tiers Before Abandoning’ and qualification rates. But the lighter green section of the first bar shows the ‘Don’t Knows’ correlate to a -10.63% decrease in qualification rates.
This suggests that not knowing or measuring when a sales rep should abandon correlates with lesser qualification rates.
Effects on close rates: The analysis demonstrates an increase of 2.08% in close rates for additional ‘# of Attempts’ tiers that are recommended before a sales rep abandons the process.
The lighter blue section of the bottom bar shows that the �Don�t Knows� correlate to a decrease of -8.83% in close rates.
This says that organizations who advocate high numbers of attempts to make contact with leads before they give up correlate with higher reported percentages of close rates.
The next area of analysis is observing trends related to company’s revenue, employee count and other general results. Once again, Dr. Oldroyd regressed these responses on the qualification rates and close rates.
The approximate headcount of employees in your company was correlated against qualification rates and close rates. The response tiers were:
Effects on lead qualification rates: Analysis shows ‘Employee Size’ with the reported effect on qualification rates and close rates. The relationship between employee size and qualification rates was just outside of the criteria for validity, but it was close enough that we have mentioned it.
It says that for every tier of increased employee size, there is a loose relationship between lower qualification rates that decreases at a rate of -1.22%.
Effects on close rates: The correlation between Employee Size and close rates is statistically significant and decreases at a rate of -1.44% for each tier of larger Employee Size. Or in other words, this suggests close rates go down in larger companies.
The approximate number of lead generation or sales reps in companies was correlated against qualification rates and close rates. The response tiers were:
Effects on lead qualification rates: Analysis shows that there was a significant relationship on qualification rates of -2.45% as higher tiered numbers of Lead Reps or Sales Reps were reported.
Effects on close rates: There was no observed effect on increasing # of Reps and close rates.
Question asked to respondents: �To what extent do you agree with the following statements?
Effects on lead qualification and close rates: Dr. Oldroyd regressed responses on all three of these questions to qualification rates and close rates and only found statistically significant relationship, that was question #3.
There was a negative effect of -2.68% for each tier from ‘Never’ to ‘Always’ on close rates when a company says they lose customers because they are not able to CONTACT THE QUICKLY ENOUGH.
There was no relationship in either direction when respondents said they didn’t have enough time or enough leads.
Question asked to respondents: �On average, is your company�s sales process a generalist process (i.e. one rep handles the entire sales process), or a specialist process (i.e. one rep hands off to another rep for different aspects of the process)?�
There were 67.4% of the respondents that reported their sales reps are generalists, while 32.6% are specialists. Specialists work in an environment where there is at least one hand-off in the sales process. An example would be a company where a lead is qualified by a representative that qualifies and sets an appointment on behalf of a rep who closes the sale.
Dr. Oldroyd uncovered a 7.9% higher reported close rate of Specialists over Generalists. Companies that focus the inside sales process have better outcomes then firms that take a generalist approach.
5. Company Revenue: This question examines the relationship between annual revenue on lead qualification and close rates.
Question asked to respondents: “What was your company's annual revenue for 2006?”
Effects on lead qualification and close rates When examining how qualification rates and closes rates are effected by revenue, there was no relationship with qualification rates, but close rates decreased at a rate of -1.55% with each increasing tier.
This finding seems to be similar to Employee Sizes and # of Reps. Close rates seem to decrease as size increased.
Lead Response Management Survey Conclusion
The Lead Response Management Survey introduces many new answers to the field of lead response management.
However, in studying the responses, we couldn’t find ANY statistically significant answers to our question of WHEN (besides generally faster and more efficiently) we should respond to web leads by asking the marketing departments of companies.
Here are a few additional questions we asked that further exemplifies this point:
|When asked “How much time does it take to make a first call attempt” we had the following responses:|
|1. Less than one hour||20%|
|2. 1 hour to 8 hours||16%|
|3. After 8 hours (next business day or beyond)||26%|
|4. Don't Know, Don't Measure or Didn't Respond||38%||When asked “How many attempts does it take before a rep makes first contact” we had the following:|
|4. Four or more||12%|
|5. Don't Know, Don't Measure, or Didn't Respond||40%||We asked “how many call attempts do you suggest sales reps make before they abandon a lead?”|
|1. One to Three||14%|
|2. Four to Five||21%|
|3. Five to Seven||12%|
|4. More than Seven||11%|
|5. Don't Know, Don't Measure, or Didn't Respond||11%|
Please note that 107 companies chose not to respond at all to these three questions.
The survey clearly reveals that marketers and sales representatives DO NOT KNOW when and how efficiently to follow up on web-generated leads. Since this was the reason for the survey, Professor Oldroyd recommended a more detailed behavioural analysis on actual call data. To perform this kind of study, we needed data that would allow us to analyze the effects on contact and qualification ratios based on the time from when leads are created, to attempted, to contacted, to qualified.
Believing that companies don’t know, we acted on his recommendation to answer the original question:
“How Much Time Do You Have Before Web-Generated Leads Go Cold?”