Quality News 5
Value Captures Potential Customers
Quality-control checkpoints ensure leads are followed up in the most effective - and cost-efficient - manner
Acquiring customers is perhaps the most important process in your company. The goal: Find potential customers who value what you produce, and sell them your product as efficiently as possible. However, internal battles between marketing and sales departments can hinder this process. If marketing doesn't consult sales about qualifying leads, sales will typically follow up on only 30%-35% of the leads that marketing generates.
A procedure for qualifying leads becomes a quality-control check. Your sales force will understand the quality of the leads generated, and you will have a way to judge the effectiveness and the efficiency with which salespeople close leads of the same quality.
All leads are not created equal (see sidebar). In addition to measuring the quantity of leads generated, be sure to also measure their quality.
That begins by understanding how well your product or service matches the potential customer's needs. All customers want value, but they define that word differently. Some equate value with price. For others, it's product performance or how well you understand their business.
Your value proposition is crucial to understanding the quality of the leads you generate. If your company provides a product that's cheaper than your competition's, potential customers who highly value low price will obviously be better sales leads than those who value product performance.
Develop a series of questions that will provide insight into what customers value and when they intend to purchase. Ask your salespeople to develop a list of 10 questions to determine whether a potential customer is a good match for your value proposition. Structure questions so customers can provide a yes or no answer, or respond by choosing from a short list of options.
4 steps to scoring value
- Rank your questions according to the most indicative of a good value-proposition match down to the least, with 10 being the best match.
- Score the answers to those questions. Answers that establish value proposition receive a score of "1," while those that do not are labeled with "0."
- Multiply each question's score by the appropriate question rank, then add all of those figures to get a total score. If you're using 10 questions, with 1 being assigned to the favorable answer and 0 to the unfavorable answer, the highest possible score is 55 ((10 x 1) + (9 x 1) + (8 x 1) and so on).
- Potential customers scoring higher than 30 are important.
Example: Sean Durkin, founder of VortalLogic, a Roswell, Ga.-based application service provider that helps companies communicate with their customers via the Internet, determines the value proposition for his company by asking potential customers, "Would you like me to show you how you could communicate with your customers and potential customers much more inexpensively?" If the customer answers "yes," the value proposition has been established.
The next step in the procedure is to identify how soon the potential customer is considering a purchase. Depending on how your business operates, "soon" could mean anywhere from one week to one year. By pinning down the customer's time frame, you determine how quickly you need to move to win the business.
Measuring your lead-generation program
Take stock of your lead-generation programs by asking:
- Did the campaign generate leads?
- Were those leads prospective customers who value what we sell?
If the issue you highlight in your message generates a high number of leads, you know that it has been efficient. If a high percentage of leads are customers who closely match your value proposition, the program was also effective. Evaluate every marketing campaign according to these standards.
Classifying potential customers
Your sales force is your most expensive resource for communicating with customers. To maximize your return on this investment, have salespeople pursue the most profitable customers by classifying prospects into one of four categories:
- Urgent and important: Customer scores highly and is ready to buy in the near future. These customers should be contacted by a salesperson immediately. Since your sales force helped develop the lead-qualification questions, they should understand that an "important and urgent" customer really is a customer who is worth their time.
Tip: Use these two procedures to measure the effectiveness of your sales force:
- If two salespeople receive an equal number of "important and urgent" leads, the one who closes the most is obviously the most effective.
- If they close the same number of leads, the one who closes them in the fewest calls is the most efficient.
- Important but not urgent: Customer scores highly but is not ready to make a purchase in the near future.
Task: Focus this potential customer on the benefits they would enjoy if they were to purchase your product or service. Illuminate and personalize these benefits as much as possible. Written materials, such as similar customer case studies, are cheaper than a sales call and can be very effective in nudging the prospect closer to a purchase. The net result: Your salespeople communicate effectively with more accounts, and you improve return on investment. Sales cycles are shortened, which lowers the costs of selling and customer acquisition.
- Urgent but not important: Customer scores poorly but will be making a purchase soon. These customers should be contacted by a salesperson immediately.
The challenge: Wrenching the account from the jaws of the competition. If the salesperson believes there is a good chance of convincing the prospect that your value proposition is superior, the account should be aggressively pursued. On the other hand, if the situation does not look as promising, take a longer-term approach by educating them on the value that your product provides.
- Not important and not urgent: Customer scores poorly and will not be making a purchase soon.
Task: Educate the potential customer with a combination of written materials and outbound telemarketing. When the customer seems to be "getting it," bring in a salesperson.
To expand on the information provided by your lead-qualification process, have salespeople learn everything that might affect your value proposition. This information-gathering step forms the foundation for the entire selling process.
By gaining an in-depth understanding of a potential customer's business, salespeople can specifically demonstrate how their products or services could improve the situation - and provide value.
Monitor this step. After the first contact with a prospect, a sales manager should consult with the salesperson to discuss how your company can provide value. The salesperson should be able to provide details to support his or her position.
Warning: If your sales force can't determine how to provide value to prospects, your value proposition has been compromised. At this point, it is critical to reassess your competitive position. Don't expect your salespeople to overcome poor value with sales ability.
The next step is to demonstrate value by taking information provided by the prospect and crafting a presentation showing how your product would improve his or her situation.
Example: VortalLogic had a potential customer that frequently introduced new products and changed pricing on existing products. As a result, the company continually printed new brochures and catalogs, then mailed them to the entire customer list. The company wanted to employ another salesperson, but was concerned with costs.
VortalLogic proposed to add value with a Web site that enables inexpensive price changes and product additions. Customers could be segmented based on their specific interests and then notified of pertinent changes in price or product, which would reduce mailing costs.
The VortalLogic salesperson first learned how much the potential customer was spending to produce and mail brochures, and then quoted how much the prospect would save by switching to VortalLogic. Based on the information gathered, the salesperson demonstrated how the purchase of his technology would not only lower costs, but would also allow management to reallocate funds to improve market penetration and customer retention. This information formed the basis for a powerful presentation that illuminated VortalLogic's value proposition.
Measuring value presentation
Determine the success of your value presentation by answering three questions:
- Does the presentation rest on information specific to the potential customer's situation?
- Does the value that you provide equal or exceed the cost of your product or service?
- Does your value exceed what competitors could offer in the same situation?
If you answered "no" to any of these questions, your chances of winning the account are slim. Make sure that your ability to offer value is equal to or greater than the price of your product or service - and greater than that of your competitors.
In previous decades, the ABCs of selling were, "Always be closing." Now it's more appropriate to say, "Always be creating … value."