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To Boost Lead Generation ROI, Look To Data

by Jenny Vance - November 8, 2011

To boost lead generation ROI, look to data by Jenny Vance

When marketing and sales executives consider campaigns for inside sales, they often contemplate whether to outsource or to handle the project in-house. They give thought to who will be doing the calling, what kind of expertise that person has, what technology is needed to facilitate the calls and how to measure success.

After careful planning, they implement the sales campaign, and the campaign has limited success.

This is because managers often overlook one of the most important contributors to the success of lead generation campaigns: quality of the data or list.

The reasons for not investing in validated data are many. The manager may feel the need to start calling to drive quick results. Perhaps the manager acquired a list through a list broker or through other sources, only to find that a large percentage of the contact data is wrong or outdated.

Commonly, managers skip the data investment to save money. They opt instead to put budget dollars into the calling program, assuming this is the best way to generate campaign ROI.

Study shows data research impacts the “R” and the “I” in ROI

LeadJen recently conducted a study of the role data cleansing plays in the success of lead generation and prospecting campaigns. The results are dramatic. Inside sales reps working with validated data achieve nearly four times more qualified appointments. In addition, inside sales reps who are not provided validated data waste about $20,000 in productive sales time annually.

Our study included 12 lead generation campaigns, representing 121,905 touches (a connection made by phone or email) across nearly 27,000 leads/contacts at nearly 15,000 companies. All campaigns were active within 90 days of the study.

Cost of Not Validating Data

Cost of wasted time

$20,475 per ISR annually

Response rate

2% lower

Appointments set

1/4

We found that when it comes to return on investment (ROI) of lead generation campaigns, investing in clean and accurate data positively influences both the Return and the Investment of ROI.

Maximizing the Investment

First we’ll examine how the quality of data can impact lead generation investment.

Our study shows that conducting a lead generation program without first investing in data results in 27.3 percent of a sales representative’s time being wasted chasing bad data. That’s 546 hours a year per full-time inside sales rep.

Considering that an inside sales rep costs a company $75,000 a year on average, including salary, benefits and overhead, that’s a loss of more than $20,000 in productive sales time yearly for every inside sales rep.

The waste happens in two ways:

1. Bad first call attempts. This is the outcome when the company is out of business, the contact no longer is employed, or the contact information is wrong and the rep cannot find replacement information online within 10 minutes. Our study shows campaigns conducted without market research result in three out of 10 first attempts being wasted, at a cost of $5,625 per rep each year.

Based on a full-time inside sales rep (2,000 staff hours a year) and 15 average attempts per hour, a sales rep could achieve 30,000 attempts a year to 7,500 contacts.

Bad first call attempts

Contacts:

7,500/year

30% first attempts wasted:

2,250/year

Hours wasted:

150 (2,250 bad attempts/15 calls an hour)

Fully-burdened sales rep cost/hour:

$37.50/hour

Cost of wasted first attempts per full-time rep:

$5,625/yr. (150 x $37.50)

2. Contact is not a fit. This is the outcome when the sales rep reaches the contact, but the contact is not a decision maker, no longer is in the necessary role, or something happened at the company recently so the company isn’t a relevant target. The average “not a fit” rate is 30 percent, but the impact on the organization is even greater. This is because sales reps must perform several attempts before finally reaching the contact, only to find that the data is wrong.

On average, it takes four attempts to reach a contact, resulting in a cost of $15,750 per sales rep annually.

Contact is not a fit

Contacts:

7,500/year

70% good attempts

5,250 contacts

30% contact not a fit

1,575 contacts

Four attempts per contact

6,300 call attempts

Hours wasted

420 (6,300 bad attempts/15 calls an hour)

Fully-burdened sales rep cost/hour

$37.50/hour

Cost of “not a fit” calls per full-time rep

$15,750/yr. (420 x $37.50)

Good data turbo-charges results

Now let’s look at how the quality of data impacts the “R” in the campaign’s ROI.

Our study shows that campaigns invested in market research average a 2 percent greater response rate per lead targeted.

Market Research

No Market Research

Response rate by lead

4.36%

2.41%

Those percentage gains translate to nearly four times more appointments.

Assuming that researched lists can expect 95 percent or greater accuracy, the outcome is dramatic:

Response rate per lead targeted

Market research

No market research

Contacts

7,500

7,500

Contacts after attrition

6,769 (7,500 x 95% accuracy x 5% attrition)

3,675 (7,500 - 30% bad first attempt - 30% not a fit)

Response rate

4 percent

2 percent

Appointments set

271

74

Since campaigns with market research result in nearly four times more appointments, it follows that campaigns investing in market research also will result in four times the number of sales.

In blended campaigns--those using both market researched lists and non-researched lists-- we found that 65 percent of appointments came from the market research lists. Considering that the non-researched lists were generated from trade shows and other inbound sources, which naturally are warmer lists, those results are even more stark.

Market research pays for itself

While market research isn’t free, we’ve found that the cost essentially is being paid for through the enhanced productivity of sales reps.

However, the real difference is seen in the results. Campaigns that deliver four times the results for the same cost are not uncommon.

Validated data delivers:

More leads, as bad leads are replaced.

More valid touches.

Nearly four times the results.

Almost 100 percent efficiency.

Summary

Conducting a lead generation campaign is exciting. Anticipating great results can cause managers to rush a program without first investing in market research. This results in significant waste for the organization.

The study shows that organizations not investing in market research as part of a lead generation campaign wastes close to 30 percent of sales reps’ time calling invalid contacts.

More importantly,, investing in good data delivers significantly better results. The study shows campaigns that have invested in market research produce nearly four times the number of appointments compared to those without market research. Since appointments lead to sales, it’s logical to say that campaigns that start with market research produce significantly higher sales.

 
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