A lead is a contact who has been identified as a potential customer by a company. It encompasses the potential as well as additional information and data related to the contact.
All processes concerning new prospective customers, their qualification and support are included under the term Lead Management. Lead management, like CRM, is integrated into the corporate structure and philosophy. Marketing and sales departments receive therefore central roles. The more sustainably and consistently lead management processes are organized, the less wastage there is.
The aim of lead management is the acquisition of new customers which is essential for a healthy growth of a company.
Lead management can be divided into the following stages:
- Identification
- Qualification
- Conversion
Identifying prospective customers
The goal of the first stage is to generate leads. Several marketing actions are used for their identification. These actions should spark the prospective customers’ interest, recognize their own needs and make them contact the company in order to provide them with the information they want: for example, using direct communication tools such as mailing campaigns or at trade fairs, or using indirect communication tools such as advertisement or referral marketing.
If one has a new lead, the next step is to document basic information such as address, contact, their function, etc.
Qualifying prospective customers
Before starting with sales work, one should always consider that a new customer is neither efficient nor profitable at any price. Therefore, the lead qualification plays a crucial role in the acquisition process. This is the only way to identify the really promising prospective customers and filter out projects that are doomed to failure from the outset.
First, a rough pre-selection is useful, e.g., the examination of the prospective customers with regard to the own target group and the budget. In this way, completely uninteresting leads can be sorted out immediately. One should also always keep an eye on the reaction of the prospects to the information received. Reticence, skepticism or unreserved enthusiasm can already be an indicator for the further course at the beginning of the project.
A deeper analysis is recommended for the remaining prospective customers. Since investing a lot of work in the actually unrealizable acquisition of a prospective customer will ultimately not bring the company any success. Costs and expenditure of time are high and cannot be justified by the only small or not at all attainable profit. It is therefore important to identify and select these leads right from the start.
A possible qualification tool is the BCG Portfolio analysis, where prospective customers or projects are assigned to a given category using a 4-field matrix. The positioning within a quadrant occurs through the respective axis values. For instance, the attractiveness of a prospective customer can be compared to the probability of a purchase. The evaluation of the prospective customer should be conducted as a continuous process and not just once. It may happen that some of the assessed criteria change over time, or additional requirements arise at a later date that turn a previously potential new customer into an uninteresting lead.
Turn prospects into customers
Once you have focused on the most interesting leads, you also want to turn them into customers. For this, purchasing incentives must be maximized while minimizing purchasing resistance. A focused look at the reasons that could prevent the prospective customer from buying is worthwhile, because some could easily be eliminated – such as an unfounded skepticism towards the product which was only due to lack of information. In this case, advising the prospective customers quickly and competently in order to close the information gap is essential.
A complete support can however be guaranteed, only if the requirements of the prospective customers as well as their level of information are known. Which information material have they already received? Which individual request have they expressed? Which questions haven’t been answered yet? If the sales employee in charge cannot answer these questions, how high is the risk that the prospect lose interest – from dissatisfaction, because of a lack of product knowledge or because the competition reacted faster. Therefore, all back office and field staff must have a direct access to a complete updated activity history. Building trust and the increase of purchasing incentive is indispensable through the complete process from the first contact with the prospect to the successful conclusion.
Not losing sight of your existing customers is also essential for long-term corporate success. Addressing new customers and product design must not be too far apart from the needs of existing customers, as otherwise customers can be won on the one hand, but lost on the other hand.
