Tuesday, November 16, 2010

The Changing Dimensions of Lead Flow

One of the more interesting ways of assessing the revenue performance of an organization that we looked at in thinking about revenue benchmarking was via an overall plan (whether just an adjustment of historicals, or a forward-looking revenue projection). However, in building an end-to-end plan for managing your overall revenue performance, it is important to stay aware of how the “dimensions” change over time. As a marketer or salesperson interacting with a prospective buying audience, how that audience is defined changes as a more direct connection is made with them. While this change is unimportant if each stage is dealt with separately, it becomes important to understand and model correctly as the entire process begins to be viewed with the same lens.

- At the earliest stages of interaction with buyers, as they are just entering into the awareness and education stage, the metrics that are trackable are around interactions and views. Whether it is views of a banner ad, anonymous visitors on a website, or searches being performed against key phrases, these views are often anonymous and may occur multiple times for the same individual.

- As individual prospects become known, uniquely identifying them by an identifier such as an email address or other id becomes possible. At this point, multiple interactions with one person can be tied together and that individuals actions can begin to qualify them as potentially being a marketing qualified lead.

- As a marketing qualified lead is handed to the sales team, and an opportunity is created to explore the interest that is expressed, the opportunity is generally with the purchasing company, with multiple interested individuals associated to it.

- The opportunity itself, as it is explored in further detail, will begin to have an approximation of size associated with it. Depending on what is being sold, this is associated with an annual contract value, total deal size, or other measurement of bookings.

- When a deal is closed, and services begin to be rendered, this bookings number will translate to a flow of revenue, based on the appropriate accounting standards being used.

At each point in an overall plan that a change in the "dimension" of what we're measuring will take place, this transition must be taken into account. If a conversion rate between website traffic and inquiries, or between leads and sales opportunities, is being benchmarked against as part of the plan, it must take this change in dimension into account. In most cases, this shift in dimensions can be built in as part of any conversion rate that is used in an applicable situation. For example, if 15 opportunities are created out of 1000 leads, a 1.5% conversion rate can be quoted (although I'm sure that the more rigorous mathematicians amongst us will cringe), and planned against without problem.

However, it’s important to realize that this change in dimensions did take place, and if any change in buying pattern or marketing approach takes place, a change in the number of individuals involved in a deal could shift this number without any underlying change in the likelihood of an opportunity to be created.

In your planning, are you clear on what the "dimension" is that you're measuring at each stage? An individual? A company? A dollar?
Many of the topics on this blog are discussed in more detail in my book Digital Body Language
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