By Larry Dillon, VARBusiness

Fri., Nov. 28, 2003

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A major publisher of financial news and data recently indicated it was looking to overhaul its network and infrastructure. The customer had about $1 million worth of work in the hopper. I gave the lead to a solution-provider client, who placed a call to the CIO, then waited for a call back. It never came, nor did the solution provider try again. No surprise--someone else won the deal.

In perhaps the most significant sign yet that the worst of the IT downturn may be over, customers are saying they have real plans to deploy new technology next year. The bad news is many solution providers like the one described above won't win those bids. One reason: They won't follow up on leads.

Granted, these leads may be six to nine months out; customers, in effect, are still shopping around. But 76 percent of those saying they will make a purchase actually do so, according to a survey by Wendover. That's why solution providers need to pitch customers even if their plans call for actual buys in the future. Similarly, some of the best leads come from marketing but are never pursued because salespeople are focused on near-term wins.

To prove that the lead-qualification process is flawed, I asked a solution-provider client to divide its leads into three piles: terrible, some potential and great potential. Then I had one of my salespeople go through the leads that had terrible potential. Within 20 minutes, she had secured an appointment with a CIO for an engagement worth roughly $300,000.

Why can't your salespeople pull that off? Because they are asked to do more with less. Existing clients require more attention and care. New clients are slow to decide. CEOs have cut sales and marketing budgets even as they demand increases in sales.

Meanwhile, salespeople are typically under pressure to close near-term deals in order to earn commissions and meet their quotas. Crunched by extreme expectations, salespeople do not have the time to follow up on every opportunity. They focus on the 10 percent of potential new customers that are ready to buy this quarter and disqualify the others.

That leaves the other 90 percent--the ones with serious plans to engage in IT initiatives months out--wide open. Wendover constantly hears about leads procured through marketing channels, for example, trade shows and other campaigns. There is ample evidence that, because these leads are longer-term, they fall through the cracks due to a disconnect between sales and marketing organizations.

The Lead-Navigation Solution
Marketing and selling are supposed to be continuous processes. But, in most companies, no one is responsible for what happens between them. Without an owner, the lead-navigation process falls into limbo and is usually poorly managed.

Solution providers need to add a tier that is responsible for reconnecting sales and marketing. This should be an organizational structure with C-level commitment. It needs its own budget and staff whose purpose is to nurture leads. Consider it a support function. A plastic surgeon who brings in $10 million worth of patients should not be setting up appointments or taking blood pressure. Nor should a salesperson be doing comparable functions for sales prospects.

So, where do you start? First, appoint someone to direct the lead-navigation database and process. That means assigning ownership and accountability to a specific individual to make sure the lead-navigation function succeeds.

The goals of lead navigation are to convert far more leads into sales and to make sure new business doesn't get away. One midsize solution provider that adopted this approach recently saw its lead-conversion rate soar 400 percent. Lead navigation sets priorities to close the current quarter's deals yet still nurtures major accounts that take a year to ripen.

If you handle your customer leads with this approach, leads that once were wasted will get worked. In addition, by improving the company's ability to classify and track its leads, lead navigation will let the marketing department generate numbers that demonstrate the payoff of the new function.

In return, marketing will have to cut its least productive investments. With better lead-tracking data, investments that generate the worst or fewest leads will be evident and will be pruned.

Likewise, the sales team should expect to see better, riper leads. The lead-navigation team will cull and qualify the leads to eliminate the window-shoppers. The result will be more leads. In exchange for those benefits, the sales teams will need to adopt some reforms. First is higher compensation for selling to new customers. Old habits die hard, so it's important for sales management to give the sales team the incentive to land new customers that are key to growth and worth more than existing customers. That means salespeople have to give up "owning" customers in exchange for more opportunities to sell--that is, the salesperson will have to let go of the idea that he or she can control all communication with the customer.

Now is the time to address these issues. For the first time since 1999 (with the exception of two fourth-quarter spikes), the Wendover Index is on the rise. That milestone occurred last quarter. That means the pipeline for new IT projects is steadily increasing rather than decreasing. During the next nine months, customers will be ready to buy. It's a given. So, work those leads now.

Larry Dillon is founder and CEO of Wendover, based in Haverford, Pa.