The Evaluation of Sales Lead Source Effectiveness

By Aaron Mandelbaum

One of most hotly contested issues between the Sales and Marketing disciplines is the topic of lead source quality.

Marketing believes they are supplying quality leads in sufficient quantity to Sales who cannot seem to close them. Sales, on the other hand, believes Marketing is not producing enough leads and those that are provided are of poor quality. Organizations faced with this strategic conflict have had difficulty finding a means to arbitrate the dispute.

Sales benchmarking, however, provides just such a reliable mechanism, in that it reveals to an organization which of its own leads are ‘the best’, allowing sales leaders to compare their performance to that of a relevant peer group to determine weaknesses and strengths. It is one thing to know that the leads coming from marketing are ‘better’ than those coming from business development; it is quite another to realize that certain key lead sources are less effective than those leveraged by a peer group.

If you are not evaluating lead source effectiveness in your current lead assessment process – do so now

For a summary level view, it is first important to compare the amount of spend on a lead source (LSGC) with its Lead Effectiveness. The chart below maps the amount spent on each lead source (LSGC) as a maroon bar and superimposes a blue line with points that represent the LE for each Lead Source.

In cases where the blue line is well above the maroon bar (e.g. Tradeshows), this indicates that there is a ‘gap’ showing highly effective leads that are not very expensive to produce and close. Conversely, in cases where the maroon bar is well above the blue line (e.g. TV/Radio), this indicates that there is a gap showing relatively ineffective leads that are also costly. These should be the least funded lead sources due to their poor return.

Sales organizations who want to know whether their leads are funded appropriately and cost-justified should take note and plan steps towards implementing a program to evaluate sales lead effectiveness.

Accordingly, sales leaders should take the following actions:

#1. Work with the Marketing department to determine:

• Universe of sales lead sources presently generating new sales revenue.
• How costs are recorded and allocated to each of these sources
• If new Sales Revenue is attributed to these sources

#2. Start the following for the sales force:

• Measure cost to follow-up on a sales qualified lead from a given source
• Track the time it takes to close a lead from a given lead source
• Separate the revenue that comes from prospecting and from other lead sources

#3. Calculate your first sales lead source effectiveness benchmark

#4. Determine if investments are appropriate to lead source productivity using internal comparisons only.

#5. Engage a 3rd party firm to benchmark you against relevant peers to determine how your internal lead effectiveness stacks up