Large Sales Pipeline is a boon or bane?
Large Sales Pipeline is a boon or bane?
Large Sales Pipeline is a boon or bane?
Large Sales Pipeline is a boon or bane?
Competitive market and ever-changing business landscape has forced all marketing organizations to continuously add new customer, new business and new value proposition to their existing offerings. Every company realizes that each sales related interest and query could have possible potential to be converted to business or customer. The companies are forced to acquire new customer, new relationship and it is this relationship building which acts as a cornerstone to attain new customer, new businesses.
But it is impossible for organization to build relationship with each and every sales interest which has been noticed. Thus for an organization following questions comes up when they try to determine about building relationship
Whom to make relationship with?
How to make relationship with them?
When to make such relationship with them?
These questions are first test for an organizations and it largely determines the success for an organization in the heat of competitiveness.
Here the Lead management and its importance become paramount for an organization. An effective and appropriate Lead Management approach, processes, techniques and metrics holds the key for obtaining perfect answers to all above mentioned questions.
Lead management has been there in some form or other across organizations but presently it is going through major midlife realignment, growth, uncertainty and promises. Marketing organization's investment in effective lead management is growing at a fast rate. It is growing almost double in proportion to overall CRM market in last 3 years and will continue for another 3 years at same rate.
According to studies, it is estimated that by 2015, 30% of the total 2000 global companies will focus on improving their lead management processes like optimizing their existing processes, investing in new approach and techniques with target of attaining 5-10% growth in revenue.
This has become imperative owing to major challenges which have undermined the effectiveness of new revenue generation. The major challenges faced by organization with respect to lead management are
Numerous methodologies and technologies coming up in market
Multichannel marketing campaigns
Increase in competition leading to urgency about lead to sales conversion
Fast diluting differentiation between B2B, B2C and B2B2C marketing model
Increasing cost to maintain large sales pipeline
Higher cost of customer acquisition
Ineffectiveness to identify, nurture and track high value leads
Reducing yield of lead management by 15-25% on an average basis
Complication due to rise of new mediums, channels and demand generation avenues
Lack of organizational alignment between Marketing and Sales
Among these challenges, one of the trickiest challenges which have emerged is "Increasing cost to maintain large sales pipeline". It is found that on an average around 20% of the total revenue share of a potentialopportunityis lost while maintaining a lead, nurturing it and then making a lead "Sales Ready". After investing so much cost, still there is good chance that lead might not convert to company's business. In fact it is found that about 60-70% of the opportunity is lost by a company to their competition. This results in effective loss of flat 20% of expected (anticipated) revenue value per opportunity (which the organisation has maintained and nurtured so far), this in effect means about 30% effective overhead cost against all the lead being converted, leading to low profitability, complex long sales procedure and low morale among customer facing employees.
If you analyse the lead to conversion activity, you will find sales activity is highly influenced by numerous parameters related to consumer behaviour, strategic value realisation etc which are generally not in the control of any organisation for example if some client is using an existing services from your competitor and if he needs a complimentary product then there is 80% or more probability that the business will go to same competitor. Similarly there are several other reasons like high switching cost, barrier to switch, loyalty programme etc which actually act as roadblock towards successful conversion of lead to business. These all factors and many more results in "No Sale" but add to the operational cost like sales and marketing cost, office operation cost etc but nothing to the top line of the organisation.
These challenges are increasing exponentially in today's marketing scenario, and leading to dilution of bottom-line and weak order book.
Solutions to tackle these challenges lay dealing with them at both Macro as well as Micro level. At Macro level Process reengineering, redesigning of process can optimize and align the Lead to Sales processes with innovative as well prevalent best practices of industry. But at Micro level specific and customisedapproach needs to be deployed which should be very focused and specific to organization requirement and positioning.
Apart from Macro level optimisation, at micro level companies understand that higher conversion rate is very important and that is only solution to remain profitable and competitive. Thus the trend is that companies are moving away from the concept of maintaining a large sales pipeline towards maintaining a highly qualified and high success (probability) sales pipeline.
Thus leading to redirection of marketing budget to effective lead management processes, approach, techniques and metrics rather than building a large lead pipeline. This not only brings theiroverall operational costdownbut also increases their resource optimisation and better focus. To attain higher profitability and ever improving operational efficiency, the companies are actively engaged in devising the best and customised methodology for the lead qualification, a suitable lead scoring model, a transparent lead assignment model and never the least a optimum lead nurturing model. A perfect lead management process and approach will build a high conversion potential sales pipeline having a higher rate of conversion but at very low cost. These all stated reasoning leads to exponentially high ROI in terms of lead management, and ultimately higher profitability for the organisation.
Basis on above discussion we clearly find that higher profitability is not because of a large sales pipeline but because of well qualified sales pipeline. Thus the new mantra of a successful sales organisation is"Small but Well qualified Sales Pipeline".
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