Implisit, an Information Technology and Services company acquired this year by Salesforce, analyzed the pipeline of hundreds of companies across the globe to determine which channels deliver the highest conversion rates, and the results may surprise you.
The data shows that across organizations, 13% of all leads end up being converted into opportunities. Undoubtedly this number will vary by industry, and results will be skewed in favor of industry leaders versus industry laggards, but the results don't stop there.
Implisit also found that on average only 6% of opportunities actually converted into a deal. Taken together these numbers paint a daunting picture for organizations constantly pushing for higher sales quotas. Some simple math will show us that sales professionals require 17 opportunities to win one deal, but to get those opportunities they will need 130 leads.
Assuming that every 15 attempts (calls or emails) result in a “live lead,” a sales person will have to make 1,950 attempts each week in order to keep the pipeline full. Assuming each call or email lasts approximately 60 seconds (dialing, leaving voice messages, tailoring e-mails etc.), the sales person will spend 32.5 hours each week to generate a single deal. In some organizations sales teams are assigned a list of target accounts and these are considered their leads, but even in this case, the number of outreach attempts required to convert them into opportunities will likely be similar.
Of course I have not included in this rough calculation time speaking with a prospect, proposal creation etc. Even if the contact metrics in your industry are more efficient that what I cited, the odds are that they still point to a similar overall trend — that sales professionals are spending too much time doing the grunt work, and not enough time formulating strategy.
If sales professionals have the luxury of farming existing clients instead of hunting for new ones, you can see why they choose to do so. It isn’t always a fear of the phone or dislike of cold calling, as much as the futility of the activity that grinds them down.
When you consider that the effectiveness of cold email or telephone outreach has been diminishing for the last several years, it is easy to forecast the effect this trend will have on cost of sales, sales staff turnover and of course to the organization's bottom line.
But there is a bigger issue here as well: if so much time is taken up in the sales process just to acquire one deal, how exactly does an organization increase sales? In this environment there are only three possible solutions — ask sales staff to work longer hours, hire more staff or focus on methods that yield better results.
WHAT CHANNELS RESULT IN MORE DEALS WON?
The last bit of analysis by Implisit suggests that latter is not only possible, but already taking place, likely by top performers. By tracking the leads, opportunities and deals won for hundreds of companies, Implisit was able to pinpoint opportunities that have significantly higher win ratios than all others.
It turns out that closing a deal is as much about where the lead came from as it is about sales skill. Hence the ongoing battle between sales and marketing. As part of the pipeline analysis, Implisit determined that the best channels (when it comes to closing deals) were employee and customer referrals, and then leads from generated from social. The poor performance came from company events, lead lists and email campaigns.
Interestingly, leads coming from the top categories (employee and customer referrals, company websites and social) not only had better conversion, but also had the fastest progression from lead to deals won. It turns out that engagement is everything.
Clearly leaders want their team to focus on methods and strategies that lead to higher conversion rates. It just makes good sense. Perhaps the more interesting question is why do opportunities from social and referrals result in a higher conversion?
The answer lies in the level of engagement that occurs in these two activities. When social selling is done properly, the relationship moves beyond the usual buyer/seller engagement. Research shows that this difference is enough to open doors and spark conversations with a higher level of success.
In the case of referrals, the familiarity (and trust) is transferred from referrer to referee, and the relationship begins in a much better position that a cold start. In both cases these conversations should move more quickly to a resolution and a closed deal. In fact this is exactly what Implisit’s research found: leads from social not only resulted in more deals won, but the sales cycle (lead to deal) was completed in almost half the time than the others.
CAN WE REPLICATE THIS EXPERIENCE?
The good news that emerges from this research is that engaging prospects and creating opportunities using social tools and referrals can be duplicated. In fact, I would argue that it doesn't matter what the lead source is initially, so long as the sales process ensures a high engagement. To move your team in this direction, focus should be placed on helping staff become proficient with social selling methodologies that include referral selling tactics in order to further enhance their sales process.
SOCIAL IS ABOUT STRATEGY
As research similar to that from Implisit continues to pour in, they will all show the same trend. Customers who are engaged on social prove to be better leads with higher and faster conversions.
It’s important to note, however, that social selling doesn’t mean abandoning the use of the telephone or waiting for the clients to come to you. In reality, the outreach process is similar, except that the cold calls become warm calls, the email outreach is more effective and in general, prospects who have shared your insights are more willing to hear your value proposition. Or at least have a conversation with you about it. Implisit’s research was crystal clear in this regard, as it spotted this trend among corporations around the world.
Social selling not just a buzzword anymore. But with so many preaching the wrong message, it is easy to get lost in the confusion. Services promising to perfect your online profile to trainers prepared to teach tools like LinkedIn Navigator, all fall under the same social selling umbrella.
Although these are all components of a successful social selling strategy, they are far from the tactics that will provide your organization with a boost in the number of deals that are won. Training must help sales professionals to craft account penetration strategies (as well as account protection tactics) in order to build pipeline with better opportunities and realize a higher conversion rate. Otherwise, your team may just be swinging at every lead, hoping to hit a homerun.
If you are have not integrated social selling into your organization, then you may have unknowingly opted for a sales process that is solely based on activity. Activity that is showing a rapid diminishing return on effort. It may be time to reconsider.
All images and data from Salesforce.