Converting internet leads to sales requires tenacious sales people. One popular statistic, quoted on hundreds of websites, is that 8% of sales people generate 80% of sales.
This statistic is generally used to justify the point that repeated followup is necessary to convert internet leads to sales.
While many studies (both our own and several reviewed below) reinforce this idea that web leads must be contacted repeatedly to achieve high conversion rates, this “8% of sales people” statistic is problematic.
First, the claim originated in an article by Robert Clay published on The Marketing Donut. However, the article has been removed from the website.
Second, archived versions of the article show that no specific sources or studies were cited to support the statistic. Instead, the author provides many generalized statements, such as “studies reveal that” and “Different studies carried out at different times, in different places, by different market research companies over a number of years all reveal”.
These two unrelated facts then allow him to say that 8% of sales people generate 80% of sales.
The problems with this chain of logic are serious:
1. What are non-routine sales, and what percentage of sales are non-routine? To illustrate why this is important, imagine that half of all sales were routine. This would mean that only half of sales fall into the category of sales that require five follow-ups. I’m not claiming that this ratio of routine to non-routine sales is correct, merely pointing out that the author’s conclusion depends on 100% of sales falling into the “non-routine” category.
2. The author conflates following up (the criteria in the first leg of his logic) with following up after being told “no” (the criteria in the second leg of his logic). Many follow-ups with sales prospects end with a request for more information, or to schedule a conversation at a later date. This is different from being told “no” during a follow up. (Many sales leads go dry without ever being told “no”). However, it is quite conceivable that many sales people will follow up indefinitely on these more positive responses.
All of these issues cast substantial doubt on the claim that 8% of sales people generate 80% of sales. However, there is little doubt that tenacity in sales is important. How important? The remainder of this article looks at what published studies can tell us.
What does “following up” with a lead mean?
The first step is of course following up on the lead. A follow up can be any kind of contact that leads to a meaningful conversation with the key decision maker from the lead. Generally speaking (with web leads) a follow up means a phone conversation.
Unfortunately, a quick look at relevant research shows that many businesses are not following up on their leads effectively.
How many leads result in sales, and are they closed during the first call/meeting?
It is rare to make a sale on the very first follow-up contact with a potential client. Instead, the first follow-up is typically dedicated to “qualifying” the lead, or figuring out if the lead actually represents an opportunity to make a sale. Leads may be hot (ready right now), warm (ready soon), or cold (possibly never ready).
After aggregating lead data from hundreds of companies, the CRM software company Implisit found that an average of 13 percent of B2B leads qualify as sales opportunities. Of these opportunities, only 6 percent actually turn into sales.
However, your mileage will vary with these sorts of broad statistics. The industry, the type of lead and a host of other factors will influence the results. In a study of 800 leads that we purchased, we found that nearly 50% were valid opportunities, and we were able to sell two-thirds of those opportunities.
What percentage of leads get “worked” or followed up on?
Leads that don’t get followed up on—much less nurtured with repeated contact—go to waste. It’s surprising just how many companies make this mistake. Between 2007 and 2012, researchers from Insidesales.com conducted 5 different “secret shopper” studies in which they generated leads by filling out online contact forms with over 10,000 companies. When they tracked the companies’ responses and crunched the numbers with help from MIT research fellow James Oldroyd, they found that only 27 percent of the leads resulted in a conversation with a sales rep. Worse still, in the different studies anywhere from 35 to 64 percent of the leads did not receive any calls at all.
How many times do sales leads get called on average?
It’s important to note that simply dialing a phone number once doesn’t count as “working” a lead. You need to actually reach a decision-maker and have a meaningful conversation. The same Insidesales.com research shows that the average sales rep gives up on leads too soon. While sales reps will attempt a first call on nearly 40 percent of leads, they’ll only attempt a second or third call to about 10 percent of leads, and less than 5 percent of leads will be followed up with a sixth call attempt.
Yet the chances of making contact with a lead increase dramatically with repeated phone call attempts. While roughly 35 percent of first call attempts result in contact, 90 percent of sixth call attempts are successful. In other words, simply increasing your call attempts can result in a dramatic increase in contact rates.
How quickly do businesses act on leads?
In the same Insidesales.com studies, the average response time for a web-generated lead was 46 hours and 53 minutes. This is far too slow to effectively serve potential clients who are searching for information on the internet, where instant gratification reigns.
The researchers found that the first 5 minutes after a lead is received is a crucial period for action. Sales reps were 100 times more likely to reach a lead if they called in 5 minutes as opposed to in 30 minutes. Plus, the likelihood of qualifying a lead also increased with a speedy response. Leads called in 5 minutes were 21 times more likely to qualify than those called in 30 minutes.
In a separate study focused solely on American B2C and B2B companies, Dr. Oldroyd’s team focused on longer response times but found a similar relationship between faster responses and better results. When sales reps attempted contact within an hour of receiving a web-generated lead, they were 7 times more likely to qualify the lead than if they had waited more than an hour, and 60 times more likely to qualify the lead than if they had waited 24 hours or longer.
How does lead nurturing affect sales?
Turning a qualified lead into a sale typically requires repeated contact—aka lead nurturing. According to the Demand Gen Report of 2014, nurtured leads result in an average sales opportunity increase of 20 percent compared to non-nurtured leads. Specifically, 67 percent of B2B marketers reported growing their sales opportunities by 10 percent through lead nurturing, while 15 percent saw even bigger gains of 30 percent or more. This kind of lead nurturing can take time. For example, in the research from Implisit, it took an average of 40 days for a web-generated lead to result in a deal.
What sorts of general claims can we make about the length of time for sales cycles?
Based on the aforementioned research, we can draw a few important conclusions regarding the time frame for sales activities using web-generated leads. First of all, a fast response is essential to qualifying a lead or converting it to a sales opportunity. Persistence is crucial to this effort, as it typically takes multiple contact attempts in order to properly follow up on a lead and qualify it. However, just because contact needs to be made quickly doesn’t necessarily mean sales will happen with similar speed. Lead nurturing takes time and persistence as well. In order to ensure your sales reps are using their time most efficiently, you want to give them the best possible leads. For example, if you purchase leads, make sure they have already been qualified so your sales reps don’t have to worry about wasting time on cold leads.