Why Does Marketing Cost So Much?
This is a question many of my clients frequently ask me. CEOs of companies rely on their sales forces to bring new accounts and/or new business into their company. Frequently, they express frustration regarding the cost of marketing. I frankly don’t believe that marketing costs too much; I believe that too much of marketing’s cost is unpredictable and unmanageable.
Studies have shown that as much as 87% of our business-to-business generated leads are never pursued. That means that 87% of the buyer’s energy, effort, time and talent that your company expends on marketing is wasted. This 87% leakage factor is extremely expensive. This problem can only be fixed by implementing a closed-loop marketing system. Cargill Consulting Group’s LeadMinder service will plug the leaks in your sales funnel and/or pipeline.
There are many reasons why leakage occurs but, most often, leakage occurs as a result of a phenomenon I have nicknamed “the gap of good intentions”. Salespeople intend to follow up on all leads; unfortunately, many non-sales tasks are injected into their daily lives. These non-sales tasks come from managers, customers, coworkers – you name it. Regardless of the source, most non-sales tasks require immediate attention.
The more non-sales tasks with which your team is confronted, the less time they have available to follow up on good leads. Consequently, these leads fall into the gap of good intentions. As soon as that lead hits the gap of good intentions, your cost has gone up. Tragically, there is very little or no potential for revenue to be generated from that particular lead.
Other studies have shown that most customers are not ready to buy until they have been touched seven or eight times. By a “touch”, I simply mean a phone call, fax, email, face-to-face meeting and/or letter. Unfortunately, most salespeople can’t follow up on opportunities at anywhere near this level.
Still other studies show that some sales – particularly, the more complicated technological sale – require two, three or even four dozen touches before a new customer is ready to sign a contract. Once again, the typical salesperson cannot follow up on an opportunity at this level.
There are many reasons that suppress the ability of the sales professional to follow up. Most impactful of these is the typical commission plan. Take a look at your commission plan and I think you will agree that, in all probability, your plan encourages your salespeople to focus on next month’s next quarter’s business. Unfortunately, most customers aren’t ready to buy in that period of time. Here again is another contributor to the gap of good intentions.
Some studies show that as many as 94% of all salespeople abandon their efforts to gain new business after only four attempts. Yet again, the typical customer isn’t ready to make a commitment to a new vendor and/or new product/service with any fewer than eight attempts. When you add it all up, this is a conspiracy of circumstances that robs your business of its ability to generate revenue and profit at the levels you would like to see.
The only cure for this problem is for someone other than the salesperson to be responsible for follow-up. This is where you have a golden opportunity to get into the lead-minding business. Lead-minding, simply stated, is nothing more sophisticated than staying in touch with everyone who says “not now.”
If you were to stay in touch with all of the leads that your company generated through tradeshows, direct mail, websites, et cetera and stayed in touch with those opportunities perpetually, I am sure you would agree that your top line would go up dramatically. It is the inability of the modern sales force to stay in touch that is creating this profitability conundrum.
We must solve this problem by assigning this follow-up to someone other than the salesperson. In this regard, I believe that salespeople should sell and everyone else should do everything else. Let me repeat that: “Salespeople should sell and everyone else should do everything else.”
If you have a team of salespeople who are fed nothing but high-quality, nurtured leads that are ready to buy, your salespeople will never allow an opportunity to fall into the gap of good intentions. Most lead-generation programs produce leads that, at least from the salesperson’s point of view, are premature, poorly incubated and not yet ready to buy.
Producing volumes of leads that are not yet ready to buy or change is doing nothing but exacerbating the gap of good intentions problem. Worse, your salespeople get frustrated, and it contributes to reduced morale on the part of your sales team. I suggest that you employ a tool or a team of people to nurture your leads. Nurturing your leads is as simple as sending a well-written business letter to a prospect every month.
Please note: I am an advocate of sending letters as opposed to emails or postcards. Emails and postcards are, in my opinion, the lazy man’s way to nurture a lead and, unfortunately, most customers in today’s world have email spam blockers that prohibit emails from getting through. I have also found, and this was reinforced by a study published recently by the postal service, that a well-written business letter has 38% more impact on the buyer’s mind than an email.
When you combine the fact that most buyers will never see your email and, even if they do, it is 38% less effective than a letter, then the argument for sending business letters is very sound and extraordinarily productive. I suggest writing one letter a month to each of your prospects.
Now, I don’t want to begin to claim that I am invented this concept. Rather, the first documented incident of a sales professional utilizing this stay-in-touch approach to marketing was written in 1965. It was documented in a book written by Joe Girard called, “How to Sell Anything to Anybody”. Joe Girard, in my opinion, is the grandfather of nurture- or direct-marketing.
Joe created a closed-loop marketing system that was manually managed and manually powered but extremely effective. Joe sold new cars from a Chevrolet dealership in Detroit. According to the Guinness Book of World Records, Joe Girard set a sales record back in the 1960s that still stands! What was Joe’s secret?
Joe simply stated that he sent a postcard, manually addressed and handwritten, to everyone he ever met. The content of those postcards was, by today’s standards, quite humorous. However, what Joe was doing was staying in touch with everyone who said, “Not now.”
He developed a manual system to close the gap of good intentions and keep it sealed permanently. By staying in touch with everyone who indicated any degree of interest in buying a new car at any point in the future, Joe Girard was able to become the world’s number one, all-time record-holding car salesman.
To put it in perspective, his W-2 in the mid-60s selling Chevrolets was well into the hundreds of thousands of dollars. Also, if you wished to buy a new car from Joe Girard, you needed to wait roughly six weeks to get an appointment with him. Contrast that to the amount of top-of-mind awareness your current sales and marketing efforts are generating.
Not only should you attempt to fill the gap of good intentions, but a properly designed closed-loop marketing system will also ensure that you have obtained and, more importantly, maintained top-of-mind awareness with all desirable decision-makers in all of demographically desirable accounts, all of the time.
In subsequent articles, I will show you how to develop your own closed-loop marketing system. The key is getting in touch and staying in touch with all decision-makers at all times. When you can achieve that, you will never again ask the question, “Why does marketing cost so much?”
Rather, you will say, “How can I invest more money into my marketing and sales efforts to produce even more high-quality, nurtured leads that will close in a short timeframe?” You will find that, as a result of doing this, your sales team’s morale goes up and your top and bottom lines improve, as do the W-2s of your salespeople.
Most importantly, and this almost seems ironic, but your cost of sales will decrease, while W-2s and profits increase. The reason for that is, by closing this gap of good intentions, you are taking a very inefficient and, therefore, costly process and turning it into a very efficient and, therefore, profitable process.
Give it a shot, and I look forward to your comments in this regard.
GOOD LUCK & GOOD SELLING!