Although there was a huge amount of money spent on marketing and lead generation, many companies find that most of their business-to-business (B2B) leads will never become customers. Studies show that nearly 79% of leads generated through (marketing) never convert into sales, creating a serious gap between lead generation activities and revenue.
Experts believe that the reason for such a high percentage of unconverted leads has to do with problems deeper than just not having enough leads. These problems can include poor lead qualification, weak nurturing of leads, and lack of alignment between the sales and marketing teams.
Here are some key reasons why B2B leads have a very low conversion rate:
- Poor Quality or Poorly Targeted Leads
The quality of many of the leads generated by marketing campaigns is poor. Many companies are more concerned about how many leads they get, rather than how many will buy.
For example, marketing may run a campaign that includes an ad campaign for an e-book. The marketing department may have lots of people who downloaded the e-book, attended a webinar, or filled in a form. But these people, while they represent leads, have no intent to buy and are not decision-makers, which means the sales team spends time pursuing leads that will most likely never convert.
A widespread problem for many businesses is creating an accurate Ideal Customer Profile (ICP). If you fail to target your ideal customer in terms of industry, company size or decision-maker role, you are left with a pipeline full of leads that will not result in revenue.
- Disconnected or Misaligned Sales and Marketing Teams
In many organizations, marketing and sales teams are not aligned, causing big structural problems. The performance of each team is measured differently. Marketing uses metrics such as the number of leads created, how many people are engaging with campaigns while sales use the total dollar amount closed and revenue generated from closing deals. As a result, there are times when successful marketing results in thousands of leads generated; however, sales teams may not consider those leads as “good” or “qualified.”
According to research, approximately 59% of B2B companies stated that poor alignment between sales and marketing is a leading cause for missing revenue targets and salespeople, in many instances, do not trust leads from marketing.
Without mutually agreed upon definitions of what is considered a “good lead,” the transfer of leads between sales and marketing often fails leading to lost business opportunities.
- Lack of or No Lead Nurturing
A major reason for the inability to convert leads into customers is the lack of any measurable lead nurturing methods.
When companies interact with customers, they often think about sales growth rather than developing long-term relationships with those customers. For example, they don’t usually think about continuous engagement, educational-based content or personalized communication. Instead, they think about sales immediately being ready to buy the product or service.
There is much more to developing new customers than following someone around until enough time goes by that they are ready to buy something. According to research, businesses that have strong lead nurturing programs generate 50% more sales opportunities that become sales-ready by having an ongoing engagement program.
When prospective customers fail to get the nurturing they need through an ongoing engagement program with the company, they either lose interest completely, find someone else to do business with by the time they find a sales person willing to help them, or both.
- Sales Teams Handling Lead Follow-Ups Slowly or Inconsistently
In B2B sales, the biggest factor in determining success is speed; however, many sales organizations do not provide timely follow-up responses to new sales leads. The amount of time between when a prospect expresses interest and when the sale person contacts them can range from a few minutes to hours and sometimes even days. A great deal can happen for the prospect to consider to be on the verge of purchasing from other companies before a salesperson from this company contacts the prospect.
According to statistics, 60%-70% of new B2B leads will never be contacted by a salesperson due to ineffective or overwhelmed sales divisions.
The overall result of slow and/or inconsistent follow-up responses is that potential customers are less likely to become sales if there are multiple delays between when the lead is generated and when the lead has the chance to become a customer.
- Poor Data Quality and Outdated Information
Another issue hindering the conversion of B2B leads is data decay. Contact details are subject to frequent changes due to switching jobs, reorganising organisations & dead email addresses; this creates a high rate of decay of data within CRMs. It is estimated that data can decay by approximately 30% each year meaning that most CRMs hold out-of-date information.
When sales teams rely upon inaccurate or incomplete data, they cannot reach their target audience when attempting outreach, thus dramatically decreasing their chances of successfully converting leads.
- Lack of Personalised Messaging & A Buyer Centric Approach
In today’s B2B world, buyers anticipate receiving personalised communications that specifically address their individual problems. Nevertheless, many organisations still employ broad-based marketing messages or elements of automated campaigns that do not connect with the buyer.
In the absence of tailored communication directed at the individual buyer type, the prospective buyer feels removed from the process (disengaged) and “peels off” from continuing through to a sale. A lack of customer-centric messaging can result in deals going offline or expiring and not closing.
Both of these reasons resulting in over 80% of all B2B leads failing to convert indicate that there is a fundamental flaw in most organisations’ sales/marketing processes. Generating leads is not sufficient; a business must ensure that its leads are very well qualified, nurtured and handled effectively.
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