A complex sale process that requires an extensive interaction between customer and vendor is usually referred as a lead pipeline or lead conversion process.
The process starts with an enquiry from a prospective customer, “the prospect”. It progresses through various stages of information gathering, clarification of needs, vendor proposal of a solution, cost estimate, conditions of sale and so on until a purchase order is received and a sale is made.
The number of steps or stages varies with the complexity of the problem, the degree of clarification and matching required and the formality of the customer and vendor processes.
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A typical model for this process is given below:
You can see from the model that the customer enters the pipeline as an enquiry, progresses to a lead, becomes sales-ready and finally is classified as a qualified prospect. The final stage is to close the sale.
The generally accepted boundary between marketing and sales is the conversion point to “sale ready lead”. That is, the role of marketing is to generate enquiries and progress these through to the point where the prospect is ready to deal with the near-term purchase of specific products or services.
The role of sales is to take these sale ready prospects and progress them to customer status – that is, to close the sale. Marketing manages the market interface (one to many potential customers), sales manages the customer relationship (one to one relationship).
Enquiries and leads have various levels of quality depending on their likely conversion to a sale ready prospect. The more knowledge the prospect has of the company and its products and services, the more likely they are to have chosen a vendor who can satisfy their needs.
At the same time, the more clarity the prospect has of their needs, the more likely they will have pre-qualified the vendor before communicating with them and the easier it will be for the marketing process to qualify them.
In order to progress an enquiry to a sales-ready lead, the vendor has to devote some level of resources. The more they need to educate and consult with the prospect, the more resources they use up in qualifying them.
Prospects may be rejected, may withdraw or are stalled. Rejected prospects are those that the vendor informs they cannot meet their requirements. Withdrawn prospects are those who recognize that the vendor cannot meet their requirements, at least not at present. Stalled prospects are those who fail to be progressed by the vendor and stay in the pipeline system neither moving forward nor withdrawing.
Poor lead generation systems fail to produce sufficient enquiries, generate too many low quality enquiries, and allow prospects to progress too far before rejection or withdrawal or have too many stalled prospects that clog up the system.
An efficient lead generation system generates an adequate supply of high quality enquires, supports quick rejection and withdrawal and has no stalled prospects.
Moving towards a more efficient lead generation system improves marketing productivity, which means that additional growth can be funded and supported.
While the number of qualified leads exiting the pipeline may be the same in both lead pipelines, the inefficient pipeline wastes considerable resources progressing poor enquiries and fails to reject or withdraw prospects that the vendor cannot assist.
Next week we will continue looking at lead generation, delving into the area of enquiry generation.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia. A series of free eBooks for entrepreneurs and angel and VC investors can be found at his site here.