The Short Life of Online Sales Leads
Are you confident that your company is effectively handling potential customers’ online queries? Think hard. Our research shows that most companies are not responding nearly fast enough.
Companies in financial services, automobiles, education, software, health care, professional services, and many other industries have increasingly turned to the internet to generate sales leads. Indeed, corporate spending on online advertising aimed at drumming up leads to potential customers soared from $12.5 billion in 2005 to $22.7 billion in 2009, and it’s still growing strongly. Online brokerages that offer customers a simple way to get quotes from multiple companies and then sell the resulting leads to those companies are thriving in both the B2B and B2C markets. The business of providing technology and services to help companies turn online leads into sales is on the rise as well.
Source: LeadsCouncil
Nonetheless, our research indicates that many firms are too slow to follow up on these leads. We audited 2,241 U.S. companies, measuring how long each took to respond to a web-generated test lead. Although 37% responded to their lead within an hour, and 16% responded within one to 24 hours, 24% took more than 24 hours—and 23% of the companies never responded at all. The average response time, among companies that responded within 30 days, was 42 hours.
These results are especially shocking given how quickly online leads go cold—a phenomenon we explored in a separate study, which involved 1.25 million sales leads received by 29 B2C and 13 B2B companies in the U.S. Firms that tried to contact potential customers within an hour of receiving a query were nearly seven times as likely to qualify the lead (which we defined as having a meaningful conversation with a key decision maker) as those that tried to contact the customer even an hour later—and more than 60 times as likely as companies that waited 24 hours or longer.
Companies are making big investments in order to obtain customer queries from the internet, and they should be responding at internet speed. Why aren’t they? Reasons include the practice of retrieving leads from CRM systems’ databases daily rather than continuously; sales forces focused on generating their own leads rather than reacting quickly to customer-driven signs of interest; and rules for distributing sales leads among agents and partners based on geography and “fairness.” We’re conducting further research to more fully understand the causes and identify possible solutions. But it’s already evident that most sales organizations need new tools and processes to meet the demands of the online age.
James B. Oldroyd (jamesoldroyd@gmail.com) is an assistant professor at the SKK Graduate School of Business at Sungkyunkwan University, in Seoul.
Kristina McElheran is an Assistant Professor of Strategic Management at the University of Toronto and a Digital Fellow at the MIT Initiative on the Digital Economy.
David Elkington (delkington@insidesales.com) is the chairman and CEO of InsideSales.com.
The Short Life of Online Sales Leads
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