Transforming your one-time buyers into lifetime customers
In the last two weeks we have been discussing about some ‘buzzwords’ in customer relationship management (CRM). We continue with few other terms.
Inbound marketing means taking care of leads when they make the effort to contact you. Lead nurturing is another phrase you’ll hear in marketing circles. When someone reaches out to you, she may have clicked an advertisement you placed or she may have visited your website.
In-bound marketing is about setting up processes to capture those leads and follow them all the way to conversion (the point where they do something you want them to do, like buy your product or service).
Complete CRM focuses on having a process and measuring everything you can about your leads as they learn about your brand and eventually convert into customers. Your CRM collects the behavioural and demographic data throughout the inbound marketing and lead nurturing process and uses automation to help your team communicate with your leads and clients efficiently.
Customer lifecycle is a term that encapsulates the journey people take from the time when they first hear about you, through their decision to purchase from you, to their consuming your product or service and becoming an advocate for your brand.
Often this progression isn’t linear, as people tend to show varying levels of interest and usage of your product or service. A good manager of this lifecycle can track where people are in various phases of engagement and can set up marketing and automation to encourage movement toward conversion and advocacy.
CRM platforms help you measure this lifecycle. Knowing how long people spend in various phases and what moves them along the customer journey is critical to improving how you do business. Your team uses your CRM to keep track of who is where in this journey, helping each person effectively reach each individual contact with the right message.
Sales pipeline and sales funnel both describe the flow of prospects through a sale but there’s an important difference between the two commonly confused terms.
A sales pipeline is a specific sequence of actions that a sales rep needs to take in order to move a prospect from a new lead to a customer. Once each stage is completed, the prospect is advanced to the next stage. Sales pipelines allow sellers to keep track of the status of every deal and understand whether they have an appropriate distribution of deals in order to meet their sales targets.
A pipeline report shows the value and quantity of all deals in each stage of the pipeline at the moment when the report is run. Though the structure of a sales pipeline can differ from company to company, here are some of the more common stages:
1) Qualification. The rep asks questions to determine if the prospect has the need, budget and authority to buy in the near future.
2) Meeting. The sales rep and prospect discuss the solution that would best fit the prospect’s needs.
3) Proposal. The rep sends the prospect a detailed quote laying out what will be provided, at what cost and for how long.
4) Closing. Final negotiations are made and contracts are signed. The prospect is officially a customer.
What is a sales funnel?
Unlike a sales pipeline, which focuses on the set of actions taken by sellers, a sales funnel visually communicates the conversion rates of prospects through the pipeline stages. It’s called a ‘funnel’ because of its shape: wide at the top as prospects enter, then increasingly narrow as they are disqualified or decide not to buy.
Unlike a pipeline report, which shows the value and quantity of deals at the moment when the report is run, a funnel report is based on a cohort. This means that a funnel report can tell you. For example, of the 100 leads you received last quarter, what percentage of them advanced through each stage of your pipeline.
A sales funnel report is important for sales leaders because it can help them forecast sales based on current lead volume and identify where deals are getting stuck so they can improve their process and better coach their team.
So, when you’re thinking about the difference between a pipeline and funnel, remember this: a pipeline report shows what a seller does during the sales process and a funnel report shows the conversion rates through the sales process.
Leads, contacts and opportunities
What is the difference between a CRM lead, contact and an opportunity?
A lead is the first step in the sales process. Someone has indicated some interest in your company or its product but you have no history of interaction with him or her.
The problem with leads is you don’t know how serious they are. Since everyone starts as a lead, this group contains everything from people who really aren’t that interested or have no use for the product, to highly motivated buyers who think your product is just what they need.
The first task with leads is to qualify them. This usually means someone from the company has to contact the lead and judge his level of interest and authority to buy.
There are basically two ways to qualify leads: let the sales department do it or have someone else do it. Generally, it is better to have a non-salesperson qualify the lead before turning it over to the sales force.
Contacts are qualified leads. That is, leads that have been vetted and in the judgment of the person doing the checking have the potential for turning into sales at some point down the road.
These contacts are turned over to the sales staff to start the selling process. The contact may be at many different points in the sales cycle, all the way from just starting out with an interest in your product and service to someone who’s ready and willing to make the buying decision.
Obviously, a lot of contacts need to be nursed through the sales cycle to produce the final sale. Depending on the industry and the contact, this process can take weeks or months. It needs to be very carefully monitored and recorded in the CRM database to make sure opportunities don’t get lost in the cracks.
Contacts represent the ground truth of selling, the place where your sales staff works their magic to bring the potential customer into the fold.
An opportunity is otherwise known as a hot prospect. An opportunity could be associated with a contact, when it has a strong prospect of completing the sale. If your account has purchased from you repeatedly, you can also term him as an opportunity as he has a high chance of buying from you in the future.
Opportunity records tracks the size of the deal (in terms of revenue), probability of closing the deal, follow-up activity you need to do, etc. You can also record the deals that are won, lost and open.
Tracking the opportunities will help you better forecast your financial future and track what went wrong when a deal falls through. For instance, if you are in talks with a local financial provider for selling your analytics software, you can track the probability of closing the deal and other aspects of the deal at various stages of the talks. This can become a template for your future deals.
(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance journalist and could be contacted on firstname.lastname@example.org)