Quantity versus Quality Leads: The Age-Old Sales and Marketing Debate

Quantity versus Quality Leads: The Age-Old Sales and Marketing Debate

Let me guess. Your sales and marketing teams fight about leads. Your sales team complains that the leads generated by marketing are low quality, while your marketing team is frustrated that sales isn’t working marketing-qualified leads (MQLs) in a timely and effective manner.

Here’s the root cause: Generally speaking, marketing departments are driven to focus on quantity of leads, while sales departments are in need of quality leads. The optimal solution is to balance the two, but it’s easier said than done.

Marketing cares about quantity mainly because it’s easy to measure and clearly attributable to marketing work. That’s why most marketing executive compensation plans are built around number of MQLs. It’s easy to measure the number of leads brought in, and that’s fully under the control of marketing. 

Meanwhile the sales team is focused on quality of leads because quality leads are easier to convert into customers, and commissions are based on conversions. Imagine you’re trying to sell air conditioners—would you rather get a bunch of leads from Alaska or Florida? If you said Florida, then you understand the importance of targeting quality leads.

When it comes to quality and quantity, one doesn’t work well without the other. Treating the tension as an either-or proposition will only frustrate both your sales and marketing teams. Luckily, there’s a way to strike a balance between the two and keep everyone within your organization happy.

Start with Quantity: The R&D Phase

Whether you’re starting a new business, launching a new product, or just looking for new ways to grow your business, you begin by throwing spaghetti at the wall to see what sticks.

Reaching out to all different types of leads helps you gather a lot of data in a short period of time. When you’re in this stage, you need a lot of leads and a lot of internal manpower to identify your ideal segments. Who are your best customers? Where do they come from? What does it take to nurture them down the sales funnel? You won’t know until you give a lot of things a try and see what works!

For example, let’s say you’re launching new software designed for dental practices. Is it better to focus on the dentists themselves or on the office manager? You may not know until you get a reasonable number of each type of lead, and see which is easier to find (quantity) and which is easier to convert (quality).  

View your investment in starting with quantity as research and development (R&D). This will likely be rather inefficient spend from an ROI standpoint, but the real goal here is to experiment and learn.

Pivot to Quality: The ROI Phase

Once the data is telling you who to focus on and how to do it, it’s time to pull back on the quantity objectives. Yes, you still need a baseline of quantity to maintain a sustainable number of leads, but now you have a sense of how many top of the funnel leads it takes to drive one sale.

Maybe for every 100 people that visit your website, 10 will fill out a lead form, which will lead to five sales phone calls, which results in two proposals, and one actual sale. Armed with this knowledge, you can begin to work backwards to set goals. If you want to make 1,000 sales, that means marketing needs to drive 100,000 visitors to your site.

Based on the profile of a quality lead, as learned in the R&D phase, you’ll know which channels are helpful to source leads and what content and messaging is needed to hook them. You’ll understand how to communicate a value proposition that squarely meets their emotional needs and delivers tangible results.

To make the ROI phase even more effective at delivering sales growth, make sure your team uses data to score leads. This will help the sales team prioritize their limited time. Build predictive models to see which leads are of the highest quality. Many tools come with built-in lead scoring models, especially email service providers. While using these tools is better than nothing, we have found custom models tailored to your business and industry are more effective at predicting results.

Then Repeat the Cycle

Once you’ve finished phases one and two, your work is not done! Because the world changes so fast, and you’re constantly updating your approach and offerings, you’ll need to reinvest in the R&D phase at least annually. If you’re launching a new product or entering a new market, it’s useful to revisit it more frequently.

The more regularly you invest in the R&D phase, the more effective the ROI phase will become. Each time you learn more specific information about your customers and their needs and behaviors, the more specific you can be in creating an effective marketing and sales strategy.

How to Align Sales and Marketing

Which takes us back to the initial problem posed above: the perennial tension between your sales and marketing teams. Even with this new strategy in place, if you don’t change your compensation structure, the animosity will continue. If marketing continues to be rewarded for quantity while sales sees bonuses and commissions for quality, there will be a vicious cycle, with marketing happy in the R&D phase and sales happy in the ROI phase.

However, there is a way to align the two teams! This is the approach we’ve seen some of our clients effectively implement.

Start by assigning a senior executive who oversees both sales and marketing to sponsor a project that objectively sets targets and benchmarks which consider both quality and quantity. This might mean bringing in an outside consultant to act as Switzerland—a neutral party—to consider all sides and propose a plan that works for the company overall.

From there, give each team shared accountability metrics. Marketing folks should be evaluated not just on quantity of leads, but also on ultimate sales. Sales professionals should be measured not only on bottom line results, but also on the effectiveness of their sales abilities (i.e., the conversion rate from leads assigned to sales). The Switzerland individual or team should set benchmarks based on prior results.

When one of the key metrics is off—be it number of leads, number of sales, or conversion rate—there can be productive, data-driven discussions around the bottleneck. Is there a reason to believe the market has changed and we need to redefine our target? Has quality of leads slipped? Has sales force effectiveness declined?

At the end of the day, it’s all about the data! Data is the key to understanding your leads and to managing the effectiveness and happiness of your sales and marketing teams.

What questions do you have about balancing quality and quantity? Please write us and we may answer your questions in an upcoming issue.

About the Sterling Woods Group, LLC

The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.

We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.

About the Author

Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.

Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.

He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.

Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.

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