Wednesday, June 10, 2009

Lead Distribution: Creating the Right Sales Dynamic

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What defines the culture of sales in your organization more than anything else? Who you hire? How you incent your team? The goals you set? No. No. No. I am convinced the number one defining factor in a sales culture is how opportunities/leads are handed out to sales people. Add to this the fact that it has been proven that 43% of a sales likelihood of closing is determined by the quality of the sales process and the topic of distribution goes from being dull as ditchwater to actually rather important.

Why does distribution define culture?

To explain the impact of distribution let me give you two rather extreme examples of sales organizations with completely differing sales objectives. I’ll finish up with an overview of how I have structured distribution in my sales team and why I have designed it that way. 

Dog-Eat-Dog Distribution

First of all let’s consider a super-aggressive sales organization run by someone who wants to drive extreme levels of competition between their sales people, let’s call it Super-A Mortgages or SAM for short. The first thing that SAM wants to achieve is to make people fight for more than their fair share of leads. Leads are distributed as soon as they arrive at the company from the lead source and sales people are required to call the lead within 20 minutes of the lead arriving. The sales person is unable to just pretend that they have called the lead because the entire team has a dialer system that automatically logs the calls made and the call durations on each lead.

At SAM, the consequence of not calling the lead in 20 minutes is that your lead is redistributed to someone else. The lead essentially recycles from one sales person to the next until it lands with someone who calls it or it enters the “shark tank” (I’ll explain this concept shortly). At SAM leads rarely get recycled because the sales people are kept super-hungry. The distribution is set up so that each sales person only gets 5 leads distributed to them per day and the day’s lead flow stops completely if any of the leads are redistributed. A lead is redistributed twice before it goes into a queue that salespeople can use pull distribution to take as many leads per day, as they want from. This is called a shark tank, for obvious reasons. Sales sharks swim in the tank all day snapping up any leads that have been neglected.

However at SAM lead redistribution is not confined to new leads that have not been contacted. A rule exists that each lead must be called 10 times at a minimum of once every day and a maximum of twice every day or the lead is redistributed to someone else. 

Another feature of SAM’s distribution set up is that it is designed not to distribute leads evenly. SAM’s owner is an arch-capitalist and believes in the survival of the fittest as well as in protecting his marketing investments as best he can. He does this with the help of two metrics; sales executive closing ratios and lead score. SAM’s owner has a model that scores each lead when it arrives at the company based on how similar the lead is to leads that have closed for SAM in the past. He also monitors the percentage of leads that each salesperson receives that they close. SAM’s intelligent distribution system matches the highest scoring leads only with the highest achieving reps and conversely the lower scoring leads with the poorly performing reps. In order to ensure that sales folks don’t get stuck in a vicious or virtuous cycle because of the leads that they are receiving he has a 20% overlap of the scores that are classified as high and low quality leads.  Put another way, if you are a low performer and only receive poor leads you will probably stay so. However, if some of the leads you get are as good or better than the worst leads that the good reps are receiving then you can claw your way from being a low to a high performing salesperson.

Many people don’t want to work at companies like SAM. It’s hard, stressful and if you’re not on top of your game can be completely soul-destroying. However, I suspect that some of the best-paid sales people in the world do work at companies with a fairly similar culture to SAMs.

Soft-and-Fluffy Distribution

Many companies don’t want to push their salespeople to compete with one another. They want their sales team to be happy and comfortable so that they focus on being as patient and caring to their customers as possible. Our example of the will be the Benevolent Education Company, or BEC for short. BEC also distributes leads as soon as they arrive at the company. However, leads are distributed using a round-robin methodology. This is where leads are distributed completely evenly and fairly so that everyone receives an equal number of leads. To make this even more egalitarian leads are scored and the high scoring leads are distributed by a different lead distribution system to the low scoring leads to make sure everyone receives an equal number of good and bad leads. The owner of BEC doesn’t want reps to suffer at the hands of bad luck.

Sales reps at BEC are distributed 4 leads per day. Once everyone on the team has received 4 leads then new leads start going into a lead queue that sales people can pull from as soon as they have no leads allocated to them that have not been contacted. BEC doesn’t redistribute leads if a rep does not work them quickly; reps are trusted to work diligently without automated inducement.

Working at BEC is relaxed and the atmosphere collegiate.

My Distribution System 

I wonder if you can detect from what I’ve written whether the distribution program that I have set up for my sales team is more like SAM’s or BEC’s. Obviously it is somewhere between the two but if I’m honest it is more like BEC’s than SAM’s. My team is encouraged to compete but teamwork and the enjoyment levels of working at Leads360 are emphasized quite highly. The people that I hire have to be able to spend a lot of time explaining a piece of technology that is powerful, feature rich and not trivially priced. I need them to be experts, stay with the company and most of all to spend enough time with each potential customer to get them comfortable with what we have to offer. That doesn’t happen in an environment where leads are continuously snapped away and sales people are directly pitted against one another.

At Leads360 we have a distribution program for each lead source of which there are about 40 or 50 active at any one time (we have a very good and energetic marketing team).  We do this to make sure that leads are distributed evenly across sources as some sources are better than others. We do not often use shark tanks but brand new leads are redistributed if they are not called within the first 2 hours of the rep receiving the lead. After the first call the rep must call the lead once every day for 6 working days or the lead is redistributed and reps are expected to leave a voicemail on the first and last call. If the lead is not contacted by the sixth and final call we place the lead in a nurture status which sends automated emails to the customer at regular intervals for the following 30 days. The system works, I want share our closing ratio but I can tell you it is impressively high. I must admit it helps to have the best product on the market but I do believe a lot of our sales success is due to a robust process.

So what kind of culture do you want in your sales team? Does the way you distribute leads currently reflect this culture? If not you are out of synch; getting the goal and the means aligned could well create the boost in sales performance that has likely been evading you. I have never seen a high-performing sales team where the two are not aligned.

1 comment:

  1. Many companies don’t want to push their salespeople to compete with one another. They want their sales team to be happy and comfortable.. hmm ture. Auto Marketing Group