The title might sound obvious. Lead management isn’t CRM because it isn’t, right? However, the number of prospects and partners I’ve met who refer to lead management software as a CRM and vice versa suggests that most people are unaware of the fundamental differences between a system like Salesforce.com and one like Leads360.
It is an easy mistake to make. A lot of CRM’s claim to allow users to manage their inbound leads while many Lead Management Systems (LMSs) handle ongoing drip marketing to existing customers. There is definitely an overlap between CRM and LMS, but then there’s an overlap between what a car and a bus do too but few people would mistake the circumstances under which each of these are more appropriate.
The bottom line is that LMSs should be used if you have ANY of the following objectives:
- Your primary goal is to expand your base of new customers
- You devote more than 20% of your marketing budget in generating Internet leads
- You want to enforce robust sales processes at your organization
A CRM on the other hand is the RIGHT tool if:
- You want a system that allows you to interact with and serve existing customers
- Expanding your share of wallet with your current customers is your major focus
What I tell customers is that if they want to gain customers chose a LMS and if they want to keep customers chose a CRM. In other words if both are important, you need to have both. You are fooling yourself if you think you can use either on their own to do both jobs well.
The reason that a good LMS is essential for customer attainment is as follows:
1. Speed to contact is essential
According to a recent MIT study, an Internet lead that is called within 5 minutes of a customer submitting the inquiry is 22 times (not percent) more likely to convert to a customer than one called after just 30 mins. In other words leads go very cold very fast.
A good lead management system is built with speed to contact in mind. Leads are received and distributed with in seconds of leads being submitted, notification systems alert the rep to the new lead and click to dial features enable lightening fast telephone calls so that a sales rep can be on the phone to a prospect before they have even had chance to close their browser window.
2. Sales process really matters
The leading lead management company recently conducted a complex statistical analysis of over ten million internet leads and was able to prove that 43% of a leads likelihood to convert is determined by differences in sales process. The remaining 57% was dictated by the quality of the actual lead.
Lead management systems are finely tuned to mimic the most successful processes you can possibly implement to maximize the chances of converting a lead. For instance, how many calls do your sales reps make before forgetting about a lead. Research shows that 6 call attempts with two left messages is optimal. 93% of leads are contacted during contact attempt 1 through 6. If your sales agents are making 12 calls they are probably focusing on the wrong thing, whereas if they make just two calls your contact rate is going to be fairly awful.
3. Persistence is very important
The majority of leads that are contacted don’t close in the first 30 days. However, most sales reps have a short attention span. If they can’t effect a one or two call close they’re on to the next best thing. A good lead management system drives persistence in the sales process through auto-reminders, prospect nurture emails and email notification systems that tell your rep when one of the automatic emails has been opened. Calling a lead when they open an email is a sure fire way to start off a good conversation.
At the end of the day, many people can’t afford both a Lead Management System and a CRM. You are probably looking at $150-200/user/month for both systems combined. So if you have to chose one, be very careful that you chose the option that is designed to help you achieve your primary task whether that be customer acquisition or customer retention.