What would your CEO say if you proved 71% of the leads your company generates on the Internet are wasted? Who would be fired?
Entire industries exist to help web marketers increase lead conversion on their website by fractions of a percent. Training firms work weekly or monthly with entire sales forces to boost closing ratios by 10% or 20%. Businesses are scraping for incremental increases in marketing yields, close ratios, and leverage through technology, yet overlooking a gaping black hole that exists somewhere between their marketing and sales teams.
Companies don’t respond fast enough to leads.
In fact, they take 46 hours and 53 minutes to pick up the phone and respond to a lead. And the sales rep who does call, only makes 1.3 call attempts before giving up and moving on. And recent research shows it is getting better, but only slightly.
How do we know this? We have tested over 10,000 companies in fifteen different “secret shopper” studies over the last five years and these are the combined numbers from all tests. We fill in a lead on their Web site with a real phone number and email address and track how fast they respond and how many calls or emails they make.
This research has been recently published again by Steve Olenski on Forbes.com, and prior to that in Harvard Business Review and Inc.com. At last count, 12 companies have built their business models on responding immediately to leads. A new industry has sprung up called Lead Response Management.
Our own in-house research shows only 27% of leads ever get contacted. Yet with a combination of awareness, best practices, and technology; companies can contact around 92% of leads. I have seven practices I’ll share in a later article that will enable companies to achieve this target.
An increase from 27% to 92% is an increase of 341% lift in results just by responding immediately and persistently to leads.
Do CEOs know that of the massive marketing spend they have approved to generate leads only 27% of the leads actually get spoken to? And worse yet, in the same studies anywhere from 35% to 64% of the leads never got called at all?
Dave Elkington, our CEO, put it in perspective: “Imagine going to Nordstrom’s on a Wednesday morning and asking to talk to a sales rep about a pair of shoes and the salesperson says they will be happy to help you Friday morning!”
The Internet is shortening our attention spans, but sales teams still have absolutely no idea how fast they need to respond to online inquiries to be effective and they don’t have the technology to help them do it. And IT and marketing departments are rarely any better, often tying up leads for hours or days just getting them routed to the right place.
Some marketing automation companies ‘score’ leads with powerful algorithms, but add hours to the process of getting it to the right place; losing far more value than they gain.
Here’s the quick story behind what may be one of the last frontiers left for companies who generate leads over the Internet to help them outdistance their competition; and why CEOs better take notice.
Dave Elkington and I started InsideSales.com in 2004. We bought the name from a guy who needed money right before Christmas. The first day we turned on the website we got eight leads. With the name InsideSales.com, and the strong trend toward Inside Sales, we built our entire business on responding to web leads. Even though our technology was designed to help companies cold call; we didn’t do any cold calling back then.
In early 2007 our salespeople kept telling us that they noticed when they responded quickly to leads they seemed to get the sale. They couldn’t prove it, but they all noticed the same thing. Intrigued, Dave and I started calling around to some of the industry experts. Dave called Laura Ramos, who was a VP at Forrester and specialized on the topic of Lead Management. She confirmed that there was a lot of buzz around the question of how fast do web leads cool off, but she wasn’t aware of any research to answer the question.
Then we called James Oldroyd, soon to be Dr. James Oldroyd, as he was just finishing up his graduate studies at the Kellogg School of Management, at Northwestern University. He got very intrigued with the question and received approval to do a large survey through Kellogg to determine if there were any best practices around responding quickly to leads. Weeks later he found interesting correlations but basically proved nobody knew.
So there we were; two strikes. But our reps were more adamant than ever.
We called Dr. Oldroyd back.
He said the only way to really answer the question was to do a true research study, not a survey. But we needed call center data (the calls) combined with the customer relationship management or CRM data (the results of the calls.) Dave Elkington assured him the data was available if we could get permission from many of our corporate customers of all sizes and industries, B2B and B2C. We gave him 100,000 data points; far more than he needed to be statistically accurate.
He came back with some amazing information from the data:
Graph from original research from Dr. James Oldroyd and InsideSales.com showing response time by 5 min increments leading to leads becoming contacted
He told us Wednesdays and Thursdays are the best days to call if you want to contact somebody (by 49.7% over the worst day.)
4pm to 6pm are the best times to call to contact a lead (114% over the worst time, right after lunch.)
8-9am and 4-5pm are the best times to call to qualify a lead, or set an appointment with a lead (164% better than 1-2pm, the worst time.)
This information was all very interesting, but Dr. Oldroyd was far more excited to share what he found next (taken from the original Executive Summary):
“The odds of calling to contact a lead decrease by over 10 times in the 1st hour.
The odds of calling to qualify a lead decrease by over 6 times in the 1st hour.
After 20 hours every additional dial your salespeople make actually hurts your ability to make contact to qualify a lead.”
“The odds of contacting a lead if called in 5 minutes are 100 times higher versus 30 minutes.
The odds of qualifying a lead if called in 5 minutes are 21 times higher versus 30 minutes.”
Graph from original research from Dr. James Oldroyd and InsideSales.com showing response time by 5 min increments leading to leads becoming qualified
“How significant is a 100x increase in contact ratios on the value of leads? How much effect does a 21x increase in qualification have on the overall sales revenue of a company?”
Dr. Oldroyd found clear patterns when many companies’ data was combined together, but huge variance in the optimal response patterns for individual companies. Different industries vary dramatically on optimal call times.
The next big question was why is response time so important?
1- When we call back immediately we know where they are. We called it “presence detection.” If they just typed in an inquiry on a website, they are probably still by their computer and by their phone.
2- When we call back immediately we are still on their minds. This is “top-of-mind-awareness.” The average call back time is 46 hours and 53 minutes. Do you remember any of the sites you were surfing on nearly two days ago?
3- The “Wow Effect.” We came back from presenting our research and built and patented technology that enables immediate lead callback within 8-9 seconds. We were concerned it would freak people out (like big brother was watching.) Do you remember the first time you called someone with Caller ID and they answered and called you by name? Didn’t it send a shiver up your spine?
But on the contrary, it seemed to impress people by the speed or “hustle” that we exhibited. In surveying them, their most common word was “Wow!” And they exhibited an emotional response that built trust, a feeling like, “that is probably the way they are going to service my account.” We called it the Wow factor.
We then coined the words “immediacy” for speed of call back, and “persistency” for how many call attempts are made.
The next big question was pretty easy, how many call attempts should we make to call people back?
We averaged the contact ratios (the contacts divided by the dials to reach somebody) and we found across all industries they average between 10% and 11%. So if you want to reach someone, make 9-10 dials, not 1.3.
So what did we do after this research?
We immediately mandated that every one of our sales reps call their leads back immediately. In trying to get them to respond manually we found the best they could do was 30 minutes (and they missed the 5 minute response effect.)
So we immediately built a technology that captured a lead from a website, looked up which salesperson it should go to, and dialed the rep; all within a few seconds. Then we applied for a patent.
Within a few months we had a person from Dun & Bradstreet Canada go to our site, type in a lead, and when we called them back within 8 seconds they answered and said, “Whatever it is you just did, we want to buy it.”
Another very large national insurance provider flew me out to meet with them (You would know their name.) My first question was, “How fast do you reply to your leads?” Their head of sales hemmed and hawed for quite a while until I grinned and blurted out, “You don’t know do you?”
He had no idea. I walked over to his laptop, went to his Web site, typed my own name in the form asking to be contacted by a salesperson, swore him to silence, and started tracking time.
His sales rep called me in 6 days. The second call came in 11 days. No emails. No additional follow up.
We found out the fastest his IT staff could send out a lead to a sales rep was the next morning. We tested a state team and had their leads sent out each morning and they started calling. By moving their average response time from 6 days to 1 day, their close rates went from 3.2% to 7.5%. Results more than doubled with nothing else changed.
Things have really taken off since then. At last count nearly 120,000 companies have downloaded or accessed those original research studies.
And what we just proved again in our most recent study with 39 hour response times, common knowledge is still not common practice.
Companies who know these truths are wreaking havoc amongst their Internet peers who don’t.
Just seems like common sense.
But it was Alese Elkington, Dave’s wonderful wife who put it in perspective for us, “Congratulations guys, you just figured out you need to call people back… quickly!”