During the coffee break at office today, I was discussing the startup business of my colleague’s husband. The startup is in the education sector and provides certification through various courses, classroom and examinations to corporate employees. She mentioned that the business is tight on funds. They are hardly able to break even every year. When I asked about the lead conversion ratio for the business, she mentioned that the business is getting some leads. However, most of them are not getting converted to sales despite showing considerable interest in the early stage of the funnel.
The number of leads generated is satisfactory. The leads also show considerable interest in the early stage in the funnel. However, the final sales conversion is quite low.
Have you ever faced a similar problem? If you are an early stage startup, I bet you would have faced a similar situation and would have wondered why on earth your leads are not getting converted to sales.
This is a typical marketing problem. Actually, I would say it’s a problem that should be tackled together by the marketing & sales team.
Hang on, did you say that your business doesn’t have a sales VP or a marketing VP?
My suggestion would be to go ahead and hire a marketing and sales VP. This stage itself can fix a lot of issues in your business. The startup that I mentioned about did not have a sales VP till a few months back. Strange, isn’t it?
So you have a Sales and Marketing VP in your business. What could be the possible reason why leads are not getting converted to sales? To understand this issue, let’s have a look at the marketing funnel stages.
Awareness is the stage through which your target audience comes to know about the existence of your solution. For the purpose of simplicity, we are only focusing on the B2B solution. This is the stage where your target users are made aware of your company. They visit the site and are called as “Visitors”. In today’s world where customers are knowledgeable and there is a long list of solutions that they can choose from, inbound marketing plays a major role. For more information on Inbound Marketing, check out Hubspot’s online material.
Discovery is the stage where your target audience comes to your website in search of a potential solution to their problem. You have got your target users to your website. They have started discovering the solutions that your company provides. This is more of a learning phase for the target users. This is the phase where your “Visitors” get transformed to “Leads”
For companies which face the problem of inappropriate leads, they need to focus their energy on “Awareness” & “Discovery” stage of the marketing funnel.
For the use case we started with, the problem lies in the subsequent stages.
Consideration is the phase where your “Leads” are considering whether to go with your solution. By this stage, they are quite aware of the products and/or services provided by your company. At the same time, they are checking out your competitors’ offerings to finalise the best solution available to them. “Lead nurturing” plays a critical role here. At this stage, your Sales Team can start to pitch in. That’s why having your Sales VP and a designated Sales Team is important. They identify the Marketing Qualified Leads and reach out to them to understand their pain points. At the same time, they explain to your potential customers how your solution fits their needs.
Companies or startups without a designated Sales Team will lack on the conversion. As a result even though there might be a lot of good MQLs coming through the funnel, the total sales might still be low.
Conversion is where your “Leads” get converted to “Sales”. Again, there is a huge involvement of the Sales Team at this stage.
If you have faced a similar situation in your business, let me know. I will be very happy to understand what your problem was and how you have fixed it.