This fall, TSIA will be digging deep into the topic of the Art and Science of the Customer Journey at our annual Technology Services World conference in Las Vegas. To introduce this theme, the rest of the TSIA research team and I will be sharing our thoughts on how it relates to our specific area of research, which in my case is expand selling. In this entry, I’ll be sharing a look at the journey from lead to closed deal for new opportunities with existing customers, how this process is different than it is for new customers, and why Services touchpoints have to be accounted for in the process.
For nearly as long as there have been dedicated Sales and Marketing functions, the lead-to-deal process has been represented by a funnel. The idea, of course, is that a large number of leads enter into the top of the funnel, and through various methods of selection and attrition, are whittled down to a smaller number of qualified opportunities and closed deals. Like most Sales and Marketing concepts, however, this funnel was designed for the acquisition of new customers. As companies realize that new business from existing customers is 3x cheaper than revenue from new customers, and that upsell and cross-sell opportunities close 43% faster than similarly-sized deals from new customers, they are wisely increasing their focus on growing their spend from existing customers.
Current Multi-Touch Attribution Models Ignore Most of the Touches
As Google and other internet-based advertising platforms flourished, marketers suddenly had the power of real data to track the effectiveness of their assets and campaigns. They could see what was working and what was not, and could begin to assign success metrics for each of their individual customer touchpoints. What they soon realized is that no single interaction in-and-of-itself was likely to lead to a deal. As a result, "single-touch" attribution models have given way to “multi-touch” models, where each marketing interaction is accounted for. The next step, of course, was to include Sales in the process.
An example of this type of attribution model, with a deal moving through the funnel while accounting for both Sales and Marketing interactions, is shown below. Each interaction can be “scored” for its effectiveness, evaluating which touches had the most influence on the deal’s advancement through the process.
This multi-touch model is a definite improvement over past concepts. However, we at TSIA have cultivated a deep understanding of Services businesses, and know that Services people interact with customers at a rate of between 5-15x that of Sales. How should this factor into multi-touch models? First, companies need to think differently about the process for existing customers than they do for new ones.
Every interaction with a customer has an impact on the ability to grow them. If customers don’t use what they have already purchased, they’ll never buy more, re-emphasizing the need for customer success efforts. Along that vein, every interaction, whether it comes through an inbound call to support or a visit from a field repair tech, has an influence. A bad interaction will dissuade future sales, and a positive experience enhances the relationship and makes Sales’ job easier.
The other opportunity presented by these Services interactions is lead generation for upsells and cross-sells, and this may be the most lucrative and most overlooked opportunity in the technology sector today. Using TSIA-documented best practices, Services teams can generate leads on about 3% of their calls. They close at a rate of between 20-30% of the time, and cost as low as $6.80 per lead. Given that other B2B lead sources cost between $70-220, this is an unbelievable bargain, and one that companies must leverage if they want to achieve profitable growth.
Using TSIA-documented best practices, Services teams can generate leads on about 3% of their calls. They close at a rate of between 20-30% of the time, and cost as low as $6.80 per lead.
Marketing Qualified Leads Are Good. Services Qualified Leads Are Better.
Speaking of leads, by most every account, the number one charter for B2B Marketing organizations is to produce leads. It’s what they are spending their budgets and cycles on. The currency and measurement for Marketing teams is the marketing qualified lead (MQL). The MQL funnel starts when a prospective customer interacts with a piece of marketing collateral or interactive content. For every interaction and click, a point value is assigned. The points are adjusted based on time lapse and other factors, such as organizational level (if it’s known). Eventually, a prospect will reach a high enough score to be passed on to sales. Sales may accept or reject these MQLs. By most accounts, sales accepts a little more than half of MQLs, and they turn into actual deals 20-30% of the time after Sales has accepted them.
When Services teams start to generate leads, there are a myriad of factors that go into making the process work. These include having the proper lead entry and tracking mechanisms, motivation and compensation, and skills and systems.
TSIA research is designed to give you the data-driven best practices on how to get these aspects right the first time. One additional challenge that some organizations run into is getting Sales to consistently follow up on these Services-generated leads. When this is the case, TSIA recommends that you take a strong look at flowing services qualified leads (SQL) through the same funnel and process as marketing qualified leads. Similar scores can be assigned based on relevant criteria, and a qualification method and follow-up discipline and processes are already built.
Tips for Success
Here are a few short takeaways to keep in mind as you apply this thinking to your organization:
- Realize that the majority of interactions with your existing customer base will come from Services, not Sales or Account Management. At the very minimum, make sure your Sales and Marketing teams have access to the information from these Services interactions, so they can factor them into to their account-focused conversations.
- Even if you don’t have a formal process in place, chances are that a few members of your Services Delivery teams are already generating leads for their Sales counterparts, and are communicating with them on an ad-hoc basis. Find out who those people are, and what steps they are taking beyond problem resolution to generate leads. TSIA can help you formalize this process.
- Finally, one word of caution as you consider how services-generated leads should be followed-up on, especially if you treat services qualified leads (SQL) the same as marketing qualified leads (MQL). TSIA research shows that there is no negative effect on customer satisfaction or Net Promoter Score when utilizing Services to generate leads unless the Services engineer promises a follow-up from Sales that ends up not happening. Whatever process you utilize, make sure you have the ability to mark when a Sales follow-up is necessary and that it occurs in a timely way.
Read more posts in the "Art and Science of the Customer Journey" blog series:
- "The Customer Journey in Industrial Equipment"
- "Optimize and 'Appify' Your Customer Journey Maps with Analytics"
- "Where Professional Services Fit into the Customer Journey"
- "How Customer Journey Mapping Improves the Customer Experience"
About the Author
Steve Frost is the vice president of expand selling research for TSIA. Throughout his career, he has held various leadership and business development roles at companies like Google, Netscape, and Loudcloud, helping them define their go-to-market strategy and business development tactics. Steve is dedicated to helping technology organizations understand and implement new sales approaches that are both helpful and contextual to their customers, as well as utilize services touchpoints to drive new leads, increase revenue, and provide better customer outcomes.