Fun with Comparing "Inbound" and "Outbound" Leads

The term "lead generation" is so broad that it creates all kinds of confusion! One really, really, important concept is "inbound" versus "outbound" (and yes, in leadgen there are few black and white cases, even here, but this differentiation helps). While speaking with Laura Merling today at Mashery, I started sketching out some ideas on how to compare leads that come to you versus leads that you have to go fetch.

(Side note: does anyone have better terms than 'inbound v outbound'? Even these can be misleading.)

Inbound leads are, as it implies, leads that come to your company and into your website or 800#: usually through word-of-mouth and referrals, public relations, search engines or perhaps through marketing campaigns. Usually, a "Market Response" inside sales team reviews, qualifies and routes the leads to the correct salespeople. Excluding the educational inquiries (such as webinar registrations), these leads generally are already interested in what you have to offer, and are about to start a buying cycle.

Outbound leads are lead that you had to go dig up, whether through market development campaigns or a Cold Calling 2.0 or other "proactive" methods to let prospects who aren't already interested know who you are, what you do and why it should matter to them.

I realize I ain't no Picaso and I know the text is hard to read. Yet I think you can figure the important points out...and at least I had fun with this :)


Why is this important?

Here are a couple of things that should help clear some of the mistakes and confusion up in execution:

1) Differentiated sales leadgen roles: you need different roles for qualifying inbound leads ("Market Response") than Sales Development (sales prospecting). Inbound leads have an hours/days rhythm; outbound leads have a weeks/months rhythm. It's almost impossible for reps to juggle both functions well because of the different demands of the job. It's similar to asking quota-based salespeople to close both small business and enterprise deals.

2) Planning is very different for each, so plan them separately. The high-quality portion of inbound leads (word-of-mouth, referrals, some search engine leads) are mostly organic. Usually their pace leads grows steadily, bit by bit, and any big jumps or dips aren't sustainable. When they come in they come in quickly, with high close rates, but it's hard, or impossible, to grow the amount of them faster.

Outbound leads that close are like finding needles in haystacks - they're there, but they take a lot more effort, sales cycles are longer and close rates are lower. But - though this can take quite awhile - once you build your "needle finding machine" that can repeatably find the needles...generating outbound leads can be very predictable.

Don't be surprised if you start seeing more stick figure sketches in future posts!

How Do Your People Feel About Their Work?

I have a personal theory about people and their interest level in talking about their work outside the office. (I'm referring to what they do and the culture, not gossip.)

I think that people who are stressed out, frustrated or just don't care about their jobs want to avoid talking about work outside the office.

People who love what they do, are engaged in it, or who are just plain interested in their work love to talk about it outside the office.

Which side of the fence do most of your people fall?

The Danger Of Success

How a company handles success can determine if success breeds more success...or if it breeds failure. Does it generate arrogance in the company, or can the company stay hungry and humble?
Depending on the tone the CEO and leadership team sets, success that generates arrogance and a sense of infallibility is a path to failure. When you begin taking customers and employees for granted is when you're at the highest risk of losing them to other opportunities or competitors.

Moving The Ball Every Day: '3 Goals'

It's very easy, both as an individual and a team, to spend time doing to-dos and activities rather than making definable progress towards a goal.

I'm a big fan of taking some time in the morning or night before to write down three goals for the day - "If I can only do three things today and nothing else, what would they be?" It's surprising how hard it can be to even get three important goals (not activities) done!

A subtle, but key difference is a focus on bite-sized results not, activity. For example, instead of "call five partners to schedule meetings", the goal should be to "schedule five meetings with partners".

For projects that span weeks and months, break it into day-sized chunks. When raising capital, one of your goals today could be to "find three referrals into targeted VC firms", or "send completed due diligence materials to firm x."

What can you accomplish today to move the ball forward?

Executive examples:
- Get management team agreement on our top three metrics to track this quarter
- Engage a recruiting firm for an open position
- Return detailed product feedback to the VP Engineering
- Finish incorporating management team feedback into the fundraising pitch
- Finish press release draft and send to the team for feedback
- Interview 3 VP Marketing candidates today

Sales examples:
- Schedule 5 phone qualification calls with prospects
- Get executive approval on pricing for a final customer quote
- Use a demonstration to either disqualify or move a prospect to the next sales cycle stage
- Add 20 new target executive contacts to a CRM system
- Get final sign-off on a territory definition
- Build a personal CRM dashboard
- Watch a CRM training video or read a chapter in a sales book

The Magic Quadrant of Time Management

Take this test:
http://www.fcprofiles.com/focusflash.html

My post around "Aligned Execution", and one I'll do shortly - "3 Goals per Day", will move you and your team into the upper-right magic quadrant of time management.

My Two Favorite Sales Diagnosis Questions

When I initially dig into understanding a company's customer / sales model and according bottlenecks, I have two favorite questions of employees working directly with customers:

1) To understand how things work:
"What's a day in your life look like?"

2) To get a sense of what doesn't work:
"What's the biggest waste of your time and energy during your day?"

However you phrase it, the second question ALWAYS elicits useful insight into what's not working smoothly in a company or process. Ask it of a cross-section of people and teams and I guarantee you'll find some common root issues that are causing problems. And, as often as not, the issues aren't hard-to-fix ones such as pricing or product strategy...but simple-to-fix issues around poor processes (especially between teams), incomplete communication, technical issues with a system, or a lack of management attention in an area.

Try it out with some of your own people and let me know how it works for you!

Aligned Execution

In working with various growing companies, I've seen one very clear theme. Every organization (both commercial or nonprofit) has great potential, but is looking for better ways to harness it.

There's a Chinese proverb "binding your own feet to prevent your progress". Teams often hold themselves back through some very common wastes of time and energy:
a) "Cross Purposes": Individuals on a team haven't developed a shared vision, or they, or their teams, don't share any common 'good for the company' goals that strategically align effort.
b) "Shoot from the Hip": Decisions based on assumptions, not root causes.
c) "Goal Clutter / Goal Quantity Over Quality": The more goals, tasks and objectives...the harder to focus on the few most important things.
d) "Fire and Forget": Doing a planning exercise once...without establishing a formal drumbeat of revisiting it.

The methodology below is simple and is guaranteed to spark "Aha!" moments the first time a team uses it. It will work at any level of an organization.

End Goal:
Each member of a team should walk away with a clear idea of what is most important to the company (values, outcomes, metrics, projects) in the next year, as well as the 1-2 most important things they personally need to do next to move the ball forward starting right NOW.

STEPS

1) What's Your Common Calling? (Why are we doing this?)
* What is our mission, the core values we aspire to?
* Why is what we're doing important to us and our customers? (Long term vision)

2) Align on Destination (Where are we going next?)
* What is our vision or snapshot for what the organization looks like in the near future? (6-18 months).
- Example attributes: revenues / people and teams / branding or positioning / organizational design / channels / customers / new markets / margins / pricing and products / investors

3) Align on Causes & Effects (What will get us there the fastest?)
* What are the root causes that create the desired effects/results?
- For example, if revenue growth is a desired "effect", what is the "cause" that drives it? (You'd be surprised at how much disagreement there is here)
* What projects or initiatives will make the biggest impact on getting the company there?
- Examples: more business from channels, more salespeople (or more hitting quota), better cash management, raising money from investors, landing a strategic customer, hiring an internal or external recruiter

4) Align on Metrics
* What are the three most important metric the company needs to focus on improving this quarter / year? Which one is #1?
* What are the three most important metrics for each team? Which one is #1?

5) Bottlenecks? (What is holding us back?)
* What obstacles or bottlenecks are in the way of the above priorities?
* What is the root cause of each bottleneck?
* What can be done to tackle each bottleneck? Add these 'bottleneck breakers' to your list of important projects.

Example: Channels aren't growing. Why?
...The right person to grow the channel business doesn't have time today. Why?
...Because they are constantly fighting customer fires. Why?
...Because internal reports are error prone, so customers get inaccurate reports. Why?
...Because there is an issue with the database's configuration. Aha!
Address the root cause: fix the database configuration to create the time to grow channel business.


6) Rank Projects (Who does what next?)
* Take the above 'cause projects' and 'bottleneck issues' and rank them by the order they should be addressed
* You now have a list of prioritized projects to execute on
* Divvy them up to logical owners
* Each owner now has a list of ranked projects. Start with the most important one and focus on it until it's done, then move onto the next.

7) Establish a Drumbeat
* This initial plan is just a starting point. How will the team establish a regular drumbeat (or drumbeats, with daily/weekly/monthly cycles) to check in on progress and make sure everyone stays aligned?
* Depending on how fast the company is changing or growing, this could be every week, two weeks, month or quarter.
* To avoid getting into mental ruts, consider throwing it totally away and redoing it from scratch every 6-18 months.

Do You Take Sales Sales Complexity Seriously?

Companies are used to a simple view of the world: sell to small companies or to large ones?

With the growth of on-demand business models, more companies are trying to deliver products and services to both small and large customers (including departments of large customers).

There's a potential complexity trap here. In evaluating your customer segments, consider complexity to sell and deliver the solution in addition to the size of the company or its budget:


Another way to think about the vertical axis might be "Willingness to pay for complexity". In essence, how likely will this kind of company actually commit enough money to fixing the problem? Including money to cover all the hidden costs your own company will incur through support, product development, and other services?

The trap companies fall into, especially younger ones refining their customer and sales models, is trying to deliver a complex solution to businesses or departments who aren't willing to pay for the complexity. That's the worst of both worlds.

If you can charge large premiums for delivering a simple product, does that mean your competitors can easily copy you and undercut your prices? What are your barriers to entry and differentiators that will maintain your pricing premium?

Remember "Pass The Phone Message Game"?

Every time information is passed through someone or a level in a company, it's filtered and changes. As a CEO or executive, how often do you talk directly with employees on the front line for unfiltered feedback? What do your salespeople tell you is their #1 bottleneck in growing their numbers? According to the front line customer service employees, what are the top customer complaints? Or from the employees that handle current customers, why do they cancel?

These reasons should all be different than last year's reasons. If they're the same - is your company really working to break the bottlenecks that are slowing your growth?

Even in a company of 20 people, a lack of communication creates unnecessary problems. In fact, it can be more of a problem because the pace of change is faster than in a big company, making regular CEO-to-frontline-employees communication even more important.

Do You Think In Customer-Centric Ways?

People tend to have self-centric worldviews, that is, they view everything in how it matters to themselves. "What do I need to do today? Why should I do this?" Since companies are made of people, companies tend to view the world in ways it matters to the company...not necessarily their customers.

Company-centric questions:
"What kinds of customers do we want? What do we want to build? What do we want to sell? How much money do we want to make?"

Customer-centric questions:
"What kinds of customers need our service? Why do they need it? What will they buy from us? What is the (quantifiable) value to them?

How do you and your company think?

Practice Growth Through Self-Awareness

1. What is your main bottleneck to more growth?
Examples:
- Not enough good leads (where do the best ones come from?)
- Converstion rates of leads to customers is low (why do they disappear or go another route?)
- Lack of talented salespeople (is it actually about the people or is it the situation they're in?)
- Attrition of current customers is too high (why?)
- Sales cycle is too long (why?)

Once you identify your main bottleneck and can address it, then move on to your next one.

2. What is your 'ideal customer'? (And which ones should you avoid?)
How large or small? Does geography, industry, business model matter? What customers are the easiest to close and the most profitable?

Flip this question around too: which customers should you avoid in the future?

3. How did your ideal customers find you?
Word of mouth, press, referral partners, etc. How can you apply more energy to the best sources to get more?

4. Why do you get referrals?
Why did customers refer others to you? Why do your customers love you? And if they don't, how can you get them to love and recommend you?

5. What is your unique, differentiated solution?
Customers, just like everyone, are bombarded by information and options. The clarity and simplicity of your solution, including how it solves their problems differently than any other option (including 'doing nothing'), is a critical factor in everything related to customer acquisition. It improves word-of-mouth referrals, speeds sales cycles and increases pricing power.

Your differentiator is something that is positioned to matter to customers and should come from their feedback - not investors' or analyst armchair feedback.

6. How much business at your current customers are we not getting today?
What is the customer spending money on that's relevant to your business...but is going to other companies? Is it simply going after more of the same kinds of teams in other divisions of current customers? Or would you need to expand the product line? Or combine current services and products in new ways to solve more of their problems?

7. Why would they continue to use your company in the future?
Your competitors aren't sitting still - when they become viable alternatives and call on your customers with a cheaper price, why will your customers stay?

For CEOs: Maintain Key Personal Relationships

Personal relationships cut right through information overload, clutter and noise. If you're a CEO, do you spend the time to establish and maintain personal relationships with the champions and decisionmakers at:

* Your top 10 biggest and most strategic customers?
* Your top 5 targeted journalists?
* Your top 5 partners?
* Other critical organizations or people that are important to your business?
* Various line employees and managers? (The ones that actually make the business work)

Part of the responsibility of CEO is staying in direct contact with customers and the business. As busy as you get, don't let yourself take these kinds of relationships for granted, or ever catch yourself consistently saying "It's not my job to maintain customer (employee / PR / partner...) relationships." The buck stops with you!

Motivation Through Fear or Aspiration?

Who did you work harder for: managers who motivate through fear and 'lashing the whip', or managers that inspired and encourage you and your team? The most productive, energetic committment comes from having a shared vision + alignment with your team and company.

Driving sustainable committment and energy takes:
1) A shared vision to aspire to,
2) A organization structure and goals that aligns people's energy toward that vision.

Mis-alignment and conflicting goals, including competition gone too far, destroys teamwork and results. You won't get far in a boat if people aren't rowing in the same direction.

There's no limit to what people can do and their energy when they share a vision together! Engage the team in creating a shared vision that people can aspire to. We updated our prospecting team's vision every year, and it was one of the first we introduced to new hires.

For example, in early 2005, we asked the team about what would get them excited and was important, which included: making a difference, being the best, trying new things and learning, and then sharing with others. We, still as a team, came up with a vision of:
"Make a difference in the success of our team & company by being the best in the world at generating new business, through constant innovation and the sharing of our expertise"

Dealing With Issues Over Email

I personally find it irritating trying to address important or sensitive issues over email. There's just too much opportunity to misinterpret or miscommunicate, resulting in unnecessary anxiety or drama. What about scheduling an impromptu meeting? Or calling the person? If you can't do either of them, is it something that can wait until the morning?

Email is also asynchronous - it's an erratic back-and-forth, not a realtime conversation, which just makes it that much more frustrating than a phone call to communicate about a complex situation.

Use common sense - if you have feedback for someone, or need to debate an issue - how would you want to receive it?