Article | MarketingSherpa

Jan 19, 2010

Article

New Chart: The Long Road from B2B Lead Generation to Sales Conversion

SUMMARY: Marketers face lengthy time spans as they progress from lead generation to conversion, making it difficult to nurture prospects while moving them through the pipeline. This chart highlights the percentages of leads in each stage of the pipeline that are likely to advance to the next stage.

By Sergio Balegno, Senior Analyst

Average Conversion Rates in the Marketing-to-Sales Process

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One of the most challenging obstacles to marketing is the time span from lead generation to sales conversion. These long sales cycles put pressure on marketers to streamline the lead nurturing process.

When prospects first enter the pipeline, they may be months away from defining specifications, a budget or purchase timeline. It is marketing’s responsibility to identify and fulfill the information needs of prospects at each stage and to advance prospects through the pipeline to a sales-ready stage as rapidly as possible.

We wanted to know what percentages of leads in each stage of the pipeline are likely to advance to the next stage. As this chart shows, on average, nearly four in 10 leads move from initial inquiry to being sales-ready, and approximately the same ratio advance from sales-ready to qualified prospect. As might be expected, the trend deteriorates moving to the next stage where only three in 10 qualified prospects convert to a sale.

The internal sales force has an edge -- albeit slim -- over top channel partners in percent of distributed leads closed. An organization’s own sales force is also three times as likely to close leads distributed to them as are their average channel partners.

Comments about this Chart

Jan 19, 2010 - Tiffany L Otten of GlobalSpec says:
I love Sherpa charts and use them often. However, I feel this one misses the mark by skipping the all-important first step: defining what a "lead" means in this context. We all know that it can mean everything from a light web hit from a cookied-in passerby all the way up to an RFQ. The ambiguity of the term not defined in the survey (or at least here in the report if it was for they survey) renders the results irrelevant. I would love to see the results of this if those criteria WERE defined, however, as it is an excellent topic.

Jan 19, 2010 - Tracy Earles of Parallel Path Corp. says:
As an Internet marketing agency servicing the B2B Tech market segment, we constantly face the challenge of the long sales cycle. Marketing execs have come to expect high measurability from Internet marketing techniques, like PPC and SEO. Because of the long sales cycle, we can report on leads generated, but typically not revenue generated. Perhaps more importantly, the sales cycle makes it very challenging top optimize campaigns for maximum revenue. Tracy Earles VP Marketing Parallel Path Corp. (http://www.parallelpath.com)

Jan 19, 2010 - Graham Lubie of Graham Lubie says:
Interesting metrics on the B2B marketing /sales funnel - the net-net is about 4% of sales ready inquiries become B2B sales (ie. 38 > 14.8 > 4.3).

Jan 19, 2010 - Jonathan of Synergy Connections Ltd says:
If I'm reading this correctly, the end result is 4.3% of enquiries become sales. I'm sure this varies hugely by industry, but a base figure is interesting. For any new marketing plan, you can then try to calculate a cost per enquiry (whether you use telemarketing, SEO, PPC or traditional media), sales revenue and ROI - to see if your business plan holds up. I've seen a lot of plans where estimates of 50% of enquiries becoming sales are common. They also do not take into account the cash-flow time lag inherent in many sales pipelines - it can easily take 6 months in many industries, especially for larger contracts. Jonathan, Synergy Connections UK Telemarketing services http://www.synergyconnections.co.uk

Jan 20, 2010 - Daniel Kuperman of Quadrant Software says:
Can you share the sample size you used to come up with these numbers? Also, what industries are represented and are they B2C or B2B or a combination of those?

Jan 20, 2010 - Heather Hughes of Denali Group says:
How were "inquiries" defined in the study - were they requests for more information on a company/product/service or a general lead such as someone who registered to download a whitepaper, subscribe to a newsletter or attend a webinar?

Jan 21, 2010 - Candyce Edelen of PropelGrowth says:
The source and nature of the inquiry is a significant determinate of likelihood of conversion to sales-ready lead. This chart refers to "inquiries." What does that mean? Is it inquiries who called or clicked the "contact us" link? I'd like to see the conversion ratios into sales ready leads from other types of lead sources. For example, what are the ratios for leads generated from venues like trade shows or webinars?

Jan 25, 2010 - Chris Lynn of Xaar says:
These data are worthless as they stand. What was the sample size? What types of company were sampled? What was the standard deviation of the responses? conversion rates for newsletter subscribers are going to be vastly different than for consumer goods, software, B2B services, or captial equipment.

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New Chart: The Long Road from B2B Lead Generation to Sales Conversion

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