Sales Lead Brownouts Produce Sales Dips Within Three Months, Leading to Pipeline Failure

Sales Lead Brownouts Produce Sales Dips Within Three Months, Leading to Pipeline Failure   :  James Obermayer

“Companies that curtail lead generation spending because cash flow slows and sales stagnate see a further decline in sales for three to twelve months thereafter because the sales pipeline has been reduced.”

Of course, I can understand caution when cash is short, but slowing down lead generation is not the way out of the morass. Whether you average 100 inquiries or a thousand a month, if you cut lead generation spending and your lead count drops by 50% or more for three to six months, sales will correspondingly drop within three months. What’s more, they’ll remain curtailed for three to six months after lead generation picks up. It isn’t just a fact, it’s common sense.

This is how it works.

After lead generation spending is slashed, sales continue for about three months as the pipeline is drained of opportunities. At this point, senior management is beating on sales management to increase the pipeline, and sales management replies with excuses for just about everything except lack of leads; that comes a month or so later when he or she gets desperate and every salesperson cries for leads.

It’s not too late, but recovery is several quarters away. It takes months to build the inquiry level back up to what it was, and months longer to rebuild the pipeline. Just consider the average sales cycle for your product and you’ll see that the rebuild time is considerable. But there is no choice. You can reignite sales lead flow, but it takes months for the pipeline to come back and months longer for sales to reappear.

What do you do?

First, don’t cut lead generation if you need an increase in sales: increase leads to increase sales.

When management requests a reduction in the lead generation budget explain the consequences:

Fewer leads for six months = smaller pipeline for nine months = declining sales for three to twelve months.

Conversely:

Increased leads for three months = increased pipeline within six months = increased sales for one year.

The lesson: curtail sales lead generation spending at your peril, understanding that there are consequences to your pipeline and to sales far into the future.

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